Include Cost of Transit in Rent Caps

Include Transportation in Affordability Calculations

Ensure that families can afford both housing and the transportation necessary to get to work.

"Subway" by Olivier Palta via Flickr

What's the issue?

Transportation can be expensive, especially for the poor. Research shows that transportation eats up proportionately more of low-income households' budgets than middle- and high-income budgets. In fact, transportation may be poor households’ greatest expense after housing. As a result, "affordable" housing may not actually be affordable once transportation costs are included.

The cost of transportation can be a particularly difficult issue for people who have been displaced. Even if people manage to find new housing that's affordable or are able to use a Housing Choice Voucher, they may face longer and more expensive commutes on public transit to keep their jobs. If the increased cost of transit is factored into what people are paying for new housing, the total may be more than 30% of their income, which is a housing burden.

How do rent caps help?

In response, affordable housing programs - whether based on rent stabilization, vouchers, tax credits, publicly owned units, or inclusionary zoning - should incorporate transportation costs into affordability formulas. State Qualified Allocation Plans could prompt developers of Low Income Housing Tax Credit properties to set rents at a particular percentage of area median income minus half the cost of monthly commutes from that location to downtown. Local subsidy programs and inclusionary zoning can follow a similar procedure when setting rents. Such changes are more difficult for federal programs like vouchers and public housing, where local governments have less leeway to set rents. For these programs,  housing authorities should alter rent formulas to take into account the cost of transit as much as possible within the bounds of policies set by the U.S. Department of Housing and Urban Development.

A variation of this program exists in Seattle. The affordable housing developer Capitol Hill Housing began a pilot program in 2016 to subsidize one half of the cost of transit cards for the residents of their developments, leading to significant monthly savings. A majority of residents offered the deal have taken it up. In this particular program, increased subsidies are tied to transit use. While this reduces choice for low-income families, it can have a useful side-effect. Greater transit use reduces the need for parking in urban neighborhoods, freeing up land for more affordable housing development.

Josh Cohen, "Seattle CDC Pairs Affordable Rent With Transit Discounts," Next City, 2016.

When and where does this policy work best?

Such a program would have the greatest positive impact in cities that are sprawling and see most displaced families moving far away from downtown areas or their places of employment. This policy requires functional mass transit systems to function properly and have an impact on displaced households. 

Works best for neighborhoods in late-stage gentrification and neighborhoods receiving displaced persons

Works best when neighborhoods are/have...

What are some possible problems and how can we address them?

This policy may make developing affordable housing more difficult by increasing costs for developers. It may also not be effective if residents cannot easily access public transit that would take them to their jobs. Perhaps an even better solution to transportation cost and job access would be to include affordable housing in transit-oriented development. However, a great deal of investment is required to develop affordable housing units in high-value locations, as transit-accessible areas increasingly are. It may thus be more cost-effective to create transit subsidies at affordable housing developments farther afield.