THE PLIGHT OF POLICEMEN AND TEACHERS—and a growing mainstream of other workers—who can no longer afford to live near where they work is putting a poignant face on a mounting dilemma for public policy makers. Ironically, that may be a good thing.

Public officials across America are realizing that without affordable housing, the future social and economic well-being of their communities is at risk. The Center for Housing Policy, in fact, reports that officials in seven out of 10 U.S. counties say affordable housing for working families is a “very big” or “fairly big” issue of concern for local communities.

The Montgomery County suburb of Clarksburg, Md., illustrates what's happening across much of the country. County leaders approved a mixed-use plan there to create a classic American town with office space and retail shops that will employ 40,000 workers; but it includes only 15,000 new homes. Where will the other workers live? Somewhere else of course; and therein lies the problem. While developers are usually blamed for sprawl, it is local governments—and their constituents—who bear the true responsibility for consciously deflecting, rather than managing, growth.

The reasons aren't hard to fathom. New residents cost counties and taxpayers money. Montgomery County will take in about $6,500 per household in property, income, and other taxes this year, according to a recent Washington Post report, but spend $8,500 to educate the average school student. State and federal aid help offset the burden, but not all the other services the county must provide. Businesses and jobs, meanwhile, bring new tax revenues with less related costs than new neighborhoods require. Montgomery is known as a pioneer among counties in fostering affordable housing. But when county executives formally approved a policy goal this past June supporting faster job growth than housing growth, few could deny their logic.

Yet public policies that promote growth but constrain housing, perhaps more than any other factor, are what's behind America's massive suburban sprawl. More insidiously, they artificially accelerate the rise in home prices—up 45 percent during the past five years compared to a 28 percent increase in income, notes Fannie Mae—forcing a virtual nation of working families to live in far off places, enduring once-unthinkable commutes.

There's little question, public officials are caught between a rock and a hard place—torn between forces of growth and the angry cries of a not-in-my-backyard electorate. The real culprit in many ways is the success of the American dream itself. In just four generations, we have become a nation where living in a city or on a farm has given way to where owning a suburban home with a yard has become the American way of life.

Fortunately, there are signs of promise. One is a new workforce housing initiative inaugurated in July in Atlanta by Fannie Mae CEO Franklin Raines, NAHB president Bobby Rayburn, and Atlanta mayor Shirley Franklin. The program represents an emerging model of cooperation between the public and private sector. The city has creatively partnered with Sharon McSwain Homes and Fannie Mae to build $110,000 to $220,000 homes where wage-earning families need them. The project in Cascade Parc is the first of 11 development sites planned in Atlanta over the next 10 years. Similar initiatives are planned for Kansas City and Albuquerque, says Rayburn.

“We're not talking about public housing,” Rayburn told us. “We're talking about how to solve the problem of providing housing for teachers, policemen, and nurses that they can afford in the communities where they work.” And as important, he said, is “showing cities and various communities what happens when you tack on impact fees that only makes housing more expensive.”

Indeed, public-private partnerships such as Florence Square in Aurora, Colo., are proving more effective in delivering affordable homes than many “inclusionary housing” ordinances and other fee-based incentive plans.

Hopefully, the growing visibility of workforce housing programs will win the attention of the American public and begin to counter our collective NIMBY mindset. Unless public policy makers are allowed greater latitude to work creatively with developers, the road for the common worker threatens to grow ever longer and more congested.

Wyatt Kash, Editor