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U.S.: Cities Use Inclusionary Zoning as Housing Costs Climb

Matthew Cardinale

ATLANTA, Georgia, Oct 27 2009 (IPS) - With most U.S. cities facing a severe shortage of affordable housing, more and more are beginning to turn to so-called inclusionary zoning (IZ).

As a type of land-use regulation, IZ may sound a bit obscure; however, the idea behind it is really quite simple. When a city or jurisdiction adopts mandatory IZ, it requires any new developments – sometimes with exceptions – to have a certain percentage of affordable units.

The term “inclusionary zoning” was meant as a response to suburban zoning policies that have come to be collectively known as “exclusionary zoning”. As many middle-to-upper class white families fled the urban core of U.S. cities after World War Two, they formed suburbs that were economically and racially homogenous.

Many of these suburbs adopted exclusionary zoning policies, such as not allowing multi-family apartment buildings or requiring that homes, or even the lots in front of them, be of a certain size, which was cost-prohibitive.

IZ arose “because communities were adopting snob zoning ordinances”, David Smith, founder of the Affordable Housing Institute, told IPS.

IZ was first used in 1972 and since then has gained in popularity. While there is no national database on use of IZ in cities, the Center for Housing Policy (CHP) estimates there are at least 300 jurisdictions that have adopted IZ.

The policy is estimated to have created at least tens of thousands of affordable units in the last 40 years. A 2008 study by New York University and the CHP found that in Washington, DC, 15,252 affordable housing units have been created under IZ as of 2003. In San Francisco, California, 9,154 units were created as of 2004.

“I think it’s a good policy in general,” Smith said. “As a general rule, in a city with a strong economic base, the highest and best use of land [from a tax revenue standpoint] will be high-density, high-income usage. That will often be office towers, hotels, and high-end residential.”

“If a locality is simply trying to [economically] maximise use of its land, it will squeeze out affordable housing. Inclusionary zoning is one of the ways you can bake in affordable housing,” Smith said.

Because of recent trends, more cities like Atlanta, Georgia are beginning to look at inclusionary zoning as many white, middle to upper-class families are leaving the suburbs and moving back into the urban core of cities.

This trend may be in part because suburbanites are growing weary of growing gasoline prices, or because living in the city is again being seen as culturally “hip”.

In any event, Atlanta is one of the fastest growing cities in the nation, and local governments like Atlanta are looking for ways to prevent displacement of lower to middle-income residents. Atlanta currently has about 500,000 residents, and is expected to have 600,000 within a few years and 800,000 by 2030.

“At market rates, over 75 percent of households in Atlanta will need assistance to be able to afford the rents or prices of new homes being built inside the City limits,” according to an IZ fact sheet prepared by the City of Atlanta in 2006.

However, Atlanta Mayor Shirley Franklin’s legal office “had provided a recommendation to the city that a mandatory ordinance would be similar to a ‘taking’ and would be unconstitutional under Georgia state law. Now there’s some lawyers that disagree with that,” said Nathaniel Smith of the Office of University Community Partnerships at Emory University.

Meanwhile, Councilwoman Karla Smith (no relation) introduced a voluntary inclusionary zoning ordinance in 2006, as a compromise to at least entice developers to include affordable units, by offering in return to allow them to build more densely – that is, to build more units in the same amount of space – than they would be otherwise allowed.

However, the IZ proposal in Atlanta also required support of the local Neighbourhood Planning Units, and at least one of the NPUs apparently objected to higher density, according to copies of meeting minutes obtained by IPS.

Action on the motion by Atlanta’s Zoning Review Board and City Council was postponed several times. However, several current Council candidates have made mandatory IZ part of their platform.

“We want healthy, complete communities,” Council candidate Liz Coyle said.

In midtown Atlanta, several high-rise luxury condominiums have been built in recent years; at the moment, few can afford to live in them.

“It’s a shame we didn’t have this 10 or 12 years ago, but more people are coming. It’s about finding the right balance,” Coyle said. “Knowing the city is going to continue to grow, and knowing we want places for everybody to live, it’s important to get these policies in place now.”

One of the positive aspects of IZ is that it does not require any local subsidy. This is unlike private housing vouchers or subsidised housing, where local governments spend taxpayer dollars to pay developers to provide at least some affordable housing.

However, one advocate for housing assistance for extremely low-income families – who spoke to IPS on condition of anonymity – said that in their experience, cities have tended to define affordability in such a way that low-to-moderate income families have received the units more often than extremely low-income (ELI) families, such as seniors and those earning around the minimum wage.

This advocate said that in some situations, additional subsidies would be necessary for developers to be able to target ELI families.

Indeed, there are many aspects of IZ policy that can be tailored to fit the needs of the local community, although each of these variations introduces its own set of concerns.

For example, inclusionary zoning can be either voluntary or mandatory. However, research has shown that mandatory inclusionary zoning has been much more effective than the voluntary option at producing affordable units.

According to a think tank called Policy Link, Cambridge, Massachusetts, operated a voluntary inclusionary zoning programme from 1988 to 1998, which offered a density bonus in return for affordable units. During this period, no affordable units were created. Since Cambridge went to mandatory IZ in 1999, 131 units have been created with 130 more in progress.

Similarly, Boulder, Colorado, had voluntary IZ from 1980 to 1985, and only one developer produced affordable units during that time. Since going mandatory in 2000, developers have built 150 affordable units in new developments and another 150 off-site through a special “in lieu” provision.

“Show me a voluntary inclusionary zoning ordinance that has produced units, and I’ll do back flips out of my office,” Nathaniel Smith said.

At least two other countries have used IZ policies, although they are termed differently, according to David Smith. “The United Kingdom has… Section 106. If you want to develop an urban infill mixed-use high-end development in a UK city, you are required to include a portion of affordable housing within that development.”

“Bombay has… transferable development rights or TDRs,” Smith said.

Also, IZ in and of itself cannot be the only solution to creating enough affordable housing to fill the current shortage in U.S. cities. To be sure, it is a private-market based solution; public housing and rent control can also be solutions.

David Smith, Nathaniel Smith, and Coyle each advocate for a mix of several market-based strategies, particularly voucher subsidies and subsidised “project-based” affordable housing complexes. Coyle also adds community land trusts to the mix.

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