Legal Experts Offer Strategies to Boost Affordable Housing Development, Preservation

ULI

The simple solution to the shortage of affordable housing? Build more of it. The path to produce and preserve low-income and workforce housing involves a complex gauntlet, however—one that ranges from assembling financing to restrictive zoning requirements.

“Often, when we’re struggling with putting our affordable housing deal together and getting it implemented, we . . . like to blame the lawyers,” says Sharon Wilson Géno, president of the National Multifamily Housing Council (NMHC). Yet attorneys play a crucial role in the production and preservation of affordable housing and possess valuable knowledge, hands-on experience, and lessons learned from past projects.

At the recent Legal Perspectives in Advancing Affordable Housing Production and Preservation panel at the 2025 ULI Spring Meeting in Denver, Colorado, Géno moderated a discussion in which legal experts shared their insights on how developers, planners, and housing advocates can better navigate the myriad barriers and evolving legal framework at federal, state, and local levels to advance affordable housing projects and initiatives.

One of the biggest impediments to affordable housing in the United States is zoning. Industry data shows that 75 percent of the residential land in many American cities is zoned for single-family. “This [stricture] is pervasive in communities across the country, but there has been a fair bit of movement over the last several years in loosening some of those requirements,” Géno says.

Zoning reforms

In Massachusetts, 80 percent of the land that’s available for residential development is zoned for single-family only. One way the state is addressing the issue is with legislation that links multifamily housing to transit-oriented development.

The recently passed Massachusetts Bay Transportation Authority communities law mandates that all 177 MBTA communities in Massachusetts allow for multifamily housing by right near transit hubs, even if they’re located in single-family housing zones. “That’s helpful,” says Sulma Khalid, an associate at the law firm of Robinson & Cole. “We also use a lot of density bonus agreements, conditional use permits, and special permits to allow for more housing in single-family zones.”

Some states, such as Oregon, have eliminated single-family zoning. Montana also recently passed new reforms that are set to make adding density within single-family zoning easier. Panelists had mixed views on whether the best course is to fully eliminate restrictive single-family zoning or instead to consider reforms that can increase density without putting undue stress on infrastructure, such as schools and roads.

“Maybe it’s a little bit too far to eliminate single-family zoning, but I think [that, if it’s] implemented properly, you can find artful ways to thread that needle,” says Jeff Nydegger, a project finance attorney and shareholder at Winstead PC. Another tool that’s used to facilitate affordable housing is the community land trust (CLT).

Typically, a CLT is managed by a nonprofit organization that holds land on behalf of a community and ensures that such land remains available and affordable for low- and moderate-income residents. A homeowner usually leases the land and owns the improvements on that land (the home), but ownership of the land itself stays with the trust.

Navigating complex zoning

Minimum square footage and lot size requirements are another huge impediment to building affordable housing. One of the easiest things that developers can do if they’re trying to construct something affordably is to make it a bit smaller. Doing so, however, is illegal in many places because of existing city zoning regulations. “The fact that [these regulations] exist is a huge barrier to creation of a lot of that necessary ‘missing middle’ that we all want to see,” says Ari Bargil, a senior attorney with the Institute for Justice.

Austin is an example of a city that recently reduced its minimum lot size requirement from 5,750 square feet (530 sq m) to 1,800 square feet (170 sq m) to make smaller homes more achievable. “Austin is notorious for having a very complex, difficult, and long permitting process. So, the city has also instituted exemptions and fast tracks for affordable housing developers,” Nydegger says.

In Texas, as in other states, a lot of push and pull exists between state and local regulations. Texas has proposed legislation that would empower the state to effectively override regulatory requirements, so that no city can impose regulatory requirements that are greater than what’s already in the state’s land use code, Nydegger adds.

Assembling the capital stack

Any affordable housing project being built now has at least one form of government subsidy—and in most cases, multiple different subsidies. “You can have cheap money, fast money, or easy money, but you can’t have all three, and a lot of affordable housing is cheap money, which means it comes with a high level of regulatory complexity,” says Althea Broughton, a partner in the real estate practice at the law firm of Arnall Golden Gregory.

For example, developers get excited when they first secure a grant, but then they realize that the grant comes with strings attached, and maybe the grant doesn’t work with other sources of capital they’re pursuing, Broughton notes. Not only do different rules and regulations apply, but often there are also different interpretations of how a regulation should be applied and what it means. Clarity proves helpful in building those complex capital stacks, Broughton adds.

A common financing vehicle is the government bond program. Federal bonding authority typically comes from the federal government, but it can also come from a state or local authority, as well. For example, Colorado was the first state to form a middle-income housing authority. “They are using the bonding authority and taxing authority from the state to try to leverage resources to hit this middle ground,” Géno says.

Some local redevelopment authorities also issue bonds, and those bonds have income limits that are much more flexible than the Low-Income Housing Tax Credit Program (LIHTC) or other tax-exempt bonds and tax credits. Those locally designed programs often let a project get to higher area median income (AMI) limits. “When we’re seeing workforce housing transactions, we’re seeing some form of local subsidy that has the flexibility to have a higher income range,” Broughton says. “That’s where the involvement of local jurisdictions is really critical, because it can help get to that missing middle piece,” she says.

“The best bond programs are the ones that don’t operate in a silo, and the ones that are designed to stack well into these financing stacks that are necessary for affordable housing developments,” Khalid adds. For example, tax-exempt private activity bonds pair with the 4 percent LIHTC. Khalid is working on two developments in Massachusetts that use state historic tax credits, which are designed to work with tax-exempt bonds.

Keeping legal teams in the loop

Among key pieces of advice that the panelists shared: Involve legal early and keep attorneys in the loop with regard to ongoing changes. Often, legal is the last to know when certain things are happening. “Even if you think it’s a minor change, it takes time to carry out through the entire document set,” Khalid says. “If you’re waiting until the last minute to tell legal, you can all but guarantee that you’re going to have a mad dash to try to update the entire document set in time to meet the other critical deadlines that are approaching.”

Bargil advocates bringing zoning and land use back to their roots as mechanisms for protecting health and safety. “Whether you’re in local government or somewhere in the private sector, orient your thinking around health and safety, and not so much [around] lofty community planning and centralized ideas about what’s best for everybody,” he says. That means taking commonsense steps, such as keeping power plants and slaughterhouses away from elementary schools and public libraries.

Avoid putting your attorney in a silo, Nydegger adds. A client might be working with multiple attorneys to acquire land, structure the public financing, structure an equity joint venture partnership, and negotiate a development agreement with the city. “It’s like playing Whac-A-Mole,” he says. “You think you solve one problem, and another problem pops up in one of these other areas. So, find an attorney [who] can see the big picture and who knows a little bit about all of those different areas and start with them.”