Inclusionary Zoning:
A Viable Solution to the Affordable Housing Crisis?
Zoning You Can Anticipate Hearing
By Bernard Tetreault
Argument I: Inclusionary Zoning Amounts To a Government "Taking" Under The Constitution
This brings to mind the old saying that when one has the facts on his side, argue the facts; that when one has the law, argue the law; and when one has neither, argue the Constitution. Nevertheless, this is a serious objection to inclusionary zoning that requires a serious rebuttal. Fortunately, there is one.
A paper on "Jnclusionary Zoning" developed by the National Association of Home Builders, which is, at best, skeptical about the concept, states: "most inclusionary zoning laws do not completely deprive the developers of a reasonable economic use (one of the Supreme Court
*s criteria) and often seek to provide incentives and bonuses as partial compensation."Although I am not a lawyer, it would appear that several steps are key in this process:
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Provide compensation to the developers (the Montgomery County, Maryland method, which has never been challenged, is to provide a density bonus).
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Care in the drafting of the legislation, although not so much care that the more conservative lawyers discover reasons that "it can
The Home Builders
* paper mentions two other legal issues—violation of private property rights through zoning and equal protection (which asks whether it is constitutional to place a threshold—in Montgomery County 50 units—under which a developer can escape inclusionary zoning requirements). The paper seems to dismiss these arguments, but this goes to the issue of careful drafting.Argument II: Density Bonuses are a Bad Idea
There are two versions to this argument, neither of which, in the Montgomery County experience, has proven very strong. The first, for want of a better term, is environmental. That is, increasing the number of units allowed on land zoned for single family or less dense development taxes the environment and resources of local government. Furthermore, requiring people to live so densely adds to social problems created by "overcrowding." If moderate-priced housing is needed, the most likely alternative—one used in countless jurisdictions—is to provide it beyond the normal growth boundaries, creating the sprawl that taxes government resources and the environment far beyond what inclusionary zoning would require. Secondly, the density required to make mandatory inclusionary zoning work is well within acceptable standards, considerably less than multifamily zones for example, and in the areas where it has been implemented there is no evidence of the social problems envisioned.
The second argument related to density bonuses is somewhat stronger: increased density requires that developers build different types of housing (i.e. townhouses in single-family detached zones), thus adversely affecting the marketability of these single-family detached homes. Generally speaking, in a high-demand housing market (like Montgomery County) this should not pose a difficulty as the demand overcomes the "intrusion" of these other housing types (this has certainly been the case in Montgomery County). Creative and attractive community design can overcome the remaining "adverse impact.~~ One of the lessons learned in Montgomery County is to provide allowances for developers to construct units that mix well within their particular community. It may cost a little more to build the unit with a brick facade rather than an aluminum facade, but if that is what it takes to make it compatible with the surrounding market-rate units, then the developer should be allowed to do it. Furthermore, it has been noted that inclusionary units in Montgomery County have been helpful to developers during an economic downturn, inasmuch as they built these units (which have a ready market in any economic situation) first and waited out a sluggish real estate market.
Argument III: Inclusionary Zoning Is A Form of Discredited Social Engineering
This is an ideological argument: government attempts to income-integrate households are a bad idea. The answer is both ideological and practical. First, zoning by its very nature is social engineering. For example, low density large lot zoning will income-segregate households, not necessarily an undesirable objective in that it is generally low-impact and high-revenue producing for the local government. Income-integration through inclusionary zoning, however, can have equally desirable outcomes: the provision of housing to the low- and moderate-income workers every community needs, planned growth that limits sprawl, and significantly, the successful integration of households of varying incomes, which is a civic good in the eyes of many (though it is not the only reason to support inclusionary zoning).
Argument IV: Developers Cannot Make Money on Inclusionary Units
This is an area of much dispute in the Montgomery County development community. There are developers who contend that it is, at best, a break-even proposition. There are others who contend that the Moderately Priced Dwelling Units (MPDUs), because of the density bonus, can be their most profitable units. Much of the discussion appears to revolve around how infrastructure costs are allocated. The basic answer to the argument, however, is that with appropriate density bonuses, the units should not cost the developer extra and, in fact, can lead to additional profit.
Argument V:Developers Should Not Have the Burden of Curing a Community*s Social/Affordable Housing Problems
No, they should not. But, like all segments of the community they have a role to play. And given that they produce the housing stock, and that the density bonuses alleviate any economic harm, the affordable housing requirement (like similar infrastructure and amenity requirements) is not an undue burden.
Argument VI: The Program Should be Voluntary, not Mandatory
Communities have very real economic development needs that depend, to a large degree, on the development of a balanced housing supply. There are many jurisdictions that have voluntary, or incentive-based, inclusionary zoning ordinances. The problem is that most of them, because of their voluntary nature, produce very few units. By contrast, the nation
*s most successful inclusionary zoning ordinance has produced 10,000 units in Montgomery County. The Montgomery County program is mandatory for subdivisions greater than 50 units. With the exception of a few small municipalities within the county, inclusionary zoning is the way of doing business in the 500 square mile planning area of Montgomery County. The mandatory nature of the program has been instrumental in its success.