Section Overview
This section describes a series of practices related to apartment development, including location, design and programming decisions that provide examples of how some organizations are advancing housing equity. Practices described include mixed-income developments, developments with a range of unit sizes, co-locating housing and essential services, affordability preservation and displacement mitigation, and community benefits agreements.
Real-Life Examples Included in this Section:
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Learn more about BRP Companies’ Urban League Empowerment Center, The Rennie and Wa-Di Housing Development in Santo Domingo Pueblo, NM – practical examples of how the content of this section is being applied.
Introduction
Successful strategies to advancing racial equity through apartment development enables communities of color to participate in shaping the future of those communities. Whether through site selection, design, programming or other points across the development process, real estate developers can map inequitable access for BIPOC communities, including communities of color, to some of the key determinants of physical and economic wellbeing. Projects that intentionally use an inclusive and culturally relevant development process have benefited from quicker approvals as well as lower holding costs, vacancy rates, resident turnover and unit rollover costs for owners. These projects benefit from an increased sense of shared ownership over public spaces, social accountability for upkeep and safety, and sense of belonging for residents.
An Inclusive process enables the resulting building to have the potential to be more reflective of community needs and can yield the following benefits:
Increase the financial viability and sustainability.
Build goodwill between the community and developer.
Reduce antagonism in the development process and streamline decision-making, which saves time and money and increases interest from potential occupants.
Shift the paradigm of inequity that has determined how investments get made in communities.
Incorporating current residents and small businesses, which strengthens community cohesion and advances equity.
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Mixed-income developments
What is this action?
A mixed-income development is a residential property or a master-planned community with housing that is affordable to residents at different income levels. One common form of mixed-income development is a rental housing development that includes both market-rate units and subsidized affordable units that are reserved for lower-income households. Such properties can include one building or multiple buildings developed on the same site. Creating mixed-income rental housing can be used as a strategy to help boost upward mobility by enabling lower-income households to afford housing in low-poverty, high-opportunity areas.
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Why might this be relevant to an organization’s efforts to advance housing equity?
Creating mixed-income housing can positively impact the financial feasibility of developing housing that is affordable. Under certain unit affordability structures, developers are incentivized to use a portion of the financial return on renting market-rate units to offset the reduced rent for affordably priced units. Methods for financing such projects are discussed in NMHC’s Housing Affordability toolkit.
Developing mixed-income housing in a low-poverty, high-opportunity area provides lower-income families with an affordable option in neighborhoods with access to resources, such as quality education, jobs, transportation and healthcare services. A study from researchers at Harvard University found that young children in families earning less than 80 percent of AMI that used Housing Choice Vouchers and moved from extremely poor to lower-poverty neighborhoods were much more likely to attend college and earn more as young adults, compared to their counterparts whose families did not have this option. In a neighborhood with a lower median household income that is witnessing significant changes in its racial and economic composition, creating new mixed-income housing developments can be used as an anti-displacement strategy. Developing mixed-income rental apartment housing in such neighborhoods can help keep these neighborhoods affordable for lower-income renters while still creating market-rate rentals for higher-income residents in neighborhoods witnessing higher demand for apartment housing. It can also incentivize business and other community amenities to locate to those areas. Choosing the right mix of incomes and housing types is essential for the success of mixed-income developments as an anti-displacement strategy. This could include ensuring that newly created mixed-income developments include an adequate share of units that align with the neighborhood’s unit affordability and size needs.
Keys to success
The design of mixed-income housing should encourage and incentivize ensuring that there are no significant distinctions between the quality and design of the affordable and market-rate units. Additionally, designing common spaces that encourage resident engagement is important to facilitate social interaction in mixed-income rental housing developments. Community amenities, such as event and outdoors spaces, which can be used by all property residents is one example. Finally, property management practices can incorporate resident services and programs in mixed income buildings that promote social interaction, such as property-level fitness and health programs.
Financing mixed-income developments can be a challenging undertaking for developers. As discussed in NMHC’s Housing Affordability toolkit, creating below-market rental units in a mixed-income rental development can result in development financing gaps based on the number of below-market units included in the development and their rental affordability levels. Generally, financing mixed-income developments requires tapping into multiple debt and equity capital resources with different requirements. A developer may use different sources for the market-rate and affordable housing components of the development, which are likely to have different requirements, risk tolerances and expected returns on investment. Housing subsidy programs that support affordable units such as project-based Section 8 vouchers, Low Income Housing Tax Credits and other state and local subsidies are often awarded competitively, thus taking years to secure. Additionally, accessing conventional financing for mixed-income development may require overcoming the persistent perceptions of risks in loan underwriting for such development. In some cases, such risks can be mitigated by pursuing separate ownership structures within the building with different expectations of risks and return on investment.
