Mercy Housing’s Tanahan affordable housing development.
Photo: California Architectural Foundation
Everyone has been talking about Ezra Klein and Derek Thompson’s book Abundance, which makes a compelling case on why housing policy so often fails to deliver its full potential, and occasionally fails miserably. The book is both a mirror and a challenge. As a mirror, it forces us to examine how well-intentioned policies hobble each other, undercutting the objectives they seek to achieve. But the challenge is on us, not the authors. Can we go beyond the catalogue of challenges to tangible, impactful, and achievable solutions?
One of the book’s central insights is that the gap between our intentions and what we achieve is not driven by bad actors or a lack of will, but by systems burdened with too many priorities and too little understanding of how complexity and delay undercut them. “If you look at the inflated cost that comes along with all of the regulation and rules and restrictions and limitations,” Los Angeles city controller Ron Galperin told Klein in 2022, “then basically all of this money is going to feed the beast of covering the cost of the regulations. Yes, they get $134,000 on average from the city, but the hoops that have to be jumped through to get it very well may exceed the $134,000. We’ve created an absolutely insane system.”
Delays and cost overruns are neither accidental nor inevitable. Tahanan, a 145 unit development by Mercy Housing in the Soma neighborhood of San Francisco, provides permanent supportive housing for the chronically homeless. Development timelines for similar projects can take six years or longer with costs exceeding $1 million per unit, according to the San Francisco Chronicle. Tahanan cost less than $400,000 per unit to build in half of the time. The reason why isn’t surprising. Developers of Tahanan avoided using government funds that drive up cost and add expensive delays. They also took advantage of state legislation that helped them avoid the typical local regulatory delays. According to a recent study by the California Housing Partnership and the Urban Institute, other factors included:
- A commitment to the timeline and cost goals permeated the decision-making process at every phase of the project.
- Flexible up-front resources, streamlined entitlements, and local government commitments to long-term property lease payments enabled early decision-making and finalization of the project’s efficient design. And,
- Modular, off-site construction.
Government money is never going to be as efficient as private funding, though it is often needed to close funding gaps in affordable housing. But it shouldn’t come at more than double the cost. Compare Tahanan to the 100% affordable 90-unit development at 2550 Irving Street in San Francisco, built by the Tenderloin Neighborhood Development Corporation, where the cost exceeded $1.1 million per unit.
2550 Irving is exactly what San Francisco needs to reduce its crippling homelessness crisis. It’s a huge accomplishment in a city that typically builds fewer than 1,000 affordable housing units per year despite a population of more than 800,000. 2550 Irving primarily houses residents who earn 20% to 60% of the area median income (AMI), with 22 units reserved for families experiencing homelessness and 15 one-bedroom units allocated for veterans with housing vouchers. The process was anything but simple. Just the application for funding from the California Department of Housing and Community Development was 359 pages long. And that’s just one layer of the funding and financing, which included: Low-Income Housing Tax Credit equity, tax exempt bonds, additional subsidy from the San Francisco Mayor’s Office of Housing and Community Development, a Multi-Family Housing Program award, additional funds from the Infill Infrastructure Grant program, and a loan from Bank of America. All those layers of funding come with their own requirements, collectively adding complexity and as a result, delay and cost.
Klein and Thompson walk us through the many layers of review that add cost, risk and time —zoning hearings, design review, environmental review, union-labor constraints, and multiple financing streams each with their own compliance demands. The result is housing which could be built faster and cheaper is delayed or cancelled. “We hire skilled, dedicated people to do the public’s work,” they note, “and then make it impossible for them to do that work well.”
On the left, concern for fairness, labor standards, and the inclusion of neighborhood voices leads to more rules. On the right, suspicion of government leads to under-investment in systems or cancellation of entire programs. Both erode capacity. For housing advocates, that means we must stop talking only about “more money,” and talk more about aligning policy structures so that systems build rather than delay affordable housing development. Our aim must be policy solutions that are tangible, impactful, and achievable; and programs that are more effective and efficient.
This is the focus of the bipartisan HOME Reform Act, introduced by House Financial Services Committee Housing and Insurance Subcommittee Chairman Mike Flood (R-Neb.) and Ranking Member Emanuel Cleaver (D-M.O.) The HOME program is critical to the production and preservation of affordable rental and homeownership opportunities in rural, urban, and suburban communities across America. Since 1992, over 1.39 million units of housing have been produced with HOME funds. HOME funds have helped an additional 404,000 families through tenant-based rental assistance. Every $1 of HOME leverages nearly $5.00 in additional investments. HOME investments have supported more than two million jobs and generated $140 billion in local economic impact. But as effective as the HOME program is, it is not as efficient as it should be. It can be bureaucratic, complicated, overly restrictive, and expensive to use.
The Flood-Cleaver HOME Reform Act makes meaningful reforms to the program that promote flexibility, streamline program requirements and regulations, and reduce barriers to entry.
The bill increases allowable income to 100% of AMI for homeownership. It increases the allowable home price from 95% of the area median purchase price to 110%. And it exempts small projects of 15 units or less from the National Environmental Policy Act (NEPA), which can dramatically increase costs at the expense of those who can least afford to pay them, and is often used as a tool by NIMBY’s to stop development. Instead, the bill simplifies NEPA compliance, eliminating current requirements to meet multiple standards and duplicative reporting requirements.
Despite Washington’s well-known dysfunction and partisanship, this bill and several other bipartisan initiatives this year, demonstrate we do know how to work together to make good policy that addresses problems we are all facing.
All of our federal housing programs need reform along the lines of the Flood-Cleaver bill. Homeless assistance programs, housing choice vouchers, and the Community Development Block Grant program are all burdened by similar issues that undercut their efficiency and effectiveness.
Federal funds should come with streamlined regulatory structures and incentives for state and local governments to be better aligned. We must also measure and reward outcomes, potentially paying bonuses to states based on delivery of results within targeted timelines. We need to create incentives and authority to create pilot programs that can scale when successful, and empower federal officials to grant needed waivers to requirements that conflict or overlap with local requirements.
For local partners, jurisdictions at every level – cities, counties, and states – should audit their housing pipelines: How many months between funding and final approval? What percentage of building cost is regulatory? How many review cycles do typical projects face? Use that data to drive reform. Establish fast-track corridors for affordable housing, cap review timelines, consolidate funding streams, and adopt “by‐right” zoning in target areas. Encourage labor and environmental standards that are smartly integrated, not barriers. This is just a notional list. There’s a lot more.
This is why NHC has begun convening our Housing Supply Working Group. It is chaired by Stockton Williams, Executive Director of the National Council of State Housing Agencies, and Laura Escobar, President of Lennar Mortgage, a mortgage lending subsidiary of the Lennar Corporation, one of the largest homebuilders in the country. She is also the 2025 chair of the Mortgage Bankers Association. Their expertise in every facet of the housing supply pipeline is essential to our success. And they definitely have mud on their boots.
I often say, when it comes to affordable housing spending, my number is always “more.” But that isn’t good enough if it isn’t also “better.” If systems are built to enable delay, deflect risk, and satisfy process rather than deliver outcomes, we’ll keep falling further behind. As Klein and Thompson effectively argue, abundance is possible—but only if we stop thinking scarcity of funds is our biggest constraint, and start thinking about scarcity of execution.