Affordable Housing Negotiations

Is the lack of affordable housing delivery attributed to discrepancies in negotiation powers? In "Ambiguous, Confusing, and Not Delivering Enough Housing," (Journal of the American Planning Association, Vol. 87, No. 4) researchers Katrina Raynor, Matthew Palm, and Georgia Warren-Myers survey 148 stakeholders in Victoria, Australia, to examine how the prospect of affordable housing development depends on successful and equal voluntary negotiations.

Stakeholders' Views on Housing Negotiations Differ

Voluntary case-by-case agreements can encourage developers to include affordable housing in their developments. However, too often voluntary programs do not translate to increased affordable housing stock. In cities that do not have a formalized or scheduled incentive structure, case-by-case negotiations "rely heavily on the ability of councils, developers, and nonprofit providers to negotiate mutually beneficial outcomes or risk actors simply refusing to engage."

Despite leveraging inclusionary zoning measures with density bonuses, design flexibility, ordinance variations, tax relief, or expedited planning processes, government, and public actors do not enter into negotiations on a level playing field with developers. Successful affordable housing negotiations depend on mutual gains, but parties differ in their access to information, knowledge, and expertise, resulting in lower levels of trust and fewer affordable housing units.

Raynor, Palm, and Warren-Myers examined Victoria, Australia, where, in 2018, the state government made several amendments to the 1987 Victorian Planning and Environment Act. These changes enabled local councils to enter into affordable housing negotiations by defining affordable housing and adding Section 173 Agreements to allow "responsible authorities" to negotiate with landowners for affordable housing contributions. The authors compared different stakeholder groups in terms of interests, mutual gains, access to information, knowledge, expertise, and trust between negotiation parties.

Groups differed in their perceptions of mutual gains, or the perceived value and benefit for parties to enter into negotiations (Figure 1). For example, 64 percent of respondents felt private developers had little to gain from entering into negotiations compared to 16 percent of community housing providers. These discrepancies highlight how the limited mutual gains are an inhibiting factor in voluntary negotiations.

Figure 1. Percentage agreeing that specific actors have little to gain from negotiations.

Survey Highlights Contrasts in Housing Negotiations

The survey underscored the contrasting interests of private and public parties. While only 20 percent of developers believed negotiations would increase profitability, the majority responded that the inclusion of affordable housing did increase the likelihood of development approval as well as improving their companies' reputations (65 percent and 60 percent respectively). Of local government respondents, 85 percent believed they had an ethical duty to support vulnerable households; 62 percent believed voluntary agreements could be an important mechanism for funding affordable housing.

The researchers concluded that "new voluntary policies should be coupled with formalized feasibility training for local government staff to ensure that localities negotiate on a more even playing field." They also found many criticisms of the existing negotiation arrangements. There was a broad desire across sectors to provide greater certainty of requirements and a preference for mandatory, rather than voluntary, affordable housing provisions.

The authors suggest that voluntary affordable housing negotiations cannot be successful "without institutional scaffolding to ensure that negotiations result in mutual gains for stakeholders." As more cities in the United States continue to adopt inclusionary zoning provisions, I believe planners can benefit from this survey on the efficacy of voluntary programs and research on negotiations theory.

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