This article is part of the Under the Lens series
Shelter in a Federal Storm: State and Local Housing Solutions for a Time of Federal Hostility
Building affordable housing is notoriously complicated. Funding usually comes from multiple sources—federal, state, and local governments; banks; foundations; and nonprofits—and requires engagement with numerous institutions whose timelines and demands may not match up.
When the University of California, Berkeley’s Terner Center for Housing Innovation researched the fragmentation of affordable housing funding sources, its staff interviewed developers and others working in the field about the challenges they face. Many talked about the difficulties of juggling investments, loans, and grants while responding to the needs of different agencies.
Some of the problems were almost silly. “HCD [the California Department of Housing and Community Development] says the toothbrush holder has to be on the left side of the counter. And Los Angeles says it has to be on the right side of the counter. And you’re like, ‘What do I do now?’” a California-based bond attorney told the researchers. (This is a literal example, not a metaphor.)
Others were serious. “In the time it takes to cobble together all the money, your costs are escalating in California. Might be like 1 percent per month, so 12 percent per year. … So, all of a sudden, that’s [millions] more that you’ve got to raise. … And it makes closing these gaps really, really challenging,” reported a stakeholder who has experience working in New York and California.
Funding issues aren’t the only things that get in the way of building new units. State and local governments often wield land use and permitting regulations that can also delay or frustrate housing construction.
Increasingly, state and municipal governments are asking themselves, What if those inefficiencies and obstacles were fine-tuned or eliminated, and the money usually lost to them was instead used to build or preserve more housing?
With a national housing crisis that’s now felt by just about everyone who isn’t wealthy and a federal government whose support for affordable housing has become more uncertain, state and local governments are desperately searching for solutions. While streamlining and consolidating government functions isn’t a particularly sexy topic—and one that won’t, by itself, close the housing gap—it is low-hanging fruit that doesn’t require major funding to have a real impact.
Beginning to Unify a Fragmented System
“We’re at the point in Colorado where it’s death by a thousand cuts,” says Katie Colton, director of the Colorado Housing Consortium at BuildStrong Foundation. If you add up all those places where systems are a little uncoordinated or clunky, she says, “it’s 20, 30, 40 percent more in costs. And if we’re not addressing [those issues], the problem will continue to grow.”
Colorado is already facing significant housing challenges. A June 2025 report showed that just over half of the state’s renters are cost-burdened, and a September 2025 study by the State Demography Office determined that Colorado was short more than 100,000 homes as of 2023.
Many cities and states have expressed interest in bringing together their housing systems’ stakeholders to improve communication and identify weak spots. Colorado achieved this with the help of BuildStrong Foundation, a private institution that administers the Colorado Housing Consortium. Founded in 2025, the group is made up of more than 60 leaders across the state’s affordable housing supply system, including government officials, for- and nonprofit developers, lenders, and advocates.
Conversations among participants in the consortium quickly led to a few early plans that are beginning to bear fruit. In November 2025, the state government, the Colorado Housing and Finance Authority (CHFA), and the city of Denver launched Housing Hub Colorado, a one-stop website offering information on tax credits and other financing options for developers, including timelines and application instructions.
The consortium’s next goal, which is members’ top priority, is to create a statewide common application for developers applying for funding. This would allow developers to enter their information once, and key funding institutions—like CHFA, which allocates federal low-income housing tax credits and the state’s housing tax credit, and the city of Denver, which manages federal community development block grants—could all access that information at once, in the same formats, enabling them to coordinate with each other on specific projects.
That type of coordination is exactly what the Terner Center recommended in the “Cost of Fragmentation” report it released this February. Along with profiling several states whose housing finance systems are unified or unusually collaborative, the report quantifies the actual cost of fragmentation.
“On average, each additional funding source is associated with adding four months to the timeline for starting construction and an increase of $20,460 per unit in total development costs,” the report notes.
