Progress on Affordable Housing Policies in Nevada

After a lengthy legal standoff between local municipalities and state authorities in Nevada, recently proposed bills may improve the situation. Find out more right here!

State Bill Clarifies Local Government’s Jurisdiction on Affordable Housing

Nevada is a state which has long harbored issues with affordable housing policies. As a result of a legal debate between state authorities and local governments, policies which could increase the availability of affordable housing for the impoverished have been sorely lacking. But it seems that this standstill could be at an end with a legislative push from members of the Nevada Legislature.

But what is the issue in the first place? Basically, it’s a matter of different interpretations of the jurisdiction of local governments regarding zoning policies. Nevada has a long-standing problem with affordable housing or lack thereof. And that’s because of a disagreement between local municipalities and the state authorities on what legislative powers the former have when it comes to housing policies.

The state of Nevada claims that even the existing law gives counties and cities the option of implementing affordable housing policies. But curiously enough, the local governments themselves disagree with this, claiming that the law gives them no explicit right to pass policies like rent control and inclusionary zoning. This is, however, curious only at first glance. Most of the local municipalities have a vested interest in not embracing such policies, as they wouldn’t be popular with deep-pocketed development and construction companies.

However, this legal limbo seems to be nearing its end. Currently, there are almost a dozen bills going through the Nevada Legislature, looking to clarify the legal situation around affordable housing policies. Specifically, SB398 proposes that city governments and county authorities have the explicit legal authority to deal with the lack of affordable housing with direct policies.

This bill would give city counsels and Nevada county commissions the option to implement rent control solutions or inclusionary zoning if they were inclined to. Crucially, the bill does not in any way force the local authorities to actually put such policies into effect; it merely gives them the legal power to do so.

Though, an increased number of these policies in Nevada is definitely the intent behind SB398. State senator Julia Ratti is the bill’s chief sponsor. While explaining her proposal, she has expressed hope that counties and cities will realize the need to deal with the low availability of affordable housing across the state.

She appeared at a hearing before the Senate Government Affairs Committee, claiming that most advocates of affordable housing find their efforts being ignored by local municipalities. In fact, according to Ratti, local governments mostly use the lack of authority as an excuse not to work on such policies. They use Dillon’s Rule as their reason, claiming that the legal authority of local governments is limited to the powers that the state grants them explicitly.

On the other hand, the Legislative Counsel Bureau of Nevada has a conflicting interpretation. Their stance is that affordable housing policies are a part of ‘matters of local concern,’ which is precisely why the local governments are allowed to regulate them. But regardless of that, state Sen. Ratti is determined to take away the local governments’ last argument against affordable housing with a bill that will give them the needed authority categorically.

Ratti called this legal dispute a ‘pissing match’ between local and state legal counsels and added that it disregards the needs of the locals who desperately require affordable housing options.

Ratti said this ‘pissing match’ between state and local legal opinions isn’t fair to the people in desperate need of affordable housing. She urged the Nevada Legislature to ‘untie the hands of the local government’ and called on them to usher innovation.

Ratti expressed the belief that the local authorities needed to play a major role in the rise of affordable housing. According to her, the state implementing a general solution for everyone would be the wrong approach. She pointed out that real estate conditions in North Las Vegas are vastly different from those in Elko or Pahrump. In tune with that, any affordable housing policies would need to be market-driven, with the local real estate landscape in mind.

Also, there are various ways to implement policies regarding affordable housing. One of the simpler ones is giving developers a set percentage of homes that have to be affordable. For example, a county may pass an ordinance which regulates this. It could say that if a developer is planning to construct 300 homes, 10% of those would have to be affordable enough for a middle-income family.

Conversely, there are ways for affordable housing policies to be less unacceptable to developers. For example, many local municipalities offer an option of paying a ‘fee in lieu of,’ excusing builders from incorporating affordable housing into their projects in exchange for a fee. And the money gathered from these construction companies would fund other affordable housing projects across the state.

All of these options are specifically defined by SB398, including the ‘fee in lieu of’ approach. That’s why many nonprofits that do work with lower-income citizens are extremely supportive of the bill. Apart from that, the cities of North Las Vegas and Las Vegas have given their support, as well as Clark County and the Nevada League of Cities.

Still, many noteworthy trade associations reject the bill, such as the Nevada Association of Realtors, Builders Association of Northern Nevada, and the Southern Nevada Home Builders Association. The spokespeople from these organizations claimed that the bill was too broad, which they’re concerned about.

Josh Hicks, a lobbyist working for the Southern Nevada Home Builders, has stated that they would like to see more specific parameters and guardrails in a state Senate bill. Also, the trade associations would be happier with incentive programs akin to fee waivers and tax credits, instead of rent control and inclusionary zoning. They believe the latter measures would negatively impact their business.

In her closing remarks, Sen. Ratti addressed these concerns. She agreed that it was perfectly normal for these businesses to prefer incentives rather than a direct mandate. But she also concluded that incentives have proved largely ineffective in producing enough affordable housing for lower-income levels.

Sen. Ratti gave some interesting statistics in previous presentations in earlier committees. According to her, 4 out of 10 households found in Southern Nevada are what she calls ‘housing burdened.’ In other words, the people living in them spend more than a third of their income just on housing. And that’s an even higher percentage among those who earn less than $50k a year — 7 out of 10 households.

With that in mind, it seems some sort of compromise between business interests and public policy concerns will have to be reached. If that is precisely what SB398 will be, however, remains to be seen.

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