Builders to Set Goal of 1 Million Urban Homes
In an unusual public-private partnership, Vice President Al Gore is expected to announce today a new agreement between the federal government, the nation’s mayors and the National Assn. of Home Builders to construct 1 million homes in cities over the next 10 years.
Under the agreement, the home builders will commit to construct 100,000 homes a year in urban centers, where homeownership rates lag behind the suburbs. The plan would commit the federal government and cities to removing regulatory and zoning barriers to home construction. It marks a major escalation of the Clinton administration’s efforts to encourage homeownership and a shift in focus for the building community itself.
“This is a much more sophisticated approach on the part of the home builders,” said one Gore aide. “They realize they don’t have to keep building further and further out [in the suburbs] to make money. They realize there is a market in existing communities.”
With interest rates low and employment high, the United States has been in the midst of a homeownership boom for several years. Now, two-thirds of homes are resident-owned--the highest level in American history, according to Census Bureau figures.
Homeownership has been rising rapidly for minorities and city residents as well--to the point where about half of urban homes are resident-owned, the highest level in 15 years, according to a study by the Department of Housing and Urban Development.
But city residents are still far less likely to own their own homes than suburbanites at the same income levels. And a recent Harvard University study found that cities accounted for only about 10% of all new single-family homes built in America in the most recent year for which data were available.
This initiative will attempt to change that pattern. Under the agreement, representatives from the federal government, the U.S. Conference of Mayors, the home builders association and nonprofit neighborhood groups will form a council intended to implement the pledge to construct 1 million homes. The vast majority are projected to be single-family houses, condominiums and townhomes, but some also may be rental apartments, administration sources said.
Harvard University’s Paul Grogan, former director of a national network of low-income housing providers, called the building initiative an encouraging sign that the private sector has caught on to positive trends in cities.
Grogan, who is vice president for government, community and public affairs at Harvard, noted that the signal has particular power coming from home builders--businesspeople with strong ties to suburbia who are not known for taking risks. “This is not charity,” Grogan said. “The lightbulb is going on for more and more people in the private sector.”
Within the next few months, the council resulting from the Clinton administration initiative is expected to designate five to 10 cities as sites for pilot programs to test models for increasing home construction. “We are not going to be doing 100,000 houses a year in the first year, but at the end of this process we are going be doing more than 100,000 a year,” said Charlie Ruma, president of the home builders association. “We are going to be setting the pace for the way this country goes in the future.”
Administration officials said there are no indications yet which cities would be designated for the pilot projects.
Under the agreement, the administration is not committing any specific new resources to the program but will provide staff support to steer local partnerships toward existing federal funds that support homeownership--such as the $1.6 billion HOME program that subsidizes construction for moderate-income families. In addition, administration officials noted, Clinton has requested $50 million in his new budget for a program that cities can use to replace abandoned buildings with new housing.
Mayors will commit to work with home builders to peel away regulatory and zoning obstacles to inner-city construction, which many home builders complain are at times virtually insurmountable. “It is probably the hardest zoning ever,” Ruma said.
Administration officials said that several details remain to be worked out, such as whether a fixed percentage of the housing would be designated for low- or moderate-income families.
Times staff writer Melissa Healy contributed to this story.
