The Democrats running for president all say they want to help contain America’s soaring housing prices. But some are promising more aggressive steps to tackle one of the root issues: the lack of housing supply.
A handful of 2020 candidates have embraced proposals to pressure cities and towns to loosen zoning laws, which experts blame for a lack of home construction. Many residents and local politicians, particularly those in affluent suburbs, oppose construction of high-rise apartment buildings and affordable housing units in their communities.
The federal government doesn’t have much say over those decisions, but it does have one source of leverage with cities and towns: federal housing and transportation funding.
Massachusetts Sen. Elizabeth Warren, New Jersey Sen. Cory Booker and former Housing and Urban Development Secretary Julian Castro have released plans that would make some of those funds contingent on local zoning reforms.
Minnesota Sen. Amy Klobuchar said in a housing plan released in July that she will “prioritize areas that have updated their zoning rules when awarding federal housing and infrastructure grants.”
And former Vice President Joe Biden touched on the issue in a proposal to combat climate change he rolled out in June, saying he supported “altering local regulations to eliminate sprawl and allow for denser, more affordable housing near public transit.” Biden’s campaign confirmed with McClatchy that using federal grants as incentives “are definitely on the table.”
Booker has proposed the most wide-reaching set of incentives to nudge cities toward building denser, cheaper housing. In a blog post, he said he’d tie eligibility to billions of dollars in grants for road and rail projects to “local governments demonstrating progress towards reducing barriers to affordable housing.”
Castro says he would tie Community Development Block Grants; affordable housing programs like Housing Investment Partnership Program; and unspecified transportation grant funding to changes in zoning laws.
Warren promises to create a new $10 billion grant program for infrastructure, parks and schools. Cities and states would only be eligible if they overhaul their land-use rules “to allow for the construction of additional well-located affordable housing units.”
Housing policy experts widely agree that restrictive zoning laws are a big reason why housing supply has not kept up with demand nationally.
That’s particularly true in California. “Most of California’s most populous cities and most affluent suburbs are just not building up housing,” Brookings Institute Fellow Jenny Schuetz told McClatchy earlier this year. “They’ve been under-building housing for about 30 years now.”
Scheutz, however, has raised questions about whether tying federal grants to zoning reforms will have the impact some politicians are promising. As she pointed out in a 2018 Brookings analysis, Community Development Block Grants (CDBG), which are distributed by the Department of Housing and Urban Development, are primarily targeted at larger, poorer communities.
“Few of the most exclusive communities receive CDBG entitlement funding,” she noted, meaning they would not be motivated to change their laws by threats to cut off that funding.
Tying surface transportation funding to zoning laws could have more of an impact. As a recent report on the news site Curbed highlighted, virtually all local and state government infrastructure projects rely on some federal funds. California is second to only Texas in terms of the amount of Surface Transportation Block Grants it receives from the federal government.
But even California, which has some of the highest rents and home prices in the country, has had trouble navigating the politics of zoning and development. Officials in the state have acknowledged the need for more home building but the most sweeping state-level proposal to address that issue, a bill to overrule local zoning restrictions on apartment and multi-family housing construction, died in the California Legislature earlier this year.
The bill faced stiff opposition from many local officials, who decried it as a power grab. Many homeowners, especially in affluent areas, also opposed it, arguing it would disrupt the existing character of their communities. Others worried about gentrification and displacement.
Given those fraught politics, presidential candidate and California Sen. Kamala Harris has sought to sidestep the zoning discussion, focusing her housing proposal on helping low-income renters.
Harris’ Rent Relief Act, which she re-introduced in the Senate in April, would create a monthly refundable tax credit for households whose housing costs exceed 30 percent of their income, including rent and utilities. A number of other candidates have proposed similar credits and other programs to help renters.
Caroline Danielson, policy director and senior fellow at the Public Policy Institute of California, told McClatchy that’s “a sensible policy” in Iowa, a critical 2020 primary state, and other parts of the country where housing supply is keeping up with demand.
But “in a place like California, where we have a housing supply crunch,” pouring more money into the rental market without addressing the supply problem would likely start “a vicious cycle and not solve our problems,” Danielson warned.