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The availability and access to affordable housing is a critical component to the long term viability of Delaware’s communities. The ability of families to obtain an affordable home in proximity to their employment has direct implications for land use, transportation and growth management planning. In addition the availability of an "affordable" workforce is vital for the competitiveness of the state’s major industries. Considering these dynamics, the adequate supply and equal distribution of affordable housing should be incorporated as an essential element for a minimum quality of life and should be considered a minimum component of the state’s "infrastructure".

While the lack of affordable housing is not a new phenomenon in Delaware, the recent large increases in entry-level service employment has exacerbated the problem throughout the state. The typical entry level salary places most employees at 50% or less of the area median income. The result of the recent job growth at this level has increased demand for ownership and rental housing opportunities that are affordable to households earning 80% of the area median income and below; and at the same time extended the affordability gap for very low income households.

The Delaware Housing Coalition is offering the following comments on the alternatives approved at the session held on April 14, 1997 and additional program elements for inclusion in the Study Committee’s final report.

Economic Incentives

State Tax Credits

The establishment of a state tax credit is highly desirable since it would represent a new and reliable source of financing and would increase a developer’s ability to attract private investment in affordable housing. The disadvantages of a state tax credit are the inefficiency, i.e., a $1 tax credit generates approximately $.65 of investment, and the limitation that potential investors must have Delaware tax liability. For these reasons, a preferred financing approach for increasing the production of affordable housing would be direct subsidies for acquisition, rehabilitation and construction; combined with incentives that reduce the cost of development such as the following:

• Waiver of State Improvement Tax
• Waiver of State Transfer Tax
• Limits on Local Government Fees such as building permits

Local Government Land Development Regulations
We strongly support a provision that would require that local government land development regulations require the inclusion of low income housing in all residential developments involving more than a specified number of dwelling units or acres of land.

An inclusionary zoning requirement goes far towards creating mixed-income communities while ensuring the production of affordable units, a variety of unit types and a more diverse distribution of low income residents. To provide a degree of flexibility this element could also incorporate an in-lieu fee concept that would allow developers to elect to make a pro rata contribution into an affordable housing trust fund instead of providing the requisite number of units.

We also support a provision providing that the permitted density in all zoning districts which permit residential density will be increased as a matter of right up to at least 30% of the density otherwise permitted to allow for low income housing. This provision should include a requirement that any "bonus" units approved are affordable to low income households.

In contrast to the above zoning practices that would serve to stimulate the production of low income units; Delaware is lacking a prohibition on zoning practices such as minimum lot sizes or unit sizes that effectively preclude low income developments or low income units, and a prohibition on land use practices that have the effect of relegating low income developments to specific neighborhoods. We are recommending the addition of a program element that overrules local government practices that effectively prohibit low income units.

An additional program element is the incorporation of language in the zoning code that provides regulatory relief for affordable housing. Examples of this relief could include flexibility in zoning dimension requirements such as lot coverage, setbacks and building height, and allowance for accessory apartments with an owner occupancy provision. This element could also incorporate procedural and substantive incentives for affordable housing similar to the language proposed under Issue 4, Alternative 3 to promote infill development and redevelopment of vacant or underutilized properties.

Public Financing Support
As mentioned above, any form of direct financial assistance is the most effective tool for generating low income units. We would propose that any new forms of public support be funded by a dedicated revenue source or endowment to the extent possible.

Definitions
We are recommending that all of the affordable housing program elements include a definition of low income housing. This definition should stipulate that low income housing is rental or ownership units that are affordable to households earning 80% or less of the area median income, adjusted for family size. To be classified as an affordable unit, the monthly rent or mortgage payment plus utilities should not exceed 30% of the household’s monthly income.

David Holden is a member of the board of directors of the Delaware Housing Coalition.