A couple of years ago, we attended a gathering of mayors. The primary topic of the meeting was the worsening of the housing affordability crisis and the growing need for cities (and counties and states) to innovate on solutions given the general unpredictability of the federal government.
During this gathering, a mayor of a major heartland city made an incisive observation that has stuck with us. He said:
“Ten years ago, the role of cities in housing was simple and straightforward: administer a few federal programs like HOME and CDBG. Now we are being asked, as a start, to update our land use, expedite permitting, embrace new construction methods, apply disruptive technologies, use land we own to increase housing production and help organize local, private and philanthropic capital. We will step up, as we always do, but we may need a bit of support.”
Earlier this month, Bloomberg Philanthropies directly answered this mayor’s call. The foundation launched a major initiative with Accelerator for America, Public Digital, and Delivery Associates to bring three promising housing solutions — Atlanta’s Housing Strike Force model pioneered by Mayor Andre Dickens, Austin’s Accessory Dwelling Unit (ADU) reforms pushed by Mayor Kirk Watson and San Diego’s speedy permitting initiative pursued by Mayor Todd Gloria — to up to 30 cities, with roughly ten local governments employing each one.
On a fundamental level, the Bloomberg Philanthropies’ announcement is a bold declaration that mayors and city governments are assuming a central leadership role in addressing the nation’s housing crisis. This is a major shift in the locus of problem solving — especially on housing. The federal government largely led housing solutions in the 20th century, responding to crises as diverse as the Great Depression, the post-WWII housing shortage, systemic racial discrimination and homelessness. As we have written before, this is changing. There has been a groundswell of city, county, and state innovation to address the housing crisis — which, uniquely across domestic policy spheres, has a tangled set of responsibilities for different layers of government.
The recent enactment of the 21st Century ROAD to Housing Act is a telling case in point: the Federal government has acted, but it has provided scaffolding to help empower cities to build — not a mandate from on high. The onus to act now sits with city (and state) leaders. The good news is that the past decade has given cities a clear set of tools that are being continuously improved upon. Focusing first on responsibilities firmly within their control (e.g., land use, permitting), cities have gradually expanded into roles (e.g., capital, construction and technology innovation) historically driven primarily by the federal government. They are also, along with private and civic partners, experimenting with substantial governance reforms, to drive inter-agency and even cross-jurisdiction collaboration in the service of housing production and preservation.
As described above, the Bloomberg Philanthropies’ initiative focused on three of these proven solutions that are ripe for replication and adaptation. Significantly, one of the three solutions — Atlanta’s Housing Strike Force — was featured in depth by the National Housing Crisis Task Force in its State and Local Housing Action Plan (which all the authors of this piece worked on). The Task Force was co-founded by Accelerator for America and is co-chaired by Atlanta Mayor Andre Dickens, Cleveland Mayor Justin Bibb, Utah Governor Spencer Cox, and Fifth Third Bank CDC President Susan Thomas.
The solutions themselves are helpful, yet what this initiative aims to do is more profound. The Bloomberg Philanthropies’ initiative goes beyond individual solutions and tries to tackle what might be the central challenge to city innovations today — not the initiation or piloting of new innovations themselves but the rapid diffusion of those innovations beyond first mover cities to a growing number of “fast followers” until best practices ultimately become the norm of how cities function, inside and outside government.
Here is where it gets interesting. More than any other public, private or civic institution in the world today, Bloomberg Philanthropies is purposefully aiming to make the practice of spreading smart solutions from one place to another a central part of 21st century city problem solving.
The new initiative reflects this aspiration on several levels.
First, the placement of the initiative within the Bloomberg Philanthropies’ longstanding Government Innovation program is important. As the Bloomberg Philanthropies’ press release noted:
The initiative, part of the organization’s Government Innovation portfolio, will be housed within its Bloomberg Cities Idea Exchange, the first effort of its kind moving what works in one municipality to where it is needed next. More than 1,000 city halls from 95 countries—serving over 745 million residents—take part in the Idea Exchange today, with nearly 200 replications complete or underway.
In addition, the Philanthropies recognizes that the core binding constraint on the diffusion of solutions is most often local capacity. To that end, the new initiative will provide each participating municipality with up to $450,000 to $750,000 in funding to accelerate these ideas — including activities such as piloting new technologies, developing permit-ready plans, or boosting staff capacity. This is a big deal. It helps remove one of the biggest challenges for a city trying something that has worked elsewhere: local institutional resource allocation.
