Rental housing affordability has garnered a considerable amount of attention recently as a critical issue facing low-income Rochester residents. While the lack of affordable and safe housing is not a problem unique to Rochester, local organizing around these issues has begun to gain national coverage. This focus is certainly warranted – according to the American Community Survey, nearly 60% of rental households in the City of Rochester spend more than 30% of their income on housing (rent plus utilities), compared to only 25% of City homeowners. The federal government defines 30% as the benchmark of affordability, and households spending more than 30% are considered “rent burdened.”
The safety and quality of rental housing is also a significant concern. The City’s rental housing stock is aging and much of it is in disrepair. Several recent stories indicate that at least some landlords are failing to keep properties up to code. Since 71% of City children reside in rental housing, issues like lead paint, unsafe and unsanitary living conditions, and overall housing instability disproportionately affect children. Along with stricter enforcement of safe housing ordinances and additional renter protections, many housing activists have urged the City to prioritize the construction of new affordable housing for low income residents.
But what do we mean when we use the term “affordable?”
Conflicts over the redevelopment of Cobbs Hill Village and new housing downtown highlight the dispute over what it means for a property to be truly affordable in the City of Rochester. The City’s Charter currently defines low and moderate income individuals as those earning up to 120% of the Area Median Income (AMI), which includes the incomes of families in Monroe, Livingston, Ontario, Orleans, Wayne, and Yates counties.
It seems that there are three main problems associated with this affordability formulation. First, as many have pointed out, median incomes in the City are considerably lower than those in suburban Monroe County and elsewhere in the region. Second, HUD calculates AMI based on the median family income in a region, rather than the median household income. Families, which are defined as having 2 or more related individuals living together in a housing unit, have higher incomes than households. And yet, affordable housing is open to all households, not just families. Finally, it is simply the case that in Rochester, like most other cities, rental housing primarily exists for the lowest income members of the community. Rental households in this community make considerably less than home owners.
The chart below illustrates the gulf between the regional family median income and the income of City rental households.
Mayor Warren has proposed an amendment (see page 3) to the City Charter that would rewrite the City’s definition of affordable housing to match the US Department of Housing and Urban Development’s affordability criteria. This is a wise decision that should clarify the relative affordability of a proposed development. The City Newspaper had a nice article on this proposal.
Through this amendment, the City would create four different levels of affordable housing in Rochester. The levels, by household size, are listed below.
| Maximum Income by Household Size | ||||
|---|---|---|---|---|
| Affordable Housing Category | 1 Person | 2 People | 3 People | 4 People |
| 30% AMI | $17,570 | $20,080 | $22,590 | $25,100 |
| 50% AMI | $25,900 | $29,600 | $33,300 | $37,000 |
| 80% AMI | $41,440 | $47,360 | $53,280 | $59,200 |
| 120% AMI | $62,160 | $71,040 | $79,920 | $88,800 |
I used data from the 2012-16 American Community Survey to assign all of Rochester’s rental households to one of the City’s new affordability categories (plus market rate). To do so, I assumed a household size of 2 people, which is close the average household size of 2.29 in Rochester. I also had to estimate a higher level of granularity of renter income data then is available through the ACS Factfinder. Specifically, the Census Bureau shares rental household income in certain ranges (e.g. 9.7% of renter households make between $20,000 and $24,999). For the purposes of this exercise, I assumed an even distribution of that 9.7% across that $5,000 range. Therefore, for this model, 1.94% of households were assigned to each $1,000 increment between $20,000 and $25,000.
My analysis estimates that all but 9% of Rochester’s renters would qualify for some type of affordable housing. This serves as further evidence that there are simply not many affluent people who choose to rent in this community. Even more striking, nearly half (47%) of all rental households make less than 30% AMI, the “Extremely Low Income” tier.
Unfortunately, 30% AMI multi-family housing is the most difficult for developers to finance and build. If tenants can only pay a maximum of approximately $500 in rent and utilities each month, the developer needs other sources of revenue to cover the costs of building and managing the property (which are growing each year). This is typically done through some combination of tax-system subsidies like the Low Income Housing Tax Credit, PILOT agreements, and in some situations, the rents paid by market rate tenants. The latter option does not really apply to our region, as we do not have the kind of high end rental housing market one finds in places like New York City, Washington DC, and the Bay Area.
And while there are many different ways to cobble together funding to support the construction of more 30% AMI housing, the bottom line is that building more truly affordable housing for renters in Rochester will require a greater subsidy per unit built. This could limit the total amount of affordable housing built in the community.
What else can be done?
It seems important to note that Rochester’s challenge of affordable housing is quite different than the situation facing places like New York City and San Francisco. There, an influx of new residents and a growing economy have increased demand for housing, skyrocketing rental and home ownership prices. This has resulted in the displacement of long-time residents and has moved plenty of middle class households into the “rent burdened” category.
In Rochester, by contrast, rents and mortgages are not rapidly increasing, certainly not in the manner found elsewhere in the country. Instead, we have one of the highest poverty rates in the country. People in or near poverty have an extremely difficult time affording housing, just as they struggle to own cars, afford an education, or save money for unexpected expenses. Simply, Rochester’s housing affordability problem is caused by Rochester’s poverty problem.
An improving economy, better employment prospects, and higher household incomes for the poor would help to address this issue. So too would state and federal policies in support of things like an expansion in the Earned Income Tax Credit, a refundable child tax credit, and even something like a renters tax credit.
But those tax policies are largely outside our community’s control. Locally, we should continue to nurture approaches like the City Roots Community Land Trust, which aims to permanently ensure quality affordable housing through community owned and managed land. We should also tighten up inspections and oversight of landlords who have a history of not appropriately maintaining their properties, and aggressively pursue actions like placing neglected multi-family properties under receivership when warranted.
In terms of building new affordable housing that addresses the needs of Rochester’s renter community, we should consider establishing affordable housing construction goals proportionate to the City’s rental population income levels. If 52% of households that qualify for some kind of affordable housing (the percentage if one excludes the 9% market rate group) make less than 30% of AMI, then Rochester should strive, over a period of years, to ensure than roughly 50% of affordable housing constructed or redeveloped within the City targets that low-income category. The other 50% of new construction would be targeted for 50%, 80%, and 120% affordability levels. This would ensure that new affordable housing fits the community it is intended to serve.
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