Filling the Gap
There is a desperate need for affordable housing in Lafayette, but first we have to get over the misconceptions about what that means.
Typically when people hear "affordable housing" they instantly conjure up images of poorly maintained and crime-ridden areas that should be located as far away as possible. They envision affordable housing as a magnet for the homeless and the indigent. But what most people don't understand is that the need for affordable housing right here in Lafayette is significant and should not only be addressed, but should be supported by leaders in our community. Also referred to as Workforce Housing, this housing is critical for the hundreds and thousands of working, tax-paying individuals who work here but can't afford to live here.
The general guideline is that housing costs should not exceed 30 percent of a household's gross income. According to the U.S. Department of Housing and Urban Development, "Families [and individuals] who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care." Remaining within the recommended 30 percent becomes challenging as a person's income level decreases.
To diminish this challenge, HUD has developed various affordable housing programs for low-income individuals and families. So what constitutes low income? HUD has defined low income as those families and individuals earning less than 80 percent of the average median income. The formula is calculated on a four-person household, with numbers being adjusted as the household contracts or expands. HUD goes on to further quantify the varying levels of affordability by: low (80 percent AMI); moderately low (60 percent AMI); very low (50 percent AMI); and extremely low (30 percent AMI). Federal dollars are generally provided for those developments serving a population at 60 percent AMI or below.
In real numbers that means the 2009 median income for Lafayette Parish was $57,500, placing the moderately low (60 percent) income limit for a four-person household at $34,500. As the size of the household decreases, so does the income limit. A one-person household, at 60 percent AMI, has an income limit of $24,180.
In practical terms, based on the information provided, someone making $24,000 per year should be paying about $600 a month for rent and utilities. On average, a one-bedroom/one-bathroom apartment in Lafayette rents for $630/month - exclusive of utilities. As the household size increases, so does the discrepancy in financial means versus asking rents. It's obvious there is a shortage of adequate, affordable housing within our own community. The Louisiana Housing Finance Authority estimates that Lafayette will be in need of 2,977 affordable rental units between 2008 and 2013 to meet the existing/projected demand.
Understand we are not merely talking about minimum wage earners; we are talking about firefighters, substance abuse counselors, bank tellers, retail personnel, police officers, court reporters, community and social service specialists, food services personnel. These individuals - this critical workforce - maintain full-time employment, pay taxes, and continuously support our local community through the on-going purchase of goods and services.
There's this huge misconception that affordable housing and public housing are interchangeable, and they're not. People need to understand there will always be a need for public housing, but beyond that we are faced with a much larger and farther-reaching challenge. For working families and individuals, there still exists a huge gap between wages/earnings and market rents.
The reality is communities need affordable housing in order to survive. Aside from providing safe and affordable housing to those who need it, affordable housing provides tangible benefits to the local community both in social outcomes and economic outcomes. Families and individuals that benefit from affordable housing tend to be:
- more financially stable
- less transient, becoming emotionally vested in the community
- involved in, and supportive of, the local economy
- committed to the local labor force
It's been shown that children who are afforded stabile housing tend to miss less school and perform better on standardized testing. Aside from the substantial social benefits affordable housing produces, it also provides economic and fiscal benefits to the community. The construction and development of housing generates income, wages, and local taxes through permits, utility connection and impact fees.
The individuals we're talking about aren't faceless people looking for a handout. They are hard-working people - the bus driver who takes your kids to school or the firefighter who shows up when you've been in an accident. By supporting affordable housing, we provide these neighbors with the opportunity to excel personally and professionally, and in doing so further increase the return on our investment - in our people and in our community.
Greg Gachassin is president of Lafayette-based The Cartesian Company, a real estate development and finance solutions company. He has 17 years of finance and real estate management experience.