Mayor’s memo: Affordable housing in Bloomington
When you think of economic development that leads to prosperous cities, you most likely think of major employers such as factories, corporate offices, universities or health care centers. While these are essential to job growth and economic health, it is important to mention an often-overlooked sector that provides substantial economic development benefits—affordable housing.
The term affordable housing can be defined several ways. A widely accepted definition, used by the U.S. Department of Housing and Urban Development (HUD) and other agencies, says housing is affordable when occupants spend no more than 30 percent of their annual income on it, including utility costs.
Affordable housing is an important component of all vibrant communities, and it’s more of an economic issue than a social issue. In August, the City Council adopted a Fair Housing Policy that aims to ensure fair and equal housing opportunities for everyone in City-funded housing units and developments regardless of race, color, religion, sex, sexual orientation, marital status, use of public assistance, creed, familial status, national origin or ability.
This policy is a step toward better access to affordable housing for everyone in Bloomington. Affordable, quality housing in the city is something residents say needs improvement. In the 2018 National Citizen Survey™, only 52 percent of respondents rated affordable, quality housing as excellent or good.
Affordable housing is good for area businesses as well as tenants and buyers. Construction of new affordable housing and programs that rehabilitate existing housing create jobs for architects, contractors and others in the construction trade. This also means more revenue for local businesses that supply building materials and related services.
Local governments also reap the benefit of increased income in the form of occupational license fees and net profits from the jobs and services being provided. Often, affordable housing is constructed on vacant, underutilized parcels because they are more cost-effective to develop. This increases the value of the property, which in turn means increased property taxes that flow to local and state governments and local school boards. This new or renovated affordable housing often increases the value of neighboring properties.
Recently, the rental market has become very competitive with more people competing for fewer apartments. This has spurred the interest of investors to purchase properties, remodel units and then lease them at a higher cost—a practice that could displace current residents. Balancing investment in these properties while limiting displacement of the existing residents is the goal.