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Over the last several years, California’s state housing agencies have adopted policies encouraging family-serving affordable housing to be developed in higher resource neighborhoods whose characteristics are associated with positive long-term outcomes for children. These “opportunity area incentives” are one of several key strategies for advancing a holistic “both/and” approach to addressing residential segregation and fostering inclusive communities, in accordance with State and federal Affirmatively Furthering Fair Housing (AFFH) requirements.
Early analyses from both the Department of Housing and Community Development (HCD) and academic researchers have found that these incentives have led to meaningful, if modest, increases in the annual share of affordable housing located in higher resource neighborhoods, statewide, when compared to the preceding period. However, prior analyses have not assessed where within the state these shifts have happened, or the degree to which opportunity area incentives may have resulted in more suburban growth away from transit and in areas subject to wildfire risks, placing the State’s equity and climate goals in conflict.
Here, we share findings from an exploratory analysis into regional and environmental dynamics of the State’s opportunity-area incentives, based on an assessment of the siting patterns of family-serving affordable housing awarded 4% and 9% Low-Income Housing Tax Credits (LIHTCs) in pre- and post-incentive periods relative to the State’s opportunity map.[1] Highlights and discussion are provided below, and detailed quantitative results are provided in an appendix here.
Uneven amounts of change across regions
Statewide, the share of family-serving affordable homes created in higher resource neighborhoods increased following the introduction of opportunity area incentives.[2] Through 2022, this share increased from 17% to 27% in developments awarded 9% LIHTCs and from 7% to 51% of developments awarded 4% LIHTCs.[3] However, we find that these overall trends mask considerable variation across regions.
For example, the share of affordable homes in family-serving developments in higher resource areas increased substantially in San Diego County, from 0% to 43% in developments awarded 9% LIHTCs, and from 27% to 50% in developments awarded 4% LIHTCs. By contrast, the higher resource share of homes in developments awarded 9% LIHTCs in the Inland Empire and Orange County regions did not increase, and Orange County even saw a modest decline. Similarly, there was no change in the higher resource share of homes developments awarded 4% LIHTCs in the Orange County and Los Angeles regions; this share was zero percent in both the pre- and post-incentive periods.
A policy brief the Partnership published in 2021 detailed how family-serving affordable homes are underrepresented in higher resource neighborhoods in every region of California. If the State’s goal is to achieve equitable siting patterns within each metropolitan area, it should continue to track progress at a regional level and implement changes, if needed, to prevent some regions from falling behind.
Modest suburbanization across the board
Higher resource neighborhoods are more likely to be suburban [4] than lower resource areas [5] (71% vs. 45% in non-rural areas, respectively), raising the prospect of opportunity area incentives leading to the suburbanization of affordable housing. However, our findings present a mixed picture, with awarded developments in both higher and lower resource areas contributing to an overall shift toward suburban areas:
● In the 9% LIHTC program, family-serving developments as a whole become somewhat more likely to be suburban from the pre- to post-incentive period (40% and 49%, respectively), as did developments in lower resources areas likely (36% pre-incentive vs. 46% post-incentive). However, higher resource area developments became less likely to be suburban (86% pre-incentive vs. 61% post-incentive).
● In the 4% LIHTC program, the suburban share of awarded family-serving developments increased more dramatically, from 43% pre-incentive to 71% post-incentive. However, both higher and lower resource area developments contributed to this trend; the share of awarded higher resource area developments in suburbs increased from 71% to 84%, and the share for lower resource area developments increased from 40% to 59%.
In sum, opportunity area incentives appear to be contributing to the suburbanization of family-serving affordable housing, but lower resource area developments are also playing a large role. Other funding program incentives or factors in the policy environment may also be contributing. Further study is needed to unpack this trend’s complexities and nuances, as the suburban category alone may not be meaningful without further specification in a largely suburban state where these areas present such a wide range of possible contexts.
Transit proximity largely unchanged
A concern related to suburbanization is whether opportunity area incentives may contribute to affordable housing being developed farther from transit stations, reducing access for families who rely on transit as well as contributing to development patterns which may not align with State efforts to reduce vehicle miles traveled. We examined this question using major rail and bus rapid transit (BRT) routes within High-Quality Transit Areas (HQTA) [6] defined by California Department of Transportation and did not find any meaningful patterns.
