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Fay Darmawi | Recently I met up with a Penn alumnus I hadn’t seen since graduation more than 25 years ago. As we caught up, he told me he’d become a successful physician and I told him I work in affordable housing.


Affordable housing, past and present: the 1972 demolition of the Pruitt-Igoe projects (above), and San Francisco’s Richardson Apartments, 2011 (top).

“Oh, you mean public housing?” he said innocently.

There hasn’t been a single new public housing unit built in the United States in more than 30 years. Yet in my friend’s mind, the famous implosion of St. Louis’s Pruitt-Igoe projects remains the iconic image of what “housing for the poor” means in America.

I was disappointed that he didn’t know what I do for a living, but it wasn’t his fault. We in the affordable-housing field have not created new images to fill the void left by that searing cinder-block explosion. Although we have created thousands of well-designed, award-winning projects in the wake of the federal government’s retreat from directly building housing for the poor, we have failed to convey the importance of those accomplishments to the general public.

It is increasingly clear that that failure carries a high cost.

Ironically, the affordable-housing sector’s invisibility to the public stems largely from how successful we have been. We are a self-regulating industry consisting of public agencies, non-profit organizations, and for-profit companies—including the nation’s largest financial institutions—that have partnered to create over 2 million new rental units for low- and moderate-income people in the United States. Most of those units are so well built and attractive that one would be hard-pressed to tell them apart from some luxury apartment complexes.

However, the superficial similarities of market-rate and affordable housing belie big differences in the populations they serve, and in the complexity of the financing tools used to keep the apartments permanently affordable.

Affordable rental units today are usually priced 20 to 40 percent below typical market rents. This discount frequently makes the difference in allowing teachers, social workers, librarians, and firefighters—residents who are the backbone of any community—to pay no more than 30 percent of their income on rent. Affordable housing is crucial to building diverse, resilient, and complete communities.

The construction of affordable housing, and therefore strong communities, depends on a critical suite of financial and regulatory tools. Their obscurity to the general public is putting them at risk.

In my home state of California, a critical source of $1 billion in affordable-housing subsidy vanished in 2011, when Governor Jerry Brown dissolved approximately 400 redevelopment agencies and absorbed their funds into the state’s general fund for other uses.

These redevelopment agencies had provided subsidies to stimulate economic development, guided by local needs and goals. The diversity of local ideas, coupled with an occasional willingness to experiment, resulted in a few controversial government-backed projects—including, most notoriously, a dive bar in the state capital. But most of the funds went to projects with clear public purposes, such as cleaning up hazardous waste sites and improving public transportation.

In San Francisco, some 50 percent of redevelopment agency funds went to subsidize the construction of affordable housing. This is a critical need in a city where, according to a February report by Redfin Research Center, not a single home or apartment listed for sale was affordable for a teacher earning the school district’s median salary of $59,700. Redevelopment-agency subsidies played a critical role in the construction of affordable housing, typically accounting for 20 to 30 percent of the layer-cake financing that enable such projects to proceed.

Governor Brown is now attacking inclusionary zoning, another crucial tool in building affordable housing. Inclusionary housing is typically a zoning requirement or city regulation that requires developers to either create a certain ratio of affordable housing units when building market-rate housing, or to pay an impact fee that is used to finance other affordable-housing projects.

Last year the California state assembly, at the urging of housing advocates, passed a bill to overturn a 2009 court decision (Palmer v. City of Los Angeles) that prohibited municipalities from placing inclusionary-housing requirements on new rental-housing development. Brown vetoed it. Such requirements “can exacerbate [the] challenges” of attracting development to low- and middle-income communities, he wrote, citing his experience as mayor of Oakland, “even while not meaningfully increasing the amount of affordable housing in a given community.”

This setback restricts the ability of municipalities, each of which faces unique challenges, to decide for themselves how best to promote affordable living. San Francisco’s inclusionary-zoning ordinance, for instance, is now increasingly precarious; the state Supreme Court is currently considering a challenge to a similar ordinance in nearby San Jose. And these challenges may have national implications; in public-policy terms there remains much truth in the adage that “as California goes, so goes the nation.”

The struggle to keep affordable housing viable everywhere will require more than lawyers fighting in the courtroom. It will depend on public support. And to build support for crucial affordable-housing regulatory and financial tools, we need to explain them better.

Above all else, the most powerful argument is that, in the housing market, we are all in this together.

Although at first blush the legal framework of inclusionary housing seems too complex to create a sound bite, it is actually a perfect introduction to the basic tenets of affordable housing. The idea behind inclusionary housing is simple: the construction of market-rate housing creates demand for affordable housing, because the existence of high-wage earners creates a demand for the services of people working in the moderate- and low-wage sectors of the economy.

Local municipalities therefore have a clear interest in meeting the needs of not only high-wage earners, but also those of moderate and low incomes. The existence of one group without the other is detrimental to both, and unlikely to be sustainable for long.

There is also evidence that economically integrated communities produce net economic benefits for all involved.

Researchers from Princeton University recently studied the effects of inclusionary housing on Mount Laurel, New Jersey—the birthplace of the concept. They found that low-income families who lived in economically integrated communities had children who did better in school, and had lower rates of welfare dependency, than those who lived in economically segregated communities.

Thus not only are we all in this together, but we do much better together.

This message has resonated in San Francisco—where the influx of technology-sector wealth into limited housing stock has made it a case study (and arguably a bellwether for other US cities) in the perils of gentrification. After losing upwards of $100 million in affordable-housing subsidy, voters here fought back. The city passed a charter amendment in 2012 to create the Housing Trust Fund, which will funnel up to $50 million in retiring bond payments to affordable-housing development annually.

This is but one example of a simple message that can rally support for affordable housing. Many of us in the affordable-housing industry are reluctant to toot our horn, but we must create a new vocabulary and imagery that appeal to the general public, so that the public will support our work. And that work is about more than serving low-wage earners. It is about creating affordable, thriving, diverse communities for the benefit of all.

Fay Darmawi C’88 is a 20-year veteran of the affordable housing industry in California.
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    1 Response

    1. Ian VanReepinghen

      Very nice essay on a very important topic. I was wondering you recommend a good source such as a website or book that provides an outsider with a good primer on the financing and regulatory tools used to build affordable housing.

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