Funding Affordable Housing: Credits

Solutions To Other Problems

One of the great focuses of environmental justice and sustainable development over the last few decades has been helping companies internalize the costs they have historically allowed other people to pay. One example of this is carbon credits. This has become a popular way for companies like Google, Apple, and others to offset the impact of their operations which other people would otherwise have to pay.

A Pattern To Solve This Problem

I propose a similar instrument to allow companies to offset the impact their workforce has on housing. A housing credit would be an easy for for companies like Google, Apple, and others to purchase instruments from nonprofits to offset the impact they have on communities. Neighborhood Development Corporations exist to provide affordable housing in their communities. Selling housing credits to cities and corporations would be a simple and straightforward way to facilitate the housing that is so desperately required in our communities today.

The cost of housing credits should reflect the local price to create units, and it should scale with the relative cost of development. For example, building a single housing unit in San Francisco has a much higher unit cost than building a hundred or a thousand units. These economies of scale should be passed on to the buyer, and the locations where they are buying credits should accurately reflect the impact their workforce is having on existing communities.

San Francisco has half a billion dollars sitting in a fund allocated by a ballot measure intended to create housing for unhoused people in the city. The problem is that there is not a clear and obvious way for the city to use this money. If nonprofit institutions existed in various neighborhoods in the city and sold housing credits which funded the construction of affordable housing for impacted populations, then the city would have an easy and straightforward option for directing those funds to creating that much-needed affordable housing.

Creating housing credits and selling them to cities and companies would be a great way to fund the development of affordable housing.

The Future

In the long-term, this could form the basis for a strategy of seeking retroactive credits from organizations which have impacted housing inventories throughout history. For example, many companies are now carbon negative due to buying sufficient carbon credits to offset not only their current production but also their past production. Therefore this same strategy could be used to expand housing beyond solving merely the current crisis to also resolve past injustices.

It’s easy to see a future where cities include housing credits in impact analyses when approving development, thus requiring developers to account for their impact on the housing inventory of the communities surrounding their projects.