May 29, 2009

HUD and DOT Forming Joint Task Force to Promote Sustainable Communities
Group will coordinate housing affordability with transportation costs

by Sara Fernández Cendón

Summary: In March 2009, the Department of Housing and Urban Development (HUD) and the U.S. Department of Transportation (DOT) announced an interagency partnership aimed at helping American families gain access to affordable housing, more transportation options, and lower transportation costs. As supporters of sustainable development await congressional action on funding for the initiative, details of the proposed collaboration, though still scarce, promise a new era of federal incentives for smart, local problem solving.

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A strong sense of momentum
HUD and DOT have made attempts to coordinate their efforts before. Recent examples include discussions, held back in 2003, to share data and develop joint geographic information systems. In 2005 HUD and DOT’s Federal Transit Administration (FTA) created an interagency agreement to help communities develop transit-oriented housing. The agreement led to a study, published in 2007, “Realizing the Potential: Expanding Housing Opportunities Near Transit.” The study included recommendations for improved coordination between FTA and HUD. In 2008, FTA and HUD released a follow-up report, “Better Coordination of Transportation and Housing Programs to Promote Affordable Housing Near Transit,” which outlined strategies to coordinate efforts in the area of mixed-income and affordable housing near transit between FY 2008 and 2010.

Clearly, the recently announced HUD-DOT partnership builds on previous efforts. Perhaps more importantly, the idea of more efficient collaboration is likely to reap the benefits of a rekindled interest in sustainability coupled with infrastructure investment.

“This had been in the works for some time, but the change in administration brought about a renewed focus on livable communities,” says David Matsuda, acting assistant secretary for transportation policy with DOT.

This renewed focus has manifested itself in a variety of ways. First, through the American Recovery and Reinvestment Act of 2009 (ARRA, also known as the “stimulus package”), DOT received $48.1 billion for transportation infrastructure, including public transit and passenger rail in addition to ports, roads, and bridges. ARRA funds for transportation include $8 billion for high-speed rail and rail programs within cities, and President Obama has proposed to budget $1 billion in each of the next five years to ensure continued funding for high-speed rail.

HUD, too, received $13.6 billion in ARRA funds, $1 billion of which was allocated to Community Development Block Grants (CDBG), with a particular emphasis on infrastructure activities.

In addition to funds received through the stimulus package, the HUD FY2010 budget has requested $47.5 billion (a 10.8 percent increase over the previous year) to respond to the housing crisis and alleviate poverty, but also to align its work with a broader national agenda focused on energy, sustainable growth, and community revitalization.

More specifically, the HUD budget is requesting $4.5 billion for the CDBG program, with $150 million of those funds to be devoted to the Sustainable Communities Initiative, which is the main funding instrument through which HUD plans to coordinate its work with DOT.

Beyond funding, calls for sustainable infrastructure planning and development have been issued by many professional organizations, including the AIA. The AIA’s 2009 legislative agenda, Rebuild and Renew, urges Congress to support well-planned transportation and community design as a way to enhance the economic development, sustainability, safety, and livability of neighborhoods adjacent to new transportation projects.

The problem
Surprising as it might seem to the uninitiated, federal program administrators dealing with housing and transportation don’t often talk to one another. Integration, to whatever extent it happens, takes place on the local level. But so far federal investments have not provided incentives for smart problem-solving.

The announced partnership between HUD and DOT (as well as HUD’s Sustainable Communities Initiative) promises to help facilitate integrated regional housing, transportation, and land use planning and investment, so it has been generally well received. The stated goals are to maximize choices for affordable housing near transportation and employment opportunities, lower transportation costs, save energy, and improve quality of life.

“APA is delighted and excited,” says Jason Jordan, policy director for the American Planning Association. “This is long overdue, and there is a lot of potential for making fairly dramatic change. Of course, the devil is in the details, and we haven’t seen much of that. But this is noteworthy just for the fact that this is a demonstration of the commitment of this administration to sustainable planning.”

Though many details of the proposed collaboration have yet to be worked out, several areas are starting to emerge as central to the joint effort.

The solutions
First is the idea of harmonizing work between the departments. HUD and DOT have separate requirements to grant funds to communities. On one hand, HUD requires that cities and counties prepare consolidated plans on a five-year basis and an annual action plan in order to receive block grant assistance. These plans do not take land use or transportation into account. On the other hand, DOT requires states and metropolitan planning organizations (MPOs) to develop 20-year long-range transportation plans and a four-year transportation improvement program (TIP). These plans usually don’t take housing and land use patterns into account.

Greater collaboration between the departments might resolve some of this fragmentation by allowing MPOs and recipients of HUD block grant assistance to present joint applications for funding. Proposals seeking federal transportation or housing funds would then reflect a broader vision for growth, and investments would be made in an integrated way.

Another key point is the idea of redefining measures such as “affordability” and “livability.” Scott Bernstein, president and co-founder of the Center for Neighborhood Technology, a Chicago-based “think-and-do” tank focused on urban sustainability, is one of many experts calling for inclusion of transportation costs in affordability indexes.

“Every day in America, affordability indexes are calculated by the millions,” he says. “An amazing array of activities are driven by this kind of indexing.”

The apparent problem is that affordability indexes don’t normally include the soaring costs associated with transportation to and from different locations. Bernstein oversimplifies a bit when he says many of these calculations are still performed based on old, reductive formulas. “A week's wage for a month's rent,” he says to illustrate the simplicity and inadequacy of the old approach.

Bernstein says subsidies and tax credits often support low-income housing development in locations where transportation expenses actually end up driving the cost up, not down, for low-income residents. This, he says, adds risk to the marketplace as it increases the odds that people might not be able to afford mortgage payments.

The HUD-DOT partnership, then, seems headed in the right direction in its goal to redefine affordability by developing measures that include both housing and transportation costs associated with specific locations. As an example of the kind of productive experimentation that a new affordability index might support, Bernstein cites location-efficient mortgages, which calculate the value of transportation-cost savings as the equivalent of increased income.

Finally the new partnership also seeks to conduct research, data collection, and outreach. HUD’s Sustainable Communities Initiative includes a proposed allocation of $10 million to fund the joint research and evaluation effort in order to assess the effectiveness of federal investments on one hand and inform private investment and consumer decisions on the other. The idea is to create broader, more accurate measures of affordability and establish performance measures, identify best practices in transit-oriented development, and evaluate instruments such as the location efficient mortgages mentioned above.

A matter of time, and funding
The Sustainable Communities Initiative is, as of yet, unfunded. As the proposal goes through the budget approval process this summer, hopeful eyes are also turning to Congress for the reauthorization of the surface transportation act, currently the Safe Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which is set to expire in September of this year.

The bill provides long-term funding for transportation programs, and advocates for sustainable planning hope it will create incentives to locate affordable housing near public transportation, connect existing housing to transit, and facilitate alternative modes of transportation, including walking.

The AIA, too, through Rebuild and Renew, calls on members of Congress to support community-based planning in the upcoming reauthorization of SAFETEA-LU to help enhance the quality of life, reduce congestion, and provide long-term economic and environmental benefits.

Waiting for congressional action on various fronts, supporters of the partnership think tangible measures could be seen as early as this fall.

“Coordination by itself won't solve every problem,” CNT’s Bernstein says. “But if we find good examples where coordination has worked, we should be able to find ways to break down barriers. The practical applications and the urgency are both pretty near-term.”


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