Finally, the initiative recognizes the power of networks in spreading ideas fast. As the press release describes, “City Hall participants will also network with their peers, sharing what is succeeding on the ground and strengthening their plans with the officials who are furthest ahead on housing solutions nationwide.”
Bloomberg’s general approach here is emblematic of what works to spread solutions from city-to-city in the 21st Century. This is a radical departure from how housing solutions were spread in the 20th Century, and in our view the fact that this initiative takes aim at housing will meaningfully move the needle.
In the 20th century, the federal government played an outsized role in creating a uniform institutional and programmatic architecture for housing. Starting in the 1930s, with the enactment of the United States Housing Act of 1937, thousands of local public housing authorities (PHAs) were created to develop and manage federally subsidized public housing. In subsequent decades, cities also began to create first redevelopment agencies and later local housing or community development agencies to manage Great Society programs and the CDBG and HOME block grants. The federal government, thus, played a critical norming role by spurring the creation of local institutions, promulgating clear program rules and then facilitating the transfer of what was working through guidance and handbooks.
The federal government, in other words, was a giant diffusion machine for housing in the last century. It both spurred the creation of local institutions that could deploy federal resources and then promulgated rules and identified best practices for the field to follow. Through the 2000s these federal diffusion efforts sputtered (for a variety of reasons), to the point where today, if we were to characterize HUD rules as “housing innovation transfer” to a room full of mayors, we’d be met with laughter.
As these federal efforts sputtered, a different kind of organic city-to-city mechanism took hold. In a prior piece, we called this “phone call federalism.” Here is how it works.
“A mayor, county executive or governor reads about an innovative local or state practice or policy in the media or, more likely, hears about it from a peer or at a convening held by a national constituency organization and decides to adapt the innovation back to their community. The elected official returns to their respective community, informs their Cabinet and staff of the intriguing innovation and places a call to the first mover mayor, governor, or legislator who led the innovation. Information is shared. Lessons are learned. Innovations are adapted. Progress is made.”
There is much to admire about phone call federalism. It is a highly organic mechanism for spreading solutions, naturally pairing up leaders in communities that are facing similar challenges. But it falls short on multiple levels and is simply not a sufficient way to diffuse solutions at a national level. As we wrote,
“Its allure — city leader to city leader, state leader to state leader — is ultimately constraining and idiosyncratic. It is possible to spread an innovative practice from one “first mover” city to two or three “fast followers.” But 50 cities? 500 cities? That outstrips the ability of individual places to bottle up their new practices and act as customized consultants to another community (after all, these practices were designed first and foremost to respond to a pressing local challenge).”
In many respects, the Bloomberg Philanthropies’ initiative represents a concerted effort to confront the unreliability of the federal government as a strategic partner as well as the inadequacy of phone call federalism as a national system for diffusing proven solutions. It aims to formalize what is good about phone-call federalism by systemically identifying proven solutions and creating cohorts of cities, armed with capacity, to adapt these solutions to local priorities and conditions. It solves the problem of moving a solution from 1 catalytic city to 10 others, a critical milestone on the path to broader adoption.
In our view, something novel and profound is being invented here that is quite distinct from diffusion efforts to date.
The Bloomberg Philanthropies’ initiative turns the 20th century model of top-down diffusion (i.e., feds give money with rules, cities must follow) on its head. The initiative recognizes, as Mayor Bloomberg recently wrote: “City halls control a variety of levers that determine what housing can be built, where it can be built, and how quickly it can be built.” It is ground up, respectful of the variance in market conditions and local power that exists in our distributed Republic. It enables places to adapt proven solutions to their own priorities and challenges and operates through codification of practices and products rather than diktats. Though, we should note, this type of model works best when there is a stable federal platform — it is best as a mechanism to speed up diffusion, not a wholesale replacement of federal uniform products.
The Bloomberg Philanthropies’ initiative is not an end to the diffusion challenge. The Philanthropies prides itself as an organization of “continuous learning.” To that end, we believe this initiative—backed by its Government Innovation program—could help cities broadly and urban housing efforts in particular answer several fundamental questions.
What makes a locally driven, public-sector innovation more or less likely to spread? In our view, several factors are essential:
- The solution demonstrably addresses a commonly held problem. (e.g. permits are slow, speeding them up saves time and money for all involved)
- The solution has a clear set of replicable steps. (e.g. to make ADU’s more prevalent, update land use in a certain set of ways)
- The solution is “cool” and easily described in a world characterized by excessive noise and distraction (this is where having first movers who have demonstrated results, like Mayors Dickens, Gloria, and Watson, is key).
