In the U.S. the mention of “railroad tracks” in urban areas has long played a role in characterizing the income divide in communities. Whether figurative or real, in today’s economy, people living on “other side of the tracks” increasingly struggle to meet the growing cost of housing. The lack of affordable housing, particularly in places with rising property values and real estate market prices, is not just a problem for low-income families but also can negatively impact local economies. Government contractors should pay attention as this impact is driving policies aimed at building more affordable housing in cities across the U.S.
Joseph F. Reilly, president and CEO of Community Development Trust (CDT) discussed the growing demand for affordable housing in a recent article for National Real Estate Investor magazine: “As the demand for affordable housing continues to grow, especially in cities with strong local economies, it will become increasingly important for public policy to help shape opportunities for investment in affordable housing.”
Investments in affordable housing and building mixed-income communities will drive state and local government bids & RFPs in this market. Reilly added, “Over the last 16 years, CDT has seen a growth in terms of the size of our portfolio and also the complexity of our projects. We see a lot of opportunity for greater investment in affordable housing.” This is good news for government contractors looking for construction, architecture and engineering opportunities.
Building Affordable Housing
Onvia’s Project Center reflects Reilly’s statement, showing a climb in contract solicitations and awards for construction supplies and services contracts related to affordable housing projects. In the first half of 2014, state and local governments released 145 bids and requests for proposals and 174 in the first half of 2015.
Contractors should note that out of 210 currently active term contracts related to affordable housing planning and construction, 142 are set to expire in the next two years.
Planning for Affordable Housing Projects
The U.S. Supreme Court brought affordable housing into the spotlight when it ruled in June 2015 that public policies can have undercurrents of racial discrimination. Distribution of low-income housing tax credits is an example. In the lawsuit, an advocacy group claimed that the City of Dallas in Texas issued too many tax credits to housing in mostly “black” inner-city areas and too few in predominately “white” suburban neighborhoods. The result of the policy led to greater separation. The ruling will make housing authorities, as well as states, cities and towns, reevaluate where their tax credits go, as they attempt to avoid adverse impacts on various communities.
— Dallas Morning News (@dallasnews) June 26, 2015
According to Project Center, state and local governments already seek a lot of input on planning and economic development, as they develop mixed-income housing facilities. In 2014, the public sector issued 145 solicitations, 2013 had 10 fewer solicitations.
Key Takeaways for Contractors
The demand for affordable and mixed-income housing remains constant as officials attempt to eliminate the figurative railroad tracks that separate families whose incomes are different.
General contractors, construction companies and engineering companies will find work at the local government level, as cities and towns issue far more solicitations and make the most awards within state and local government.
The Supreme Court’s ruling will likely force states and local governments to review their policies. In addition, because of these possibilities, companies can also identify local agencies that are thinking about affordable housing projects before the bid or RFP and offer their consultative expertise to help cities plan their future housing developments.