For example, while in the pre-incentive period family-serving 9% LIHTC developments in higher resource areas were less likely to be close to transit hubs compared to those in family-serving developments as a whole (10% vs 24%, respectively), in the post-incentive period higher resource area developments were marginally more likely to be close to transit hubs (13% vs 12%, respectively). In the 4% LIHTC program, higher resource area developments were only slightly less likely to be close to transit hubs compared to all developments both pre-incentive (17% vs 19%, respectively) and post-incentive (14% vs 16% respectively).
In sum, our analysis does not provide evidence that opportunity area incentives are pushing affordable housing for families away from high quality transit. However, generally low rates of proximity to major rail and BRT stops across neighborhood contexts could merit further examination, given the importance of transit access to both residents as well as strategies to achieve State climate goals.
Little exposure to wildfire hazards
Some have voiced concerns that opportunity area incentives could increase exposure to wildfire hazards. We explored this issue by analyzing whether developments were located in very high and high fire hazard severity zones in both State and Local Responsibility Areas (SRA and LRA), as defined by Cal Fire.[7] Similar to the transit proximity analysis, we did not find meaningful patterns related to wildfire hazards:
● In the 9% LIHTC program, a very small share of higher resource area family-serving developments were in high and very high fire hazard severity zones: 5% during the pre-incentive period and 3% during the post-incentive period. Similarly, only 1% of lower-resource area family-serving developments were in high and very high fire hazard severity zones during both pre- and post-incentive periods.
● In the 4% LIHTC program, there was a marginal increase in the overall share of family-serving developments located in high and very high fire hazard severity zones, from 6% vs. 7%. However, the share of higher resource family-serving developments considerably decreased from 25% in the pre-incentive period to 8% in the post-incentive period. By contrast, the share of lower resource family-serving developments increased from 3% in the pre-incentive period to 6% in the post-incentive period.
In sum, family-serving developments in very high and high fire hazard severity zones were rare in the pre-incentive period, and this continues to be the case in the post-incentive period – both in higher resource areas and for developments overall.
Discussion
We provide an early assessment of regional and environmental dimensions of the State of California’s efforts to locate more affordable housing for families in higher resource areas. Taken as a whole, our findings provide preliminary evidence that – at least at this stage, a few years after incentives were introduced – a conflict between equity and climate goals has not materialized to the degree some may have feared, particularly with respect to proximity to transit and exposure to wildfire hazards.
We do find that incentives may be contributing to modest increases in the rate at which affordable housing for families is developed in suburban neighborhoods. However, this trend is complicated by the fact that lower resource area developments are also becoming increasingly suburban, and that other incentives in state funding programs may also be playing a role. Further, the suburban category may not be meaningful without further specification in a state where suburbs represent such a large share of urbanized areas and provide a wide range of contexts and resources.
Our assessment of the environmental dimensions of opportunity area incentives is also exploratory and limited. For example, we do not include a comparison of greenhouse gas emissions for affordable housing in higher to developments in lower resource areas. Other potential topics of interest could include exposure to environmental and climate hazards such as air pollution and urban heat islands, as well as access to safe places for outdoor recreation. We also do not provide context for affordable housing’s role in advancing the environmental goals or consider how the State could weigh potential lack of alignment between climate and equity goals should it materialize in the future. Finally, developer pipelines may continue to adjust to incentives, and siting patterns may change over time. For these reasons, it would be beneficial for the State to monitor these issues moving forward.
More concerning is the uneven degree of change across regions after the introduction of opportunity area incentives. Family-serving affordable homes are underrepresented in higher resource areas in every region of the state, but only some of those regions are seeing progress in rebalancing the portfolio across neighborhood types. The State should continue to track progress at a regional level and implement changes, if needed, to ensure that affordable homes in each region are providing opportunities for low-income families to live in resource-rich neighborhoods which they may otherwise face great difficulty in accessing.
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This piece was written by Amba Gupta & Dan Rinzler. Amba Gupta is a Master of City Planning candidate at UC Berkeley and was an Equity Policy Research Fellow at the Partnership in summer 2023. Dan Rinzler is Associate Research Director and leads the Partnership’s work related to affirmatively furthering fair housing.
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