- The solution allows decision makers to see something in it for themselves. (e.g. Strike Forces allow for a clear and fast problem-solving machine for publicly announced goals)
- The solution, once implemented, can yield significant results relatively quickly, which can be measured, tracked and communicated. This last feature is critical to restore public trust in government’s capabilities to solve problems. It is also the hardest to measure and ensure in a policy arena as multi-dimensional as housing.
The three areas of initial focus — Strike Forces, ADU reforms and fast permitting — fit these criteria at the outset. The intriguing question is what lessons will be learned as the initiative proceeds. Which factors hold true? Which factors need modification?
In the end, a diffusion effort run by cities for cities is different from one imposed by the national government from above. The Bloomberg Philanthropies’ initiative provides both a uniform platform for action with the ability and flexibility to customize to local circumstances.
This combination of uniformity and customization has been a central limitation of federal actions in the past.
What can innovations in the housing sphere learn from other public sector innovations?
The Bloomberg Philanthropies’ initiative is not a siloed housing effort; as described above, it sits within the broader Bloomberg Cities Ideas Exchange and wider Government Innovation program. For more than a decade, those efforts have cultivated the infrastructure through which mayors and municipalities can bring innovative ideas to life—with the capabilities that make change stick—alongside a mechanism that is helping move what works from one city hall to another. That means that this initiative can be informed by other urban interventions and, hopefully, as time proceeds, inform others.
There is a fundamental need for such cross fertilization. As James Anderson, who leads the Government Innovation program Bloomberg Philanthropies, recently said in an interview with Governing:
“We tend to organize the way we approach most issues at the local government level in a vertical way. Funding flows vertically. Incentive structures are organized vertically. Accountability is vertical.”
Housing, more than most urban challenges, sits within its own bubble, circumscribed by decades-long ways of doing things, in a language that has often been described as “HUD-speak.” The various Bloomberg Philanthropies’ efforts are sparking and spreading innovative solutions around data, technology, governance, community participation and other elements of design and delivery that can directly the housing space. As James Anderson observes,
“That is the art and science of idea-spreading: Understanding what in the model really matters, what’s a core component and what’s optional, what’s typically not talked about in the press releases that makes implementation really challenging, and whether those barriers to implementation can be overcome in other places.”
The production and preservation of housing, let alone the approach to homelessness, has similarities to other areas of urban policy and practice, but also some critical differences. Understanding this in depth could enable the cross fertilization of ideas across the full landscape of urban challenges and smartly inform the design, financing and delivery of housing solutions.
What can public sector innovators learn from the diffusion of private sector innovations?
The housing market is, in many respects, a private-public enterprise: in the U.S., the public sector largely sets conditions for housing production, the private sector, for the most part, builds and finances the home or apartment building. The private sector is very effective at what it does by routinizing product types that are easily understood by consumers, be they home types (e.g., accessory dwelling units), financial products (e.g., fixed rate mortgages) or technological advances (e.g., construction materials and techniques). It is also remarkably responsive to incentives.
Product innovations of this kind are relatively easy to spread partly because market players — technology firms, production companies, housing developers, financial institutions, architectural firms and consultancies — literally capture, carry and apply the same intervention from place to place. Where there is a private incentive to go, the market goes; where there is disincentive, it goes elsewhere.
In many respects, the Bloomberg Philanthropies’ effort is trying to “productize” problem solving in the public sector. As it does so, applying lessons from the private sector companies and institutions would be novel and, possibly, transformative.
The Bloomberg Philanthropies’ initiative arrives at the exact moment when Housing Federalism — i.e., the division of responsibilities across levels of government and sectors of society — is undergoing the most profound change since the 1930s. Over the next decade, the size and scale of the challenges will precipitate new understanding of what reforms are necessary, who delivers them and how they are then coordinated, diffused and scaled across the country.
Bloomberg Philanthropies asserts that cities and mayors are ready to play their unique role as catalysts of experimentation and innovation. This is an initiative that bears close watching, both for the impact it delivers and the learnings it imparts.
Bruce Katz is the Founder of New Localism Associates and a Senior Advisor to the National Housing Crisis Task Force. Colin Higgins is Executive Director of the Task Force. A.J. Herrmann is Chief of Housing and Policy Innovation at Accelerator for America.