Authors: Victoria Basolo
Fannie Mae Foundation

Public choice theorists predict that cities will not support local affordable housing programs, reasoning that city policy makers seek to provide the best cost-to-benefit ratio for public goods and services to attract residents and maintain fiscal health. This economic self-interest by cities results in interjurisdictional competition and the avoidance of redistributive policies such as affordable housing programs. Furthermore, some scholars argue that intergovernmental funding and mandates are necessary to motivate cities to support affordable housing programs. This article examines the relative influences of intercity competition and intergovernmental factors on local affordable housing expenditures. The analysis uses survey data and data from the 1990 U.S. census. The findings show that intercity competition reduces the likelihood that cities will spend local dollars on housing programs. Intergovernmental factors, such as federal funding and state-mandated housing planning, on the other hand, positively influence cities to spend local funds on affordable housing programs.

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