Issue #131, September/October 2003


Zoning for Housing Justice

Affordable housing and affluent neighborhoods needn't be mutually exclusive. Here's how some communities are making it work.


Alvivon Hurd remembers when no one with means lived in downtown Los Angeles. Especially not white people. “For 30 years you only saw [white people] during the day in the week,” says the life-long L.A. resident, who can see downtown from her apartment.

But things have changed in the past few years. “Everything is coming back to downtown,” says Hurd. “Restaurants, a supermarket, juice bars…there are benches on the streets, green areas and trees. It’s beautiful! Darling, you can almost eat off the sidewalks.”

All this activity requires labor. And not surprisingly, the people working at the new businesses – bussing tables, cleaning the streets and the offices, providing security – can’t afford to live downtown. As happens with so many beautiful and suddenly popular places to live, downtown L.A. is out of reach for the average Angeleno. In fact, all of L.A. is short on housing, and overcrowding is rampant, says Jan Breidenbach, director of the Southern California Association of Non-Profit Housing. But the booming new downtown is an extreme example. Studios rent for $1,500 a month and buildings that were once SRO units are being converted to high-end lofts at a terrific pace. Priced out of the housing market, most downtown service workers are commuting from great distances, sometimes two hours each way.

That’s why Hurd, as a member of ACORN, is fighting for an inclusionary zoning ordinance that would require private developers to include a certain percentage of affordable units in their developments. “We feel that all residents, all segments of L.A. should be able to enjoy the benefits [of the improvements in downtown],” explains Hurd. “These are the people who have to service you. Why can they not live beside you?”

That kind of economic integration is exactly what proponents say inclusionary housing is all about. Alan Mallach, research director of National Housing Institute, defines inclusionary housing as anything that fosters integration of lower-income and market-rate housing and/or uses the “power of the marketplace” to generate resources for affordable housing. And although economic integration is the primary objective of inclusionary zoning, racial integration often becomes a focal point in the deconcentration of poverty as well.

Proponents of inclusionary housing hope that it will mitigate the effects of poverty by giving lower-income families access to better schools and job opportunities in less economically disadvantaged areas. Inclusionary zoning, the most common type of inclusionary housing program, builds affordable housing requirements into the zoning code. Developers who build in an area governed by inclusionary zoning usually receive a density bonus which allows them to build more units than normally allowed by zoning laws. First tried in 1975 and used frequently throughout the late 1970s and 1980s, inclusionary zoning has experienced a surge in popularity throughout the last decade.

Of the 107 inclusionary housing ordinances in effect in California, for example, 63 percent were passed since 1990 and 15 percent since 2000, according to the report Inclusionary Housing in California: 30 Years of Innovation, released this summer by the California Coalition for Rural Housing and the Non-Profit Housing Association of Northern California.

This increase in popularity appears to be driven by several factors. First, the continuing affordability crisis is reaching ever higher on the income scale, prompting creative solutions. Second, the luxury building boom of the 1990s, hasn’t yet slowed and has provided new opportunities for cities to capture some of the value of private investment for the public good. Third, the discussion and practice of inclusionary zoning has reached enough critical mass to forestall some of the legal battles that surrounded the earlier zoning ordinances.

Inclusionary zoning ordinances vary widely, tailored (at least in theory) to each community’s specific needs and housing market. The many questions and decisions that can shape the ordinance include:

• if it will be voluntary (with incentives) or mandatory (with compensation);
• what percentage of units will be set aside;
• what income levels those units are targeted to;
• if any additional subsidies will be built in;
• how long those units will stay affordable;
• which developments are covered (usually all over a certain size, or any one applying for a variance);
• if developers will be able opt out and pay a fee or build off-site units instead;
• how compliance will be monitored.

All of these decisions will have an enormous effect on the results and have been bitterly contested by communities and developers. For example, a 2002 review by the National Housing Conference, Inclusionary Zoning: Lessons Learned in Massachusetts, noted that despite more than 100 inclusionary zoning ordinances in that state, very little building had occurred because of restrictive qualifications. And study after study has shown that voluntary programs produce practically no affordable units.

There have been some success stories. Montgomery County, MD, enacted the first inclusionary zoning ordinance in the country in 1975. At the time, the county was quite rural/suburban, and well off. The Moderately Priced Dwelling Unit (MPDU) ordinance applied to developments over 50 units with lots less than one acre. In return for a density bonus of up to 22 percent, developers were required to set aside 12.5 to 15 percent of the units as affordable housing, targeting households earning 65 percent or less of the Area Median Income (AMI). Affordability controls for MPDUs remain active on rental units for 20 years, and on for-sale units for 10 years. When a unit is sold after the 10-year limit, a significant portion of the net profit goes to the county’s Housing Initiative Fund, which provides for the creation and preservation of affordable housing units.

To keep some units permanently affordable and reach lower income brackets, the county’s public housing agency can buy up to 33 percent of the affordable units. As of 1999, they had purchased nearly 14 percent.

