New Database Identifies State-Level Approaches to Catalyze Housing Production at the Local Level

The Urban Institute and Terner Center for Housing Innovation released a report outlining a new framework for evaluating how states are regulating municipal action in regard to housing production. The report, “Incentivizing Housing Production: State Laws from across the Country to Encourage or Require Municipal Action,” analyzes over 140 “pro-housing” laws implemented at the state level throughout the country and categorizes the different approaches taken to advance housing production. The four regulatory tools identified by the authors are (1) requiring localities to adopt plans, (2) instituting state standards, (3) offering “carrots” to incentivize production, and (4) utilizing “sticks” as punitive measures when localities do not adhere to regulations.

To compile the database, the authors scanned existing research for mentions of legislation designed to increase housing production. They supplemented this with information found by using a legal search engine to identify legislation that was not cited in the literature they encountered. The resulting database identified 144 laws in 20 states, which the authors acknowledged is not a comprehensive list of all legislative attempts at promoting housing production. The authors then developed a typology to categorize each piece of legislation according to its overall purpose, the policy levers that describe the type of intervention, and “escape hatches,” which are exceptions built into legislation that apply to municipalities under specific conditions. 

The overall purpose of the law was broken down into two components: the functional goal and the target market segment. The functional goal referred to the intended outcomes of the legislation, which were categorized as one of the following: the general production of market-rate housing, supporting the development or preservation of affordable housing, advancing fair housing, and fostering environmental sustainability through planning and development. The market segment component related to the kind of housing promoted by the law – for example, emergency shelter, missing-middle developments, or accessory-dwelling units.

The authors identified four policy levers: plans, state standards, sticks, and carrots. Planning and state standards were the most popular. Approximately half of the identified laws required municipalities to plan for housing needs or expand existing planning requirements, while a similar number of laws created state standards that limited the control municipalities could exert over their land-use decisions, such as implementing parking minimum requirements. Roughly 30% of laws were characterized as using “carrots,” which offer rewards to municipalities for pro-housing actions through mechanisms like funding or the granting of flexibility in land-use policies. The least popular policy levers were the “sticks,” which refer to laws that penalize states for non-compliance with a regulation – for example, by imposing a fine or withholding funding.

The authors conclude by calling for the expansion of the database so that all efforts to advance pro-housing legislation are documented. Beyond documenting the legislation, they advocate for further research to understand what strategies are effective, and in which housing markets they are effective, so that policymakers can utilize the database to better identify model legislation and best practices.

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