"Inclusionary Zoning for Affordable Housing"
Inclusionary Zoning for Affordable Housing Douglas R. Porter The Growth Management Institute February 21, 2007 Inclusionary Zoning Developers required to include affordable units in residential developments Key Points: – Percentage of affordable units – Specified income level – Design requirements Stems from Three Housing Trends 1. Nationwide escalation of housing prices 2. Increase in households with inadequate incomes for decent housing 3. Decline in federal housing subsidies relative to need Borrows from Two Regulatory Trends 1. Increased public use of exactions from developers 2. Requirements for “fair-share” housing Benefits Piggy-backs on market forces. Creates mixed-income housing wherever residential development occurs. Generates units as growth occurs. Retains developer responsibility for site and housing production. Raises Issues Fair or legal to require developers to help meet public responsibilities for decent housing? – Perhaps not, but uses developers’ expertise and market forces to meet community goals – Generally considered legal if incentives help offset development costs Another Issue Who pays? -- Costs absorbed by premium prices for market-rate homes – Costs reduced (at least in part) by incentives – Economists: Landowners absorb costs as markets adjust – Developers: cost of doing business in a desirable market How It Works 1. Mandatory or voluntary 2. Affected projects: size and location 3. Specified proportion of affordable units 4. Incentives offered 5. For-sale and/or rental units How It Works 6. Household income eligibility 7. Options for off-site construction, in-lieu fees 8. Guidelines for unit dispersal, size, appearance 9. Duration of affordability (control period) 10. Owner/renter selection process, unit management Project Size, Location One unit (Boulder) to 50 units (Fairfax Co.) Entire jurisdiction, designated areas, zoning categories Offsite option – neighborhood, area, or anywhere Incentives Density bonus: 10 – 25 % Fast-track approval process Reduction in standards (parking) Fee reduction, deferral, or waiver Subsidies for affordable units Exemption from growth controls Tax abatement Inclusionary Zoning in Practice State mandates (esp. California, New Jersey, Massachusetts) Regional programs – a sometime thing Local programs: 350 to 400 jurisdictions Production: 80,000 to 90,000 units since 1970 Fairfax County, Virginia Four-Plex Montgomery County,Maryland Duplex Inclusionary Zoning in Practice New trend: central city initiatives: – Boston – Denver – New York – San Diego – San Francisco Under consideration: – Washington, Atlanta, Chicago Big-City Hurdles Most market action is in suburbs Effective developer opposition Fragmented constituency Complex regulatory environment Expensive construction costs Getting Started 1. Make affordable housing more than an afterthought 2. Build leadership and political will 3. Expect to take short steps 4. Recognize the need for a rigorous administrative process Getting Started 5. Knit IZ into a comprehensive housing program 6. Borrow ideas, not details 7. Choose incentives that make sense (cents) 8. Seek a state or regional commitment that will energize local governments Where to go from here? State/Regional Leadership – Requirements for local housing plans – Enabling statutes – Model ordinances More comprehensive applications – Conversions and adaptive use – Rehabilitation of existing units – In-lieu fees (high-rise, outlying, below-threshold)