By most accounts, the Montgomery County ordinance was successful in both racial and economic integration. The owners and renters of the affordable units are predominantly of racial minorities, and the average income is well below the target. It’s also one of the most productive in the country, having produced 10,781 units by 2000. A slight increase in the poverty rate of the county from 1970 to 1990 might indicate that those moving into these units were coming from outside the county.

Montgomery’s program is cited as a model by inclusionary zoning proponents – from the national Innovative Housing Institute (IHI) to tenant organizers in Chicago. David Rusk, the former mayor of Albuquerque, NM, an urban policy consultant and board member of IHI, estimates that having such an ordinance in place in the 100 largest metro areas in the country for the past 25 years would’ve met one-third of the affordable housing shortfall for the working poor and rolled economic segregation back to pre-1970s levels.

But the ordinances would have had that impact only if permanent affordability controls had been in place. In Montgomery County, where the affordability controls are already expiring, only about 3,800 units – including those bought by the public housing agency – remain affordable. And as the county becomes built out, the number of developments large enough to require new affordable units has dropped dramatically.

Time limits on affordability can range from 10 to 50 years for inclusionary zoning ordinances. But some places – like Cambridge, MA, and some towns in California – have managed to include permanent controls. “Every time you put an affordability restriction with a term, you create an expiring use problem,” says Breidenbach. Many of the California ordinances that have permanent affordability have only added it within the last five years, according to the California Coalition’s report.

Access to better schools is one of the central reasons advocates for the poor want these affordable units to be created and sustained in middle class and affluent areas. David Rusk’s recent study for the University of Denver showed that a Montgomery-style ordinance for the Denver metro area over the past 20 years would have reduced racial segregation in the area’s 17 school districts dramatically. On a scale of 0-100 (100 being total apartheid), Denver’s segregation, theoretically, would have dropped from 59 to 14. This assumes that non-minority families would move into the central city and inner suburb areas that racial minorities were moving out of – an assumption that even Rusk admits is a little far-fetched. The potential is still impressive though, and it holds out hope for a way to improve educational outcomes for minorities.

“A lot of the motivation stems from the question of ‘What are we going to do about the schools?’ ” says Patrick Maier, director of IHI. “Kids do better in integrated settings. Instead of pouring funds into poorly performing inner-city school systems, [inclusionary zoning] is bringing poorer kids into better systems.”

But is it really? Montgomery County has influenced new inclusionary zoning ordinances, but these new laws differ in content and motivation. For example, Long Island, NY, has the highest homeownership rate in the country (over 80 percent) and is the nation’s seventh least affordable place to live. Since the 1990s, real estate prices have been soaring past wages all over the New York City suburb. Many existing rental apartments are being converted to for-sale units, and any new rental housing is very high-end.

Long Island faces a burgeoning homeless population, and its immigrant service workers are doubling and tripling up in the few available rental units. “A lot of the people who need affordable housing are working everyday jobs or [are] professional people…teachers and nurses, entry-level high-tech workers,” said Edward Hernandez, director of the Long Island Campaign for Affordable Rental Housing (LICARH). Hernandez is used to making the case for affordable housing, as Long Island has notoriously been resistant to the idea.

“The Long Island economy cannot long survive without housing for its workforce,” Hernandez continues, describing how businesses and young adults are both looking elsewhere. Taking its cues from affordable housing marketing campaigns, like that of HousingMinnesota, LICARH ran a series of ads this summer showing a graduate, a nurse, a teacher, a construction worker and a soldier along with the question “Can you afford to live without me?”

Long Island Campaign for Affordable Rental Housing (LICARH) ran a series of advertisements as part of its affordable housing marketing campaign this summer.

Photo © courtesy of LICARH/CJ2 Communication Strategies

The ads were an attempt to generate support for a state-level inclusionary zoning bill that would apply only to Long Island. The bill would require setting aside 10 percent of the units for families earning up to 80 percent of AMI, which is $65,288 for Suffolk County and $72,030 for Nassau County. The bill passed the Assembly, but didn’t make it to the floor in the Senate.

School issues often come up when Long Islanders talk about inclusionary zoning. According to an April New York Times article, some towns fear that inclusionary zoning might overburden their school systems with new (and lower-income) children. Hernandez says they have nothing to worry about – inclusionary zoning will mostly benefit low-income people who are already living there and attending the schools. The real problem, Hernandez says, is that it costs $100,000 to educate a child – who as an adult will eventually have to move out of Long Island because of the lack of affordable housing.

The question of how to craft an effective policy also has bearing on a larger issue: Is inclusionary zoning really about economic integration and deconcentrating poverty – or is it just another way to fund low-to-moderate income housing production?

Jim Morgo of Long Island Housing Partnership says that it’s possible that the creation of new for-sale units will open up some rentals for those in the lower income brackets. Hernandez’s assessment is telling. Giving inner-city and extremely low-income children access to Long Island schools is clearly not the priority. This combination of higher income targeting and no provisions for increasing regional economic integration is not unusual in the inclusionary zoning ordinances on the table today.

In suburban areas, Montgomery’s income target of 65 percent of AMI seems pie-in-the-sky ambitious. More common is 80 percent of AMI for rentals, and 120 percent of AMI for homeownership units. In California, over 76 percent of programs target homeownership units to low- and moderate-income families – from below 80 percent to 120 percent of AMI. Less than half, 48 percent, target any units to below 50 percent of AMI. Some of those who target that low provide extra subsidy; others offer an option to provide fewer units at the more subsidized level.

