Siding with industry yet again, lawmakers reject affordable housing measures

Siding with industry yet again, lawmakers reject affordable housing measures
Las Vegas. Photo by Dani Molina on Unsplash

By Michael Lyle, Nevada Current
This story was originally published by Nevada Current.

CARSON CITY–Lawmakers know full well about how Nevada ranks worst in the nation for affordable housing, leaving an estimated 44% of the residents who rent at risk of housing instability and homelessness. 

Yet some affordable housing advocates and social service providers can’t help but marvel at how legislators still seem more beholden to people who make money from houses than people who live in them.  

Two recent proposals, Assembly Bill 331 and Assembly Bill 334, would have enabled local governments, if they chose, to collect fees from developers to aid in the creation of affordable housing. 

Developers lobbied lawmakers not to consider the proposals and both bills died three days after receiving one committee hearing without a single vote.

It’s the second session in a row, organizers noted, that lawmakers have declined bills related to the creation of affordable housing at the behest of developers. 

J.D. Klippenstein. Image: This Is Reno

“This is a lesson in power,” said J.D. Klippenstein, the state director of Faith in Action.  “Community organizations and impacted residents have to take a long, hard look and realize we are 0 and 2 when it comes to taking on the paradigm of how housing is zoned and built in our communities. We’ve tried two sessions in a row to create more tools and opportunities for locally driven decisions with more community input. A very, very powerful industry that uses their money to influence elections and legislation has won two times.”  

Assembly Bill 334, introduced by Assemblywoman Shondra Summers-Armstrong, would have allowed, not mandated, local governments to collect fees in lieu of inclusionary zoning requiring builders to include a portion of affordable housing when creating development, or fees linking market-rate housing to the production of affordable housing.

The fees would have been deposited into a trust fund for projects that create affordable housing. 

Assembly Bill 331, sponsored by Assemblywoman Elaine Marzola, would have enabled local governments to incorporate the two options from AB 334 into their affordable housing plans.

The proposal would have also allowed the Nevada Housing Division to reward tangible commitments local jurisdictions have made when allocating funds the division administers from the Account for Affordable Housing. 

By the standards of affordable housing policy, both measures were what could be considered modest.

And during the hearing on AB334 April 6, Summers-Armstrong said both ideas were a nonstarter for developers.

“We have spent hours talking to the industries about this issue, and no one has brought any type of solution. The only reply we’ve gotten is ‘no,’” she said. “What are we supposed to do with that? We have a housing crisis right now. We have to come up with something to help a problem that’s going to be a tsunami in two years. ‘No’ is just not a solution.”

She stressed the bills weren’t mandatory but only provided enabling language for local governments to collect fees that could be used to fill gaps in financing affordable housing. 

“Development costs our communities already,” she said. “When a developer puts in 500 homes in a beautiful, lovely designed community, those developments are already influencing us as taxpayers. We are providing infrastructure, roads, streets, off ramps, lights. Even people who cannot afford to live there are still contributing to access to those communities. There is a price for everything. There is a price for homelessness. There is a price for houselessness. There is a price for inadequate housing. There is a price that trickles down in this entire situation. At some point, we have to recognize we have to deal with it.” 

Neither bill got a vote before the legislative deadline to pass out of committee.  

Christine Hess, the executive director for the Nevada Housing Coalition, a group that consists of non-profit organizations, social service providers, businesses and banks, worked on both bills, and said the proposals were part of a comprehensive approach to address the state’s housing crisis.

“Nevadans don’t have more time,” she said. “They are in crisis. Enabling these tools at this time was to get this conversation started, so it’s disappointing that the bills didn’t move forward now to start the conversation in a meaningful way. But the coalition isn’t going to drop the conversation.”

Klippenstein added “it was frustrating to see good bills” not even get a vote and said that developers “went out of their way to kill” those policies.

“They are very powerful voices in the legislature and it’s very easy to spook legislators,” he said.

‘Not a core priority’

Nevada has a deficit of 105,575 affordable units, lawmakers were told during the committee meeting. 

The state doesn’t have the ability to climb out of its current hole.

The 2020 Annual Housing Progress Report showed that in 2019 there were 28,458 affordable housing units across the state. The next year, it only increased to 29,074. 

“Our affordable housing production has been flat if you look at our net inventory,” Hess said. “When are we going to tackle this? The current tools we have, the current progress we are making is not enough.”

But building housing, especially affordable units, comes with numerous obstacles, including land-use restrictions, pushback from neighbors and the high costs of land and lumber.

There are tools localities can use when developing housing, Hess said. 

“If you think about the tools available to our local government right now, they can donate land for a project… they can waive or reduce fees and reduce taxes” for developers, she said. 

Most of these options, she added, either cost local governments little or are “cost neutral.”

Furthermore, private developers aren’t building affordable housing on their own.