Colorado’s data is strikingly similar. Between 2021 and 2025, the average per-unit development cost increased from about $325,000 to just under $500,000, and the number of completed developments declined. Much of the cost increase may have been due to rising prices caused by high interest rates, tariffs, and labor issues, but likely not all. For example, says Colton, “I’ve heard that the legal fees associated with closing [a project] have tripled in last 5 to 10 years because of fragmentation.”
Colton and others hope the common application, which is expected to be ready by the end of the year, will begin to solve that problem.
Shared Equity Housing as a Bargain
Some cities and states are hoping to get more bang for their buck by adjusting the content of their affordable housing financing guidelines, not just how they’re administered.
In some cases, this has led to increased focus on shared equity models like community land trusts, which not only help residents who might not typically qualify to become homeowners, but which retain that subsidy to also keep homes affordable for future buyers without as many new resources needed.
“Anecdotally, we feel like we’re getting more interest in shared equity models now than in recent years,” says Colby Sledge, regional policy director at Grounded Solutions Network, a nonprofit that promotes permanently affordable housing solutions. “We think it’s because local and state governments are having to make their dollars go further toward remedying a housing crisis that has hit pretty much everywhere in the country.”
Sledge and his colleagues have been working with housing finance agencies around the country to help expand their eligibility criteria for specific loan funds and grant programs. They’ve also seen housing trust funds adjust their scoring rubrics to allow community-owned projects to compete. For example, says Sledge, the Barnes Housing Trust Fund in Nashville has added new scoring language to incentivize community ownership, resulting in the creation of some new limited equity cooperatives.
Because many policymakers are unfamiliar with shared equity projects, including them in more conventional funds can be an iterative process. In Oregon, the Local Innovation and Fast Track (LIFT) program has served as the state’s primary funding source for new affordable housing projects since 2016. In 2024, it was restructured and made compatible with joint ownership projects, thanks in part to advocacy by groups like SquareOne Villages, which builds cooperatively owned communities.
“We made the case that these resources are available to rental housing. We’re serving similar people, so we should be able to access [these resources], too,” says Andrew Heben, executive director of SquareOne Villages.
Last year, SquareOne Villages’ Rosa Village Co-op became the first cooperatively owned housing project to receive LIFT funds—one that will create 52 permanently affordable homes. Heben considers this a demonstration project that will help make the case for more funding. “That’s our next push,” he says. “Now that [the state has] made it open to this type of housing, we’ll argue that we should be able to get broader use of the funds.”
On Land Use Approvals, Getting to ‘Yes’ More Easily
For almost a decade, housing advocates have criticized single-family zoning and other restrictive land use regulations for limiting the number and types of homes built. But the issue has historically been viewed as solely a local one. Now, states are viewing it with concern as well.
“States have a policy lever and are increasingly using it to require or incentivize” zoning that promotes more housing, says Helen Ketema, state housing and land use policy fellow at New York University’s Furman Center. Ketema cowrote a recent report by The States Forum that highlights how much the 50 states differ in their housing permitting rates—and why.
“There are many explanations for the stark differences in housing production across the states, but among the key factors are restrictive zoning regulations and land-use processes that make it hard to get to yes on any proposed new housing development,” the report reads. “Considerable research shows a correlation between the restrictiveness of zoning regulations and the supply of housing—and, subsequently, of rents and housing prices.”
In response, state governments have adopted a variety of stick-and-carrot approaches. For example, Arizona passed legislation in 2024 requiring municipalities to publish a housing needs assessment every five years and report annually on their progress to the Arizona Department of Housing. Montana mandates that municipalities with over 5,000 residents allow for increased density. Other states, including Massachusetts, require that a certain percentage of a town’s housing stock be affordable to low- or moderate-income households; or, like New Hampshire, they reward towns that pass pro-housing ordinances.
And some states address the permitting and development process itself, limiting local governments’ ability to reject potential projects or restrict the amount of time they’re debated. “We’re seeing more states saying, ‘You can’t do this lengthy discretionary process where the local government has all these different standards,’” says Ketema.
