We should not exclude inclusionary zoning

By Casius Pealer

During the 2017 Louisiana Legislative Session, Senator Conrad Appel introduced SB 162. The bill restricted and potentially completely prohibited municipalities across the State from using local  zoning policies to promote mixed-income housing development. This law would repeal a law passed in 2006 to actively promote what is called “inclusionary zoning.”

The Bill passed Senate Committee, but was defeated in the House Commerce Committee with a 8:7 vote. Overwhelmingly, the opponents to the Bill, both advocates and public officials, highlighted the importance of locally made decisions. Every real estate market is different, and we should have the ability as a city to enact specific policies to address our conditions and ensure equity and affordability.

Today, at least 482 jurisdictions in 27 states and the District of Columbia have adopted inclusionary zoning policies.

Today, at least 482 jurisdictions in 27 states and the District of Columbia have formally adopted inclusionary zoning policies, with the earliest of those policies in place since 1974.[1] The vast majority of states currently leave inclusionary housing to the general delegated home rule/municipal powers, meaning that the vast majority of states support this traditional local land use power. Louisiana is one of thirteen U.S. states that go further and expressly authorize inclusionary housing measures.[2]

These laws are often opposed by developers and existing property owners in the targeted areas, concerned about additional requirements and a negative impact on property values. Indeed, this concern applies to most local zoning policies, including more traditional use, massing, setback and parking requirements. All effective zoning rules require a strong understanding of local markets and balance a complex set of costs and benefits—and inclusionary zoning rules are no different.

Inclusionary housing programs can produce affordable housing and do not lead to significant declines in overall housing production or to increases in market-rate prices

The Urban Land Institute (ULI) is a respected industry association for real estate and land use experts. In 2006, ULI issued a lengthy report titled, “The Economics of Inclusionary Development,” summarizing the potential benefits and pitfalls of inclusionary zoning or “IZ” laws:

A recent review of the leading IZ research from across the ideological spectrum concluded that “the most highly regarded empirical evidence suggests that inclusionary housing programs can produce affordable housing and do not lead to significant declines in overall housing production or to increases in market-rate prices.” The study cautioned, however, that careful attention to the design details and the structuring of incentives is critical to avoid adverse effects.”[3]

Clearly the particular program design details matter greatly, including targeting geographic areas that are seeing the most dramatic price increases and resulting exclusion of even moderate-income households. Fortunately, multiple industry guides and resources exist for municipalities to learn from, including a Model Inclusionary Zoning Ordinance adopted by the Louisiana Legislature in 2007.

With careful design and implementation, developers themselves can benefit from a targeted inclusionary housing policy in at least three ways: certainty and clarity on individual project requirements, a level playing field with competing projects, and continued public support for development. In this way also, inclusionary zoning is similar to other zoning rules which already govern what private owners may build and which are responsive to very local market conditions.

Effective inclusionary housing policies are just one part of a comprehensive local or regional housing plan.

Inclusionary housing policies are often criticized for not producing a large number of units. Advocates respond that the annual number of units may not be significant, but the location of these units in the highest-cost areas serves a unique purpose, and with long-term affordability requirements can have a significant impact over time. The most recent assessment of affordable units produced through inclusionary housing policies estimated between 129,000 and 150,000 nationwide.[4]

Indeed, most municipalities only enact these policies as a singular part of a larger comprehensive housing strategy. Research on inclusionary housing jurisdictions shows that they most often have implemented a range of additional housing programs, using both federal and local funds.[5] For example, New Orleans has long dedicated local funds to housing through a local housing trust fund (the Neighborhood Housing Improvement Fund, established in 1992)[6] and more recently established an independent community land trust (the Crescent City Community Land Trust in 2011).[7] These local housing efforts are unique in Louisiana, but more common elsewhere in the country.

Additionally, New Orleans recently completed a 10 Year Housing Plan called HousingNOLA, involving numerous stakeholders and ongoing monitoring and assessment. Given this context, it is not surprising that New Orleans would also be the first jurisdiction in Louisiana to enact an inclusionary zoning ordinance under the Legislature’s 2006 Act–again as one part of the City’s 10 Year Housing Plan.

Land use and zoning decisions are inherently complex and traditionally made at the local level where the effects are most apparent. The Legislature should uphold this long-standing tradition and defeat SB 162.

Casius Pealer is a Favrot Professor of Practice at Tulane University’s School of Architecture, and Director of the University’s graduate program in real estate development. Pealer is also a real estate attorney and previously served on the American Institute of Architects (AIA) national Housing Committee.

[1] Lincoln Institute of Land Policy, “Achieving Lasting Affordability through Inclusionary Housing,” July 2014, available at

http://www.lincolninst.edu/publications/working-papers/achieving-lasting-affordability-through-inclusionary-housing

[2] Grounded Solutions Network, “Inclusionary Housing Explained,” http://inclusionaryhousing.org/inclusionary-housing-explained/what-are-the-downsides/is-it-legal/ (last visited May 22, 2017). This