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Local Reports Characterize Regional Housing Affordability Crisis

Local Reports Characterize Regional Housing Affordability Crisis

Communities across the capital region widely recognize the growing crisis of housing affordability. Housing affordability reports recently published by eight local municipalities shed some light on aspects of the crisis. 

The cities of Madison, Sun Prairie, Fitchburg, Middleton, Stoughton, and Verona, and the villages of Waunakee and Oregon published the reports to comply with legislation enacted by the State of Wisconsin in 2018. The law requires municipalities in the state with populations greater than 10,000 to prepare housing fee (Wis. Stat. 66.10014) and housing affordability (Wis. Stat. 66.10013) reports. 

Statute 66.10013 states that “not later than January 1, 2020, a municipality shall prepare a report of the municipality’s implementation of the housing element of the municipality’s comprehensive plan.” The law specifically requires the housing affordability reports to identify development activity, land availability for development, and analyses of options for reducing housing development costs. In other words, what development is occurring, is land available for development, and how can the municipality modify its development process to meet projected demand and reduce development costs (which can reduce housing unit cost). 

Development Activity 

The reports present information about the volume of development activity as measured by approvals in the local development review process: subdivision plats, condominium plats, certified survey maps, and building permits. These measures of development activity can be compared to estimated housing demand to get a general picture of housing demand and supply.  

This article will focus on building permit data because in the development review process, the permits are issued closest to the actual housing construction.  

The eight municipalities, representing 72 percent of Dane County’s population, permitted 3,319 residential units in 2018 (including 2019 numbers reported by Stoughton, which for the sake of this article is being combined and reported as 2018 data).  

The population in the reporting municipalities increased by 4,609 from 2017 to 2018, and by 5,553 from 2018 to 2019 (Wisconsin Dept. Administration estimates. The 5,553 additional people need 2,645 housing units assuming the County household size in 2018/2019 (2.21) and a 5% vacancy rate. Thus the 3,319 permitted units were in line with estimated demand.  

Some notes of caution are in order. First, there is a time lag between issuance of a building permit and construction of housing unit(s). Units may be constructed in year(s) after permit issuance, or in some cases perhaps not at all. Second, a single year of data is only a snapshot of supply and demand. There may be significant variation from year to year for a variety of reasons internal to municipalities and the region, or due to state or national housing trends. As additional reports are issued over time, a more complete picture will emerge. 

The reports also show that municipalities approved 21 subdivision plats with 1,859 housing units and 45 certified survey maps (CSMs) with 776 housing units. Subdivision plats and CSMs may take many years to fully develop but give an indication of what land available for future development.  

Land Available for Residential Development 

The reports include information on two categories of land available for residential development: undeveloped land zoned residential and undeveloped land suitable for residential development but not zoned residential.  

The seven municipalities reporting this information listed a total of 6,298 undeveloped parcels that are zoned for residential development. Most parcels are for single family detached housing units. Some are for multi-family or mixed residential and commercial uses. A residentially zoned parcel may not yet be subdivided into smaller parcels. So the total number of undeveloped parcels zoned for residential development will generate a greater number of housing units, but it would be difficult to generate an accurate estimate of those units. In general however, over 6,000 undeveloped parcels represents a sufficient availability of land zoned for residential development given current population growth trends. 

The reports also identify 470 parcels of undeveloped land “suitable for but not zoned for residential development.” These are generally larger parcels that have yet to be subdivided and thus could hold an unspecified number of residential parcels and units.  

Options for Reducing Housing Costs 

The most common strategies identified by reporting municipalities focused on increasing allowable density. As shown in the table below, six municipalities discussed reducing minimum lot size requirements. Five municipalities included enabling and permitting accessory dwelling units (ADUs), and four included establishing more by-right development. Related density strategies mentioned by two or more municipalities included: allowing “missing middle” housing types, eliminating off-street parking requirements, enacting higher-density and multi-family zoning, and allowing more density in residential subdivisions. 

MadisonFitchburgMiddletonSun PrairieVeronaStoughton (2019)WaunakeeOregon
Allow “missing middle” housing types XXX
Enable, permit ADUs XXXXX
Establish more by-right development XXX
Rezone areas to allow mixed-use by rightX
Eliminate or minimize off-street parking requirementsXX
Enact higher-density and multi-family zoningXXX
Allow more density in residential subdivisionsXX
Reduce minimum lot size requirementsXX Analyzed XXX

Another group of commonly-cited strategies related to making the approval process less cumbersome. Four municipalities included the strategy of streamlining reviews and the permitting process. Other similar strategies mentioned included: convert to electronic plan review or develop online applications; increase the number of reviews and approvals handled at the staff level rather than at plan commission or board; provide standard specifications for utility and street construction; and make more frequent comprehensive plan amendments.  

Municipalities also discussed a variety of funding mechanisms to make housing more affordable. Three municipalities discussed providing density bonuses in exchange for more affordable housing. Three discussed using Tax Increment District affordable housing funds and TIF policy to encourage production of affordable housing units. Municipalities also mentioned using affordable housing trust funds, providing financial assistance, aggressively seeking housing subsidies (such as Low Income Housing Tax Credits or Community Development Block Grants), land banking, offering grants for improving older neighborhoods, and exploring other public funding strategies.