Indiana housing providers, financers and consumer advocates on Thursday outlined the scope of the state’s affordable housing shortage and proposed solutions to specific challenges.
But they also sought to balance potential state action with builder budgets, resident pocketbooks, local government control, and unintended consequences.
“This particular issue is the foundation of all our communities, and it’s what’s going to shape Indiana moving forward, as we enjoy our unprecedented growth and our unprecedented draw for jobs,” said Housing Task Force Chairman Doug Miller, R-Elkhart, at the group’s first meeting.
“Affordable homes are no longer affordable,” Miller added.
The task force is one of Indiana’s interim legislative committees, and will meet two more times before delivering recommendations for legislation next session to other lawmakers.
What’s wrong?
Indiana lacks financially and physically accessible housing, government, industry and consumer groups said.
“We have a group of potential homeowners that can’t get a loan,” said Thomas Dinwiddie, representing the Indiana Bankers Association. “It’s not because there’s not mortgage money available. It’s because they can’t find a house that’s affordable. And that’s a real shame.”
For renters, the affordable housing gap is “huge,” said Indiana Housing and Community Development Authority Executive Director Jacob Sipe: nearly 420,000 units short for Hoosier households earning less than $50,000 annually.
And even the state’s existing — aging — housing stock can’t serve all its residents, particularly those who are disabled, Sipe and Indiana Association of Realtors CEO Mark Fisher noted.
Protecting tenants — and owners
That inventory pressure can have negative, even deadly impacts.
“When the stock of affordable and available housing is so low, Hoosier renters have to have to make do with inadequate or inhabitable housing,” said Derris Ross, representing the Hoosier Housing Needs Coalition.
He recounted the story of a mother living with her child in a unit with black mold. When the child fell ill from the mold and wasn’t allowed at daycare, the mother took the week off work to become a caretaker — and lost her job, Ross said. She was eventually evicted from the apartment and caught a fatal case of Covid-19 upon doing so.
“I must re-emphasize that housing is healthcare,” Ross said. He went on to ask the task force to consider solutions, like stronger tenant protections, tailored to low-income, racially diverse, renting families with children.
Sen. Fady Qaddoura, D-Indianapolis also focused on tenant protections with regards to habitability, referencing an infamous New Jersey-based nonprofit landlord facing lawsuits and ownership changes over its affordable housing in Indianapolis.
“I’m very concerned because, if we on one hand, build 420,000 rental units to help those who are below the $50,000 median income, and on the other hand, we have 10s of 1,000s of units that are inhabitable because of negligence, then we are shooting ourselves in the foot,” he said.
But the Realtors’ Fisher said his group didn’t support restrictions on out-of-town investors, and emphasized he wanted to “do no harm” to the state’s current property tax climate, assessments and more while on the hunt for housing-friendly solutions.
Finding balance
Among the task force’s mandates: to consider state laws that impact local housing regulations, as well as zoning and land use restrictions, which are also largely local.
Housing providers, including the Indiana Builders Association, Habitat for Humanity of Indiana and the Indiana Apartment Association, said government regulations represent a significant portion of costs: from about 25% on single-family projects to nearly 45% on multi-family ones.
Builders President Paul Schwinghammer and Habitat Indiana State Director Gina Leckron said local requirements on details like number of windows, garage capacity, exterior treatments, minimum square footages, lot sizes, impact fees and more can add thousands to build costs.
An electric vehicle charger requirement, Schwinghammer said, is “just one example of some of the things that that come across our desk, all the time, of government trying to get their hands in. They’re telling us what we have to put into the houses, which ultimately, all that does is we pass it, we have to pass it on to the buyer, right?”
“They don’t call us a nonprofit for nothing,” Leckron said. “So we’re not making a profit. We’re absorbing those costs. And this math problem is not tenable.”
But advocates for local governments and homeowners bristled at the idea of statewide mandates.
“I don’t think we should be getting into huge standards across the state for all communities when it comes to zoning, when there’s a lot of different needs and issues out there,” said Goshen Mayor Jeremy Stutsman, representing Accelerate Indiana Municipalities.
“I’m a local control type of guy,” Qaddoura said, before asking, “How can you preserve the authority that we give to local folks versus address the policy concern that homes are becoming unaffordable because of these requirements?”
Problem, meet solutions?
Several task force participants converged on the concept of a revolving loan fund, a self-replenishing development model that would use payments on old loans to issue new ones.
Sipe proposed helping local communities establish their own revolving loan funds, challenging listeners to consider “investing into housing, so that we don’t just create one unit and say that we’re happy or we were successful.”
Schwinghammer suggested a state revolving loan fund of about $100 million to offset infrastructure costs, along with five-year residency requirements or similar to prevent abuse by investors.
Leckron also expressed interested in infrastructure cost help, as well as new state incentives on giving. She said the federal government’s 2017 overhaul of the income tax disincentivized donations from middle-income people, who she called Habitat’s “bread and butter.”
To help ease labor costs long-term, Schwinghammer said he was readying a proposal for next session intended to “fuel interest in the technical trades for middle school and high school students.”
There’s plenty left to consider.
“Housing isn’t just the units, it is a community,” Sipe said. “We also need to be mindful of how we develop those units and where we develop those units so that we put people into places in which they can be successful and support our communities.”
The thirteen-member task force includes four lawmakers, plus representatives for IHCDA, the Apartment Association, Accelerate Indiana Municipalities, the Builders, the Bankers, the Realtors, Habitat, the Hoosier Housing Needs Coalition and the Indiana Manufactured Housing Association.