Policy, possibilities weighed for Delaware’s affordable housing problem
DOVER — Affordable housing needs to focus less on subsidies and more on policy reform, according to top state and county officials and employers at the Delaware State Chamber of Commerce’s “Developing Delaware” conference Thursday.
With millions of dollars from the American Rescue Plan Act (ARPA) funneled by the state and counties to build more projects and support other programs, and the pool about to dry out, Delaware’s government and business leaders are starting to consider how to make sure residents are not priced out of their homes – and attracting and keeping a young workforce.
“In my 30 years of public service, housing has been the most difficult because it’s really, really expensive,” Gov. John Carney said in his keynote speech at the event. “We have millions [of dollars] today, more than any time in the state’s history, to put to these resources, and a significant amount of that is going to programs that already exist today. Their tax credits are expiring. We have to invest more money just to stay with the number of units we have; that doesn’t include trying to add units in the future.”
The Developing Delaware conference is held once a year in the state’s capital intending to draw together scores of local, county and state officials and business leaders to inspire ideas on how to improve the state’s economy — and ancillary issues that impact it. Five years ago, the conference bore the “Ready in Six” initiative to get Delaware closer to shovel-ready development within six months. That project has been pushed by the Delaware Business Roundtable and seen some results, namely two bills signed into law that shorten parts of the state’s permitting process.
But this time, the call to action impacts a broader circle of Delawareans. The average home sale price was $450,993 in July 2023, per Bright MLS. The U.S. Census Bureau shows that Delaware’s population is growing, particularly with retirees, and that 71% of the housing units are owned by its owners. In 2022, the Delaware Department of Labor found that the mean salary in the state was $62,260.
Delaware State Housing Authority (DSHA) Director Eugene Young Jr., who is preparing the State Housing Needs Assessment, said that 60% of homes in the state are single-family detached houses, and in areas of Kent and Sussex counties, that rises to around 85%. Among the 57 incorporated areas and informal towns, a few of them have more than 10% affordable housing options.
“What’s been happening is for years, we’ve only produced one style of home: the single-family detached home. Our next largest number is luxury apartments, and there’s the missing middle: duplexes, triplexes and the quadruplexes,” he said. “You’re having a situation where when kids graduate from college, they have to come back home because it’s hard to find an apartment.”
Another big issue is the public pushback to multi-unit dwelling complexes, or a “not in my backyard” (NIMBY) school of thought. Kent County Administrator Ken Decker argued that regulation and zoning code has created more barriers to affordable housing — and sending public dollars to the private sector may not fix the housing crisis.
“Well, everyone wants a workforce and affordable housing. No one wants it next door and no one wants the value of their own home to be lowered,” Decker said. “But we in Kent County are optimistic. The first step is decluttering the zoning and land use regulations, because much like the United States tax code, the complex regulations benefit a narrow band of stakeholders at the expense of the economy.”
To that end, the Kent County Levy Court recently adopted its most recent change to the zoning code: making it possible for anyone who owns a home in the county could add accessory dwelling units on top of a garage or elsewhere on the property. Decker hopes that it will add thousands of new homes in the coming decades.
Tapping into existing programs to offer tax abatements, like the Downtown Development District, could also make developing affordable housing complexes more attractive. Leon N. Weiner & Associates [LNWA] Executive Vice President Sean Kelly said his firm has used that program for rent-restricted projects and luxury housing.
“We’d love to see it expanded or have inclusionary zoning for the DDD to set aside units for our needs and the workforce,” he said. “Outside the state, we’ve seen a lot of utilization of tax abatements to hold rents low in exchange for an agreement where an entity holds rents low for an extended period of program. In New Jersey, you must pursue a PILOT [payment in lieu of taxes] agreement if you want to move forward.”
LNWA operates rent-restricted housing in more than 10 states and Washington, D.C., with 6,800 apartments under management. Kelly noted that some states have long-term lease agreements with the government to make a project work; in Colorado a middle-income housing authority owns land and California’s joint power agreement shifts tax exemption to savings in a rent-restriction agreement for multi-family units.
“Affordable housing cannot compete for the market for the land. The market-rate developer is able to factor in future rent increases that have no regulation. In the work we do, we cannot pass the elevated land cost to our residents – so there is a gap there,” he said.
In New Castle County, successful initiatives include Vacant Spaces to Livable Places, which has created 700 affordable homes by selling and buying back properties at low costs; a $31 million affordable housing fund to sustain more than 1,000 units; and a Habitat for Humanity partnership that offers short-term rentals as low as $700.
In Sussex County, $1.5 million in ARPA funds were spent to rehab 117 homes; $1.9 million was allocated to the county’s Homebuyer Assistance Program; more public funds were spent on 196 units; and the Sussex County Rental Program is preparing for a new apartment project.
Sussex County may face some of the biggest challenges in terms of addressing its housing issue, as more and more seniors are moving to the area to be close to the beach. That’s also putting pressure on employers like Beebe Healthcare and TKo Hospitality as they struggle to find places to keep employees close.
“Studies show that commuting over 30 minutes impacts retention, as wear and tear on vehicles are all factors,” Beebe Healthcare Chief People Officer Ashley Foster said. “But a big one for us is making sure our patients are ready for surgery in less than 30 minutes, and it’s not just the nurses and physicians that assist. It’s the surgical techs, the sterile processing personnel, the pharmacy team, environmental services – and so many of those roles cannot afford to live in our immediate area.”
TKo Hospitality Human Resources Director Christine Lauser said it can be a struggle for the seasonal workforce, especially those who use the J-1 visa program. She estimates that their hotels lost $53,000 this past summer in looking to secure housing for those students to live in them at least 12 weeks of the year.
“We love the program, and it’s an educational opportunity for our students and our team members. But we have to re-establish how we will work with these students,” Lauser said. “I understand that the people who have second homes and rental properties only have a certain amount of time to make money. But on the same hand, we also have to look at people who live and work there all year long.”