“We have never, ever, ever built affordable housing or maintained enough housing that’s affordable for extremely low-income renters,” Klippenstein said. “Supply and demand has never and will never change that, because there is no profit in building those without the right tax incentives or subsidies. The market will not build that housing ever unless there are incentive requirements or some type of policy that forces them or greatly incentivizes or enables them to build that kind of housing. ” 

For several sessions, lawmakers have weighed options to enable local governments to address the housing crisis. 

One of the more contentious suggestions that received pushback from developers and realtors is inclusionary zoning, which mandates a certain amount of construction from developers be designated to affordable housing for low- and moderate-income renters. 

When looking at the crisis in 2019, lawmakers proposed that along with several other bills:

  • Senate Bill 448, which provides $10 million annually in transferable tax credits for developers to build low-income and affordable housing.
  • Senate Bill 103 allows municipalities to reduce or subsidize certain fees, such as sewage fees, in order to aid developers.
  • Senate Bill 398, which enabled language that allowed — not mandated — counties and city governments to consider policies like inclusionary zoning or rent control as a response to the housing crisis.

Only SB 103, which was praised by the housing industry and chambers of commerce, passed —  unanimously by the Senate, and overwhelmingly in the Assembly, 36-4.

SB 398, which was ridiculed by the industry, made Republican lawmakers “uncomfortable,” but it was Democrats who quietly killed the legislation on the Assembly floor without a vote or an explanation for its death.

“I think it’s really clear that when it comes to housing justice that is not a core part of either of the parties’ agenda, the Democratic Party or the Republican Party,” Klippenstein said. “I’ve seen some openings and some legislators be bold and forward thinking. The fact we are having some of these conversations is an improvement. But neither party, not the majority or the minority party, has prioritized housing justice. Individual legislators are.” 

‘At every turn there is always pushback’

Developers and realtors have fiercely opposed any legislation that suggests inclusionary zoning or in lieu of fees.

Nevada Housing Now, which was created by developers, lobbied lawmakers to kill two affordable housing proposals.

Prior to the hearings on the proposals, developers plastered social media with ads asking Assembly Speaker Jason Frierson to kill the legislation and suggested the bills would drive up the cost for affordable housing. 

Speaking in opposition of the two bills, the Southern Nevada Home Builders Association told lawmakers “the home building industry cannot bear full responsibility on its own, but rather Nevada needs to work together on creating solutions as a community to solve this community-wide need.” 

Matt Walker, a lobbyist with the association, said the bills are “fundamentally flawed.”  

“As long as local governments have large swaths of the valley designated for one or two homes per acre, as long as local governments in support of this bill are advertising on their websites they have the lowest property tax rate in the region, as long as parking minimums and building height maximums are the norm, I don’t think it’s fair to say local governments have used the existing tools in their toolbox at the level that when necessitate policies such as the ones proposed in this bill,” he said.

Each of the local government policies Walker identified have been supported by the housing industry, which has traditionally wielded an outsized influence on local government.

Klippenstein said the industry’s arguments aren’t new and added the “status quo” isn’t working. 

“We have this idea, for some reason, if given no regulation, if builders can build wherever they want, they would suddenly build housing and they would then charge substantially less for rent,” he said.

He points to Washoe County, which he said has a 25,000 unit shortage for low-income renters, as an example for how the current structure is not working.

Klippenstein said a lot of the rhetoric used by developers provides cover for lawmakers, who echoed the industry’s concerns that AB 331 and AB 334 would stifle developers’ ability to build affordable housing and have an adverse effect on what was trying to be accomplished. 

Not all lawmakers, though.

“At every turn there is always pushback, understandably, about any type of impact fee for their business,” Summers-Armstrong said. “We understand that.”

However, she added, “I think we also have to be realistic about the benefits of businesses coming to Nevada …. We have a lot to offer. We have no income tax. Our tax structure is very attractive to businesses. We have a reason for them to come here, which is why they do. They come here in droves. This is not going to make our environment so hostile that they are not going to want to come here.”

Developers and companies that set up shop in Nevada bring benefits to the community, but they also bring consequences, Summers-Armstrong said. 

“One of the consequences is that they bring workers and often those workers don’t make a housing wage,” she said. “What do we do? Do we ignore that we have people who can’t afford housing?”

Some lawmakers argued developers voluntarily donate money to build firehouses or donate land for schools or nonprofits, and making them pay fees to develop affordable housing would stop those donations. 

“I believe we’re at a place when it comes to housing that I would imagine many direct-services providers would be like, ‘if we don’t get that donation but they’re contributing to address housing concerns, that’s actually more beneficial for us and for the people we serve in the long run,’” Klippenstein said. “Donating charitably here and there doesn’t address the systemic problem within our state.”

Housing groups are still hoping remaining legislation, including proposals to preserve existing affordable units and offer tenant protections, will help contain the crisis and bring some protections for renters.

But no one thinks those measures will be enough. 

“The preservation tool is huge, but it doesn’t bring resources,” Hess said. “It doesn’t bring financial resources. While we can take action, we still need financial resources.”