Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
The United States is facing a housing crisis caused by decades of underproduction of new units. This crisis seems to be caused by rising costs of materials, labor and land, in addition to growing regulation on projects.
We used to believe that Indianapolis was immune to these extreme housing challenges, but statistics show that is no longer true. Indianapolis is struggling to update its aging housing stock, provide more affordable housing and create attractive housing that will stem the outflow of middle-class families to surrounding counties. These ring counties experienced the highest in-migration in the state from 2010 to 2020, with Hamilton County growing 25.5%, Boone 25% and Hendricks 20%.
While these are daunting headwinds, Indianapolis has distinct assets that could drive local housing development. Indianapolis is still a relatively inexpensive place to build due to lower labor costs, minimal state regulation and our sprawling development pattern resulting in cheaper land. Legendary developers like Gene Glick and the Simon brothers spawned a deep bench of regional housing developers. Powerful development subsidies created for downtown renewal projects could be applied to projects across the city. Local philanthropy backs capable nonprofit affordable housing development organizations like the Indianapolis Neighborhood Housing Partnership, LISC, Intend Indiana, Englewood CDC and Habitat for Humanity.
Sadly, these advantages have not been enough to overcome locally imposed barriers to developing housing. The first is the creeping growth of regulatory requirements imposed by Indianapolis government that raise costs, delay projects and discourage development. Local development is regulated by the Business and Neighborhood Services Department, which was removed from the Department of Metropolitan Development in 2008 and re-created as a self-funded autonomous agency. This independent structure is no longer led by officials who are also charged with encouraging positive development, so it has slowly grown into a regulatory gauntlet that is widely held to be discouraging housing investments.
The U.S. Department of Housing and Urban Development simultaneously raised development standards for affordable housing projects, making development by nonprofit affordable housing developers less common and more expensive.
The increase in development difficulty within Indianapolis has coincided with a reduction in consumer demand for many urban neighborhoods. It appears to be the result of anti-urban fears stoked by sensationalized media coverage of the pandemic-era riots and violent crime spikes. This combination of higher costs and weaker demand has pushed development by for-profit builders out into surrounding counties.
If Indy is to ramp up housing production, it will take focused leadership across the government, philanthropy, finance, nonprofit and for-profit development sectors. City leaders should join with local developers to examine opportunities to reduce zoning and regulatory barriers, quickly reform unnecessary rules and reposition Business and Neighborhood Services to a pro-development posture. The city also should aggressively position and promote city-owned land for housing development. It can examine opportunities using tax increment financing, residential tax abatements and other creative public tools to incentivize housing production.
Banks, philanthropy groups and nonprofit developers could pool capital, subsidies, guarantees and relationships to lure high-capacity regional developers and builders back to building in Indianapolis. Cities like Charlotte, North Carolina, have demonstrated how such coordinated resources can entice developers to improve disinvested housing and build new mixed-income housing, and Indianapolis has the resources to replicate and expand this approach.
We have everything it takes to make Indianapolis the most attractive place to build homes in the Midwest. Let’s work together using Indy’s collaborative abilities honed by ambitious sports and entertainment events to grow plentiful, affordable and desirable housing that revives our city’s growth.•
__________
Bill Taft is director of Interurban at Indianapolis-based Sagamore Institute. Send comments to [email protected].
Click here for more Forefront columns.
Please enable JavaScript to view this content.