Even in some urban areas, income targeting is creeping upwards. The advantage of urban areas, however, is that there is a concentration of housing advocates who are watching out for the interests of lower-income people. When the city of Denver proposed an inclusionary zoning ordinance in 2000, it targeted incomes 90 to 100 percent of AMI. It compensated developers, not only with traditional density bonuses and expedited permitting, but also with cash bonuses from a low-income affordable housing fund.

Advocates, including the Section 8 tenants group SOS 8 and the Community Resource Center, fought to promote a version of the ordinance that would be voluntary, but also increase incentives for developers who targeted lower-income residents. When the city council rejected the alternate plan, the advocates focused on lowering the mandatory income targets. Eventually, the city council agreed to lower the income target to 65 percent of AMI and take the cash compensations from the general fund.

The upward pressure is still strong, however. In Boston, housing advocates waged a very successful media campaign around inclusionary housing three years ago. The response was positive and the campaign resulted in the passing of an executive order that includes a 10 percent set-aside – with half targeted to 80 percent of AMI and half between 80 and 120. Unlike most inclusionary zoning campaigns, where off-site development options and in-lieu fees are included as concessions to developers, Boston advocates consider theirs to be key wins, because many low-income homebuyers would prefer to stay in their neighborhoods rather than move downtown. Overall it seems that the balance of on- and off-site development – 184 on-site units and $2 million for off-site development – is working.

There are other beacons of hope. The affluent Chicago suburb of Highland Park has passed a proposal that would target rental units to below 50 percent of AMI, and their neighbors in Evanston are considering something similar. Notably, Highland Park has engaged in other innovations, such as the development of a housing trust fund and a community land trust.

The question of how well inclusionary zoning promotes economic integration goes beyond just income targeting. It also has to do with determining where the income-qualified people are moving from. “You…want the inclusionary [zoning] to be more than a production program, you…want it to be a ‘Moving to Opportunity’ program,” explains Breidenbach, referring to the HUD program that encourages families to move out of public housing and into low-poverty neighborhoods by providing them with rent subsidies, vouchers and counseling.

However, anecdotal evidence and a few studies indicate that despite inclusionary intentions, most affordable units go to people who already live nearby. The Impact of the Mount Laurel Initiatives: An Analysis of the Characteristics of Applicants and Occupants examined the 1975 Mount Laurel decision by the New Jersey Supreme Court that required each New Jersey town to provide a fair share of affordable housing. The study found that the majority of people moving into Mount Laurel’s inclusionary housing already lived in the neighboring suburbs. “It’s painfully obvious – deconcentration does not just happen,” says Mallach, who was the housing director for Trenton, New Jersey’s capital, from 1990-1999. “The developer wants to unload the units as quickly as possible, and the municipality wants to help their own. Nobody’s going to…spend the extra time, extra money, extra work.” Rusk acknowledges that too much local application can impede inclusionary zoning’s integration potential. “When you’re talking about ‘little boxes’ government, you’re only going to get diversity if you set up administrations that are larger,” says Rusk, referring to the Northeast’s “home rule” states where zoning is under the control of many small municipalities.

The answer may not be regional government, but Mallach envisions at least a sort of “regional housing center,” where people who don’t live nearby can find out more information and perhaps put their name on a waiting list. “If you’re close to the scene you’re more likely to get information than if you’re 10 or 20 miles away,” says Mallach.

The bottom line is that inclusionary zoning isn’t a panacea, says Nick Brunick, of Business and Professional People for the Public Interest. But it can be an important statement on the part of a municipality. “It can change the dynamics of the development process.”

Inclusionary zoning proponents have a more concrete and difficult goal than making statements: increasing integration. And while inclusionary zoning shows promise in that regard, it hasn’t often lived up to its full potential. Perhaps housing advocates in Chicago and L.A., who are currently pushing ambitious inclusionary zoning proposals, can integrate the lessons of hundreds of varied attempts and start a new chapter in inclusionary zoning history.

Miriam Axel-Lute is the news editor of Metroland, an alternative newsweekly in Albany, NY.


Resources

Inclusionary Housing Programs: Policies and Practices, by Alan Mallach. Center for Urban Policy Research, Rutgers-New Brunswick, NJ. 1984.

Inclusionary Housing in California: 30 Years of Innovation, California Coalition for Rural Housing and Non-Profit Housing Association of Northern California. 2003. www.nonprofithousing.org.

Expanding Affordable Housing Through Inclusionary Zoning: Lessons From The Washington Metropolitan Area, by Karen Destorel Brown. Brookings Center for Urban and Metropolitan Policy, 2001.

Innovative Housing Institute
www.inhousing.org

Opening the Door to Inclusionary Housing workbook, Business and Professional People for the Public Interest, 2003. www.bpichicago.org/rah//pubs/opening_the_door.pdf.

“Inclusionary Zoning,” Equitable Development Toolkit. PolicyLink. www.policylink.org.