Affordable Housing: How Tourist-Based Economies are Increasing their Stock

Like most things economic development, housing is more adaptable and more resilient to economic forces when there is diversity in its stock. We know it’s important to have a variety of housing options in a given place to accommodate a range of jobs and the wages those jobs bring. Unfortunately, “hot” markets where second home ownership is prevalent means efforts to create affordable housing need to be persistent and creative. We recently complied this list of actions and programs housing nonprofits can do to increase the amount of affordable housing in their community. Research was geared towards those communities in tourist-based economies with a large proportion of second home ownership.


Encourage second home owners rent year-round (Cape Cod, MA)

With the increase in popularity among online short-term rental sites like AirBnB, the Housing Assistance Corporation created a program on Cape Cod to incentivize year-round rentals. The program provides a $1,000 signing bonus to home owners and provides assistance with property management and leasing. 


Modify houses to include multiple units (Santa Cruz, CA)

Once a nonprofit secures ownership of the house, consider modifying it to include multiple units. This could include garage apartments, basement flats, stand-alone backyard cottages, and living units attached to the main house. This not only serves more people but also lowers the cost per unit. These houses could be managed by the housing nonprofit or undergo a co-ownership model and be self-managed. Encourage zoning (or a loosening of current zoning) and a streamlined permitting process which will facilitate this type of redevelopment.   


Start a Covenant program (Nantucket, MA)

A Covenant program allows property owners to have two dwellings of seperate ownership on the same lot. The primary dwelling is a market rate unit, while the secondary unit (the Covenant unit) abides by income, occupancy, and re-selling restrictions. While the local municipality’s housing authority signs the covenants, the affordable housing nonprofit, Housing Nantucket, can issue fines under circumstances of noncompliance. They, in addition, administer the program.  


Create a legacy program or otherwise encourage land and house donations (Various)

Solicit residents, particularly seasonal residents, to donate their house or land at time of death or when no longer needed. This may provide a tax benefit to the homeowner; this and other benefits should be communicated with the potential donor. Alternatively, purchase house at below-market rate value using grant or otherwise raised funds. Work with local contractors to renovate.  


Assist with the homebuying process (Various)

Work with local banks to establish mortgage education and loan programs that makes the homebuying process easier and more affordable. Many models exist and include paying for PMI, providing mandatory education on budgeting and saving for a home, and/or reducing or waiving lawyer fees or inspection fees (by working with a local provider). In some communities, the municipality has acted as lead and, by receiving federal funding such as CDBG grants, are able to help banks offer low interests loans to qualifying individuals. These programs could be geared toward first time home buyers, those who work in the community but live elsewhere, or any other criteria established by the nonprofit. 


Use a land-trust model to encourage home ownership (Wilmington, NC)

The housing nonprofit would purchase the underlying land, leaving the buyer responsible for purchasing the building structures and improvements made. This significantly reduces the cost to the homeowner. As the land holder, the nonprofit would have the right to purchase any structures built on the property. These typically involve a 99-year lease on the underlying land. 


Ensure continuous revenue with rental housing (Jackson Hole, WY)

The Jackson Hole Community Trust is working to create and manage affordable rental units which will create a regular stream of income, which can then be invested in new affordable housing opportunities. 


Build local support through a Workforce Housing Partnership (Martha’s Vineyard, MA)

The Island Housing Trust serving Martha’s Vineyard created the Workforce Housing Partnership which solicits local businesses to support affordable housing through in-kind and financial support. Supporters know that, by providing affordable housing options, it means more potential availability of future employees, and a reduced commute for current employees. Also known as Employer Assisted Housing (EAH).  


Consider a natural building approach (Moab, UT)

The Community Rebuilds model, a nonprofit based out of Moab, UT and in proximity to Arches and Canyonlands National Parks, builds straw bale houses for those seeking affordable housing. Qualified homeowners and natural building interns work to construct the home with instructors. Community Rebuilds then provide subsidized loans to homeowners though federal financing partners. Part workforce development, part sustainability, and part affordable housing, the model meets many community needs at the same time. (And yes, you can build straw bale houses pretty much anywhere!) 


Important elements among all actions: 

  • Ensure the home stays in affordable ownership in perpetuity. Have a reselling requirement that (for example) sells to a certain AMI, allow price ceilings for homes sold, and/or to workers in the community who travel over 1 hour or 50 miles to work.  
  • Maintain current partnerships and form new ones with housing professionals including plumbers, electricians, HVAC professionals, carpenters, etc. These professionals can be solicited to 1) educate homeowners on the upkeep of their home; 2) provide reduced service fees for home maintenance; 3) assist in the renovating of houses for new homeownership; and/or 4) provide inspection services when considering the purchase of a home.  
  • Create guidelines for new homeowners where they in turn commit to educating others (other homeowners, decision makers, or the community). This will not only create a network of success among all homeowners, but also be advantageous in marketing the program.  
  • Ensure the new homeowner adheres to standards which will create a positive aesthetic in the community. This includes regular landscaping and home exterior maintenance.  
  • Support the affordable housing municipal actions and work to garner public support, specifically for a revenue fund that draws off developer fees, hotel occupancy tax, or other to assist with affordable housing continuously.  


While this list is geared towards those in tourist-based economies, many of these creative approaches can be modified and scaled to fit any community. And as many tourist-based economies are also afflicted by a lack of seasonal workforce, this article will help to explain the evolving trends of the seasonal workforce. If your community needs to create housing options for your Senior community, this article will  you introduce you to the different options needed by this community. And if your community is in an Opportunity Zone, check out this article on how to create affordable housing with this tool.  


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