Examining Five Common Criticisms of Mixed-Income Housing Development Found in the Real Estate, Public Policy, and Urban Planning Literatures

The intensity of federal involvement in the production of affordable housing has waned dramatically in the United States over the last five decades, and as a result, control over downtown redevelopment initiatives has largely been ceded to state and local governments, as well as the private sector (Fraser, Chaskin, and Bazuin, 2013). This policy shift has encouraged some downtown areas to gentrify, while others have experienced prolonged periods of disinvestment (Hays, 2012). Municipal governments seeking to combat the latter outcome are increasingly turning to public-private partnerships designed to stimulate the production of mixed-income housing in economically fragile urban neighborhoods (Hyra, 2013; August, 2016). This type of development is an attractive option when it increases the stock of affordable housing, creates appropriate risk-adjusted returns for developers, and capitalizes on prevailing market demand for urban living. However, it can also serve as a source of contention when non-developer stakeholder concerns are excluded or minimized.In theory, mixed-income housing development strategies leverage market forces, economic profit incentives, and the skills of real estate developers to expand the housing stock. Developers place their social, political, and financial capital at risk and seek to earn risk-appropriate returns. Policymakers and public officials create zoning, process, and political incentives designed to attract capital to projects that include both market rate and affordable units. Both groups, along with the future occupants of the newly constructed housing, benefit and the marginal well-being of an urban place increases. However, rarely does theory match reality. Some mixed-income housing development strategies have created remarkable social and economic returns, such as supporting longer term market acceptance, scalability, and the potential for technology transfer. others have missed the mark, opening this strategy to criticism.Many criticisms of mixed-income housing development are embedded in the real estate, public policy, and urban planning literatures, most of which focus on the neoliberal turn in urban governance (Darcy, 2010). In the aggregate, these studies contend that government efforts to encourage the integration of market rate and affordable housing can (1) accelerate state-led gentrification, (2) encourage public policy objectives to be prioritized in an inappropriate manner, (3) limit the representation of historically marginalized groups, (4) compromise long-range municipal planning efforts, and (5) promote the detrimental privatization of urban space. In this literature review, we explore each of these issues in an effort to provide readers with a better understanding of factors that should be considered when evaluating the risk and return merits of proposed mixed-income housing developments. We also describe the best practices that may promote neighborhood revitalization and serve the interests of low-to-moderate income families, while concurrently generating appropriate returns to real estate developers putting their capital at risk to make these projects possible. We conclude the paper with a discussion of gaps in the body of research that need to be filled to better inform those responsible for crafting and implementing mixed-income housing policies.THE ROLE OF MIXED-INCOME HOUSING DEVELOPMENT IN URBAN REVITALIZATION"Mixed-income housing" is a broad and somewhat nebulous term used to describe residential development projects including a combination of market-rate and subsidized units (Schwartz and Tajbakhsh, 1997; Levy, McDade, and Bertumen, 2013). Like traditional real estate development, the production of mixed-income housing is a profit-motivated enterprise where developers seek to earn sufficient risk-adjusted returns to warrant putting their scare capital at risk. Unlike traditional development, however, mixed-income housing projects also require the creation of housing for those not typically served by the private market. …