The Local Playbook for Solving the Housing Crisis

Note: I love it when smart people stop by the porch to discuss the really important issues of the day. This week affordable housing expert Tom Coale dropped by to suggest ways that local governments could make a real difference in providing affordable housing. I hope you enjoy. Don Mohler

By Tom Coale

 

Local governments are not on the sidelines of the housing crisis—they are often the deciding factor in whether housing gets built at all. Federal programs like the Low-Income Housing Tax Credit (LIHTC) provide critical equity, but they do not close deals on their own. Local decisions around taxes, land, and gap financing are what determine whether a project actually moves forward. If jurisdictions want more housing—particularly affordable housing—they need to start using the tools already in front of them in a more consistent and predictable way.

The first is property taxes. For most multifamily developments, taxes are one of the largest operating expenses. Yet, many jurisdictions still treat tax relief for LIHTC projects as a negotiation rather than a policy. That creates unnecessary risk and delay. Developers have to guess what they might receive. Lenders price that uncertainty into the deal. Projects stall over issues that should be straightforward.

A better approach is simple: if a project is awarded LIHTC and is subject to long-term affordability restrictions, it receives a property tax exemption automatically. No negotiation. No delay. That kind of predictability makes deals easier to underwrite and faster to close. It also ensures that the public benefit—long-term affordability—is tied directly to the tax treatment.

The second issue is land. In many markets, land cost alone is enough to kill an otherwise viable project. At

 

the same time, local governments own a significant amount of underutilized property—parking lots, excess land around public facilities, obsolete sites that are no longer serving a clear purpose. Too often, those sites are either ignored or sold off without any long-term strategy. That is a missed opportunity. Local governments should take inventory of the land they already own and make a portion of it available for affordable housing through long-term ground leases at a nominal cost—$1 per year. That immediately reduces development costs without requiring an upfront subsidy. More importantly, it allows the jurisdiction to retain ownership of the land, which is one of the only ways to ensure long-term control over affordability.

This is not complicated, but it does require intention. The inventory needs to be public. The process needs to be clear. And the priority needs to be housing, not simply maximizing short-term revenue. Even with reduced land costs and predictable tax treatment, most affordable housing deals still do not fully pencil. There is almost always a gap. That is where local housing trust funds come in. Howard County’s Housing Opportunities Trust Fund is a good example of how this can work when it is taken seriously. The fund is designed to support both new construction and preservation, and it can be deployed flexibly—loans, grants, acquisition support, rehabilitation. That flexibility matters because the housing problem is not one-dimensional.

What matters more than structure, though, is commitment. A trust fund only works if it is funded at a level that actually moves projects. One-off allocations will not do it. Predictable, recurring funding will. When local governments treat housing as infrastructure—something that requires ongoing investment—the results follow.

 

The final piece is how to sustain that investment over time. One of the more practical approaches is a form of value capture—what is often referred to as a synthetic TIF. The concept is straightforward. When public action—rezoning, infrastructure investment, or both—drives an increase in property values, a portion of the resulting tax revenue is set aside for housing. This does not require creating a formal TIF district or issuing bonds. It is simply a policy decision to dedicate a share of new revenue to affordability. In growing jurisdictions, that revenue can be significant. More importantly, it aligns the system. Growth generates value, and that value is reinvested into housing so that the community remains accessible.

None of these ideas are new. The issue is not a lack of tools. It is a lack of consistency in how they are applied. If local governments want different outcomes, they need to remove uncertainty where they can, use the land they already control, fund housing at a meaningful level, and capture some of the value that growth is already creating. The jurisdictions that do this will not solve the housing crisis overnight. But they will start producing housing at a scale that actually makes a difference.

Tom Coale is a Maryland-based government relations attorney who works on land use, housing, and economic development issues at both the state and local level. He regularly represents real estate and housing stakeholders before the Maryland General Assembly and local governments across the state. tom@perryjacobson.com

Don Mohler is the former Baltimore County Executive and President and CEO of Mohler Communication Strategies. He may be reached at don@donmohler.com.(Photos generated by AI)