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Variety of Unit Sizes in Apartment Developments
What is this action?
Creating apartment housing that includes a variety of housing types and sizes can help meet a diverse range of housing needs and better ensure that they are accessible to more BIPOC households. For example, a development with a mix of one-, two- and three or more-bedroom rental units will allow households of different sizes, compositions, and incomes to live in the same community, which increases both their access to different amenities as well as their opportunities to interact with a diverse set of residents. This may be particularly meaningful for families with children, who require larger units in neighborhoods with access to quality schools and recreational space, as well as multigenerational households, which are more common in BIPOC households, according to a Pew Research Center report.
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Why might this be relevant to an organization’s efforts to advance housing equity?
The lack of an adequate supply of rental housing units that can accommodate the needs of households of all sizes in a specific jurisdiction will likely subject renter households who cannot access and/or afford larger rental units to experience overcrowded housing.
When renter households with housing needs that include accessing larger apartments cannot afford such units, these households are likely to be priced out of high-opportunity areas with quality educational and economic opportunities. Research by Brandeis University suggests that affordably priced rental units with three or more bedrooms are disproportionately located in low-opportunity neighborhoods, which makes it difficult for renter households who need larger units to access high-opportunity areas. This challenge extends to both subsidized and market rate rental housing.
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Keys to success
The creation of larger sized units that are affordable to modest income households requires scarce housing subsidies which are not readily available in many communities. In addition to the availability of needed subsidies, the choice of location should include ensuring that neighborhood amenities are available that meet the needs of the residents; for example, larger units may be more appealing to families with children when proximate to good schools, daycare centers and recreational opportunities.
Co-location of housing and essential services
What is this action?
Co-location/mixed-use development is the practice of pairing housing with non-housing uses that can benefit the development’s residents and the surrounding community. Co-location can take different forms; for example, a developer could create a non-residential space within an apartment housing development or create a partnership with an existing non-housing service provider to ensure residents have ready access to specific services. Considering co-location is impactful in advancing housing equity for developments in disinvested BIPOC communities.
Why might this be relevant to an organization’s efforts to advance housing equity?
In disinvested neighborhoods, co-location of commercial and community services creates benefits for apartment residents and the surrounding community. Additionally, in markets where there is scarcity of developable land, co-location can be used as a strategy to increase housing supply by creating housing and non-residential spaces on the same site. Co-location can also help maximize limited public resources.
Keys to success
Engaging with the local community to understand how the commercial space of the development could address service gaps, which would lead to a more optimal use and economic success of the development. Effective community engagement will likely accomplish a shared vision for the development, which may facilitate accessing necessary public subsidies, and expedite the project’s approval. Consideration should also be given to creating space for service providers that could support BIPOC residents.
Affordability Preservation and Displacement Mitigation
What is this action?
Housing acquisition/rehabilitation can be used as a strategy to mitigate displacement of lower-income residents in communities experiencing significant demographic and economic changes. This is particularly important for preserving the affordability of unsubsidized affordable housing in neighborhoods of opportunity which are more at risk of affordability loss.
Why might this be relevant to an organization’s efforts to advance housing equity?
Preserving housing affordability through acquisition and rehabilitation projects can mitigate residential displacement, a process by which households are forced to move from their residences due to rising demand for housing or re-development projects. Displacement disproportionately affects communities with lower median incomes and communities of color, compounding persistent inequities in housing. Preserving housing affordability through acquisition can help residents, particularly BIPOC households, remain in their homes and neighborhood, as well as connected to their social networks, schools and jobs.
Renewed investment in building repairs, updated building systems and kitchen appliances improve property condition and operating efficiency and may provide a healthier indoor environment for residents. Building upgrades that focus on utility efficiency can have a meaningful return on investment and are likely to result in lower utility costs for residents. A report from CBRE found that older apartment properties as well as Class B and C apartment properties have lower resident turnover and vacancy rates than newer and higher-class properties.