Vermont is taking a slightly different tack. Last September, Gov. Phil Scott issued an executive order that introduced a variety of efforts to address the state’s housing shortage. What’s gotten attention is the order’s mandate that state agencies inventory vacant or underused state-owned land that could be used for housing—similar to initiatives in Massachusetts and Oregon. Vermont’s Department of Housing and Community Development is leading the effort. So far, it has identified 130 eligible parcels, and it plans to pick 5 to 10 as test cases, says Alex Farrell, the department’s commissioner.
However, another proposal in Gov. Scott’s executive order that has received less attention could be a big deal: a plan to improve the state’s permitting processes.
“Vermont is known to be regulation-heavy, to the detriment of housing [construction],” says Farrell. Before breaking ground, a builder might have to apply for as many as six permits, including for construction in a wetland, a brownfield, or a Department of Transportation right-of-way. “There’s no single entry point. So, for housing at any scale, you can only get through the process safely with an attorney and many consultants,” he says. And that, of course, costs money—money that is ultimately reflected in housing prices.
Gov. Scott’s plan streamlines the process by creating a single entry point for applicants. Instead of builders navigating an arcane system, state government personnel—coordinated, ideally, by a single “permit czar”—would handle moving an application through the relevant agencies before returning it, completed, to the developer.
“This can truly change permitting here in Vermont,” says Farrell. “Internally, there’s absolutely urgency and energy around it.”
Finding the Housing That Is Out There
Permitting reforms, sweeping land use legislation, and efforts to consolidate affordable housing financing systems are all supply-side improvements. Changes are also occurring on the demand side and are just as needed. For example, many municipalities are discussing or finally establishing a unified system where local renters seeking affordable units can fill out a single application used by all agencies offering subsidized housing.
In fact, The New York Times reported in November 2025 that even New York City, one of the largest and most expensive rental markets in the U.S., lacked a single cohesive database of available affordable units. That is, it did until last year, when a couple of high school students recognized the need and created one themselves in their spare time.
It was a no-brainer. But like many other administrative inefficiencies, it had been overlooked by city agencies and even advocates for years.
In Jackson Hole, Wyoming, a new housing collective—similar to Colorado’s—composed of housing stakeholders from the public, private and nonprofit sectors, has been meeting to find ways to improve the area’s affordable housing system. The group determined that the solution with the highest impact would be the creation of a universal intake system that makes it easier for residents to find housing.
As in many other municipalities, affordable housing in Jackson Hole is offered by a number of providers, including town and county agencies; institutions such as schools that offer housing for their workforces; and for-profit and nonprofit developers.
“They’re all siloed,” laments Wendy Martinez, director of housing solutions at the Community Foundation of Jackson Hole, which is convening the housing collective. “For a community member to find and connect to housing, they have to go to many different places. It’s a very complex system to navigate.”
What the solution will look like is still unclear: it could be a universal application that all the agencies agree to accept, a universal listing service, or something else entirely. Consultants from the Urban Institute are helping the collective figure it out, with input from users.
The housing market is particularly unusual in Jackson Hole, a resort town constrained by topography and publicly owned land. Prices in the area keep increasing. Last year, the median single-family home price in Jackson Hole reached over $5 million, and it’s clear to everyone involved in the housing ecosystem that they need to do something.
Funding for more homes would be ideal. “We need a little bit of everything at this point,” says Martinez. In the meantime, though, small improvements around the edges can at least make the systems that already exist run more smoothly.
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Well written, 2 things as a new developer
1. I need to have 2 projects under my belt, before I can apply to get grant money for low income housing
2 zoning needs to be changed
3 getting funds that will be enough to build
In CA it is not the affordable housing finance system or a fragmented system that is the biggest issue. It is misaligned and conflicting state program requirements that fund affordable housing and how those funds are administered. The state of CA dept of housing and community development uses a competitive process to select individual projects using “first in money approach” but then they call it “gap financing”. If it is first in money you have not lined up all your sources and uses and you do not know what the gap its. Additionally, this creates a top down to project selection instead of a bottom-up approach thereby creating delay, complication and adding to the cost. Often projects awarded HCD funding are even not shovel or financially ready for bonds and tax credits to be awarded thus the return for multiple rounds.