Housing

“Inclusionary Upzoning” Is Gaining Ground. Here’s Why.

Inclusionary housing policies can help with a lot of the issues that many cities and towns struggle with these days, from the dwindling supply of affordable rental options in hot housing markets to the need for a fairer housing market that includes real location choices for lower-income households. These policies, which ask developers to include […]

Inclusionary housing policies can help with a lot of the issues that many cities and towns struggle with these days, from the dwindling supply of affordable rental options in hot housing markets to the need for a fairer housing market that includes real location choices for lower-income households. These policies, which ask developers to include affordable homes in otherwise market-rate properties, are a tool without peer in helping lower-income households access neighborhoods with good schools and healthier environments. And as more development turns inward toward walkable urban places, inclusionary housing policies help reserve land for lasting affordability in tight, gentrifying or pre-gentrifying markets.

But legal, political and market barriers too often impede the adoption of inclusionary housing in many states.

This is why I’m so excited about the new and growing crop of inclusionary housing policies tied to upzoning referred to as “inclusionary upzoning.” These policies are an important part of the story of inclusionary housing’s spread over the past seven years to a total of 27 states plus the District of Columbia. According to a recent survey from NHC’s Center for Housing Policy, more than 60 new inclusionary housing policies have been added since 2007, putting the total at over 500 mandatory or voluntary inclusionary housing policies nationwide. Many of these new policies are linked to upzoning.

Inclusionary upzoning often works like this: when localities adopt new land use plans that allow taller height limits, greater development intensity, or new land uses such as housing in formerly industrial or commercial areas, they link new development options to requirements or incentives for lower-priced, income-targeted housing. In some localities, the principle is applied more broadly so that affordability requirements kick in whenever a developer seeks discretionary “zoning relief.”

In either form, inclusionary upzoning can provide a helpful workaround in communities where inclusionary housing has run into legal barriers, such as Oregon, Washington, Texas, Colorado and more recently California. Optional or mandatory policies that only apply when a neighborhood or property is upzoned offer localities in these states a legally viable alternative.  Similarly, inclusionary upzoning may be an easier fit than traditional inclusionary housing in lukewarm-market cities. Inclusionary upzoning offers these localities a means of testing a policy in a targeted area where significant, transparent zoning benefits can help soften inclusionary requirements and ensure that new housing development is still economically feasible.

In hotter housing markets, inclusionary upzoning is providing a politically appealing means for strengthening existing, jurisdiction-wide policies in neighborhoods where affordability pressures and land constraints are greatest. Places such as Fairfax County and Arlington County (VA), and Santa Monica (CA) have used inclusionary upzoning to supplement a baseline inclusionary housing policy in targeted, improving sub-markets.

As I wrote recently in a report titled Inclusionary Upzoning, these policies are getting results. New York City, Boston, and Redmond (WA), for example, have collectively generated over 4,000 affordable homes through inclusionary upzoning. Newer policies in places like the Tysons community of Fairfax County have recently added to that total, and are poised to add thousands more affordable homes in growing communities over the next 15 years.

Several factors are contributing to growing interest in inclusionary upzoning:

1. Our nation’s transit boom. As of last year, there were more than 700 transit projects in some stage of development nationwide. Many localities are accompanying these transit investments with looser zoning restrictions for neighborhoods within walking distance of new stations to maximize transit accessibility. As new transit service often adds its own boost to land values, it is a common denominator for many inclusionary upzoning policies.

2. Surging demand for urban living, which is fueling higher rents and prompting urban places to rezone for more housing.

3. Greater alignment of federal agency funding with inclusivity goals, most significantly HUD’s renewed scrutiny of local plans for furthering fair housing, and the Federal Transit Administration’s announcement that it will review affordable housing zoning as part of its scoring process for allocating New Starts grants for new rail lines.

The durability of these trends will mean growing interest in inclusionary upzoning in more regions of the country over the next decade. But timing is crucial. Inclusionary housing is harder to institute after a neighborhood is upzoned and land prices have risen to reflect new development potential. Rezoning without affordability expectations leaves little room for future affordability requirements. As communities upzone, they have a once-in-a-generation opportunity to build in affordability and promote broader housing options for low- and modest-income people.

You can learn more about where inclusionary upzoning can work, where it may be less suitable, and emerging best practices this November in Oakland at Solutions 2014, NHC’s national conference on state and local housing policy; register and learn more.

 

Robert Hickey is a Senior Research Associate at the Center for Housing Policy, the research division of the National Housing Conference. Find Robert on Twitter at @housingRobert.

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