Recapitalization is particularly important for the unsubsidized affordable small and medium multifamily (SMMF) housing stock, which represents a significant component of the affordable rental housing stock. Enterprise Community Partners’ research on SMMF properties, defined as those with between two and 49 units, found that this housing stock provides 54 percent of the rental housing stock in the U.S. and is home to a majority of households with low-incomes, including 60 percent of all renters who make less than $10,000 per year. Enterprise’s research also found that acquisition and preservation of unsubsidized affordable SMMF housing offers a cost-efficient way to preserve housing affordability, costing 30 to 50 percent less than new construction. One 2013 Center for Housing Policy study finds that new construction costs $40,000 to $71,000 more per unit than rehabilitating older units. The preservation of SMMF properties serves as an important housing equity and affordability tool, as for the past 25 years, construction of SMMF has declined relative to historical trends, and older SMMF buildings are not being replaced with similar building types.
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Keys to success
Developers pursuing the acquisition and rehabilitation of housing at risk of affordability loss are often able to tap into acquisition funds that can be capitalized with multiple funding sources, such as public funds, philanthropic support, and financing by Community Development Financial Institutions (CDFIs). Housing acquisition funds typically provide developers who are willing to preserve the affordability of acquired housing with access to short-term financing available on an accelerated basis to acquire properties at risk of affordability loss. These acquisition funds may also attract private capital, as financial institutions could invest in acquisition, which may receive credit under the Community Reinvestment Act. To incentivize affordable housing preservation, acquisition funds may offer financing at competitive terms and rates.
Additionally, retrofitting unsubsidized affordably priced apartment housing may be financed by a range of federally backed green loan programs. For example, Fannie Mae’s Green Rewards program offers lower pricing, additional loan proceeds and a free property, energy and water audit to finance smarter, greener property improvements. Also, under its Green Preservation Plus program, Fannie Mae offers additional loan proceeds to finance energy and water efficiency improvements for existing apartment affordable housing properties. Freddie Mac’s primary Green Advantage incentive programs, which include Green Up and Green Up Plus, offer better lending pricing and more debt capital to properties that can demonstrate a certain reduction in water/sewer and energy consumption.
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Community Benefits Agreements
What is this action?
A community benefits agreement (CBA) is a contract between a developer and representatives of a community in which a developer commits to providing a range of community benefits in exchange for receiving the community’s support of a proposed development. For example, a residential developer could commit to providing housing-related community benefits, such as creating a specific number of affordable rental units. CBAs can also be used to ensure community engagement in the planning process of a housing development project.
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Why might this be relevant to an organization’s efforts to advance housing equity?
CBAs can be used to meaningfully engage with community-based groups that represent BIPOC and other community interests to work with developers on incorporating some of these considerations in new housing developments. For example, in a neighborhood that is witnessing market pressures and significant changes in its racial and economic composition, a CBA could incorporate housing affordability requirements that could help keep the area affordable for existing lower- and moderate-incomes renters. Additionally, a CBA could be used to meet some of the community’s other development needs, such as infrastructure investments, through new development.
Gaining community support for a proposed development can also help the developer access public subsidies needed to achieve specific housing affordability levels, receive zoning changes from a local government body, or receive necessary local approvals. CBAs also allow for a more transparent, open process that documents community engagements and details agreed upon terms.
Keys to success
The use of a CBA structure differs in different localities. Sometimes such an agreement is with a local organization or organizations that are acknowledged to represent the interests of the community and in other cases, the agreement is with the local government body. Regardless, the state or local government empowered to provide the financial and other incentives need to be engaged. Typically, CBA negotiations do not include community members who will oppose or support the proposed development regardless of the community benefits included in the CBA.
Case Study: BRP Companies’ Urban League Empowerment Center, The Rennie
BRP companies has a long track record of developing workforce and mixed-income housing in neighborhoods with a high share of BIPOC residents, using a business model that is centered on meeting the needs of local residents and institutions. Many BRP projects combine housing with community and retail space to provide a range of services and opportunities to residents, while also providing energy efficient and environmentally sustainable developments. BRP staff contributed to this case study.
A community-centered model guides their development approach. For example, the Urban League Empowerment Center combines 171 units of mixed-income housing with office and retail space, including the new headquarters of the National Urban League and New York City’s first civil rights museum. The project not only returns the National Urban League to the neighborhood where it was first founded, but also ensures the surrounding community will benefit from the development by including local and BIPOC-led organizations in both the development of the project and the eventual lease out of retail and office space.
Collaborating with local partners has become part of an anti-displacement strategy. A building in Harlem called The Rennie combines housing with community development by working with a local church to add community space to the development of over 130 mixed-income condominium units. Also notable in the development of the space was the collaboration between BRP and historic preservationists to ensure the new building honored the former Renaissance Ballroom it replaced, which was a cultural hub of the community during the 1920s but had been abandoned since the 1970s and was already partially demolished.
BRP measures its impact with both traditional and non-traditional metrics. In addition to the number of units and square feet of space developed, the value of commercial and retail business residents, and the return on investment, the organization also tracks the number of permanent jobs created, demographics of beneficiaries of job creation, kW of energy saved, and the value of community facilities created. BRP’s commitment to affordability and community partnerships also ensures its developments serve the needs of BIPOC residents with low-incomes now and in the future.
Important ways that BRP Companies addresses inequity through their development projects:
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Their projects foster economic development through increased employment and investment opportunities while also meeting community needs for retail and services.
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By reinvesting in community assets that are meaningful to the neighborhood, they celebrate its history, rather than erasing it, while also providing amenities that meet the current and future needs of the area.
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Local collaborators enable projects to achieve multiple benefits and build on the strengths of anchor institutions in the community.
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Case Study: Wa-Di Housing Development, Santo Domingo Pueblo, NM
Development Partners: Santo Domingo Tribal Housing Authority, Concept Consulting Group, LLC, Sustainable Native Communities Collaborative, and AOS Architects
The Wa-Di Housing Development is a joint effort between public, non-profit, and for-profit partners to develop 41 affordable rental units located on eight acres of the Kewa Reservation in New Mexico. The New Mexico Mortgage Finance Authority supported the financing of the residential component of the development by allocating more than $11 million in funding for the project through its Low Income Housing Tax Credit program and the state’s Housing Trust Fund. The Santo Domingo Tribal housing Authority brought together a team of architects, finance consultants and local businesses to collaborate on the project and ensure it met the needs of a community that had long faced struggled with housing affordability, quality and crowding concerns.
The project team intentionally designed a planning process that meaningfully engaged the Tribal community to develop a project that would meet their needs, respect their culture and design preferences, and last to serve future generations. The project approach began with acknowledging that the development of America’s built environment has historically excluded and suppressed Indigenous communities. The development’s year-long planning process included several community engagement activities, including community meetings, in-person surveys and community walks that were designed to identify and incorporate the Tribal community’s needs and preferences into the site’s comprehensive site plan, as well as the design and construction of housing units.
The year-long planning process identified solutions to address prominent racial inequities in housing among Native communities. The project was designed to intentionally avoid using cookie cutter designs and layouts that replicate suburban housing and result in housing developments that do not meet the needs and respect the culture of Tribal communities. Furthermore, the development project was designed to create quality, affordable homes that could last for decades to serve households who live on Tribal land for generations and pass their homes down from one generation to another. The project’s scope was broader than providing basic shelter, as it included creating a master plan that focused on ensuring that Indigenous households have access to essential services, including transit, daycares, schools, and elder and community centers.
The Wa-Di development was also designed to boost the economic and physical wellbeing of the Tribal households, many of whom rely on conducting traditional stone grinding at home as a source of income. A health scan that was conducted as part of the project’s planning process identified that indoor traditional stone grinding has caused major respiratory issues among Tribal households. Therefore, the development project added a small, outdoor work shed to each housing unit to allow the community members to continue gaining economic benefits from traditional stone grinding, while practicing it in healthy, outdoor environments.
Important ways that the development team operated to reverse inequitable practices include:
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Throughout the project’s development process, the project team intentionally worked on addressing concerns and skepticism among Tribal community members who had faced significant housing challenges for years, as well as broken promises to create quality housing that meets their needs.
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The Wa-Di development was explicitly designed to advance racial equity for a tribal community by providing quality, healthy housing that can boost the community’s upward mobility, including economic success and empowerment. This was achieved by creating workspaces for each home that were tailored to the realities of residents’ day-to-day lives and enable them to continue traditional work in which they were already skilled.
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The range of community engagement activities was intentionally organized around fundamental cultural values and experiences that mattered to the community, including multi-generational participation, artistic expression, and oral history.
“People were shocked that we were going to listen to them and adjust the design according to their feedback.... Adjusting the design as we were listening to them had never been done before.”
- Tomasita Duran, Executive Director, Ohkay Owingeh Housing Authority
For Further Reading
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Wa-Di Housing Development: Opening Doors to Cultural Connection, Atkin Olson Schade
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Design with Love: At Home in America Katie Swenson (Oct 2020)
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Decolonizing Colonial Structures, Joseph Kunkel (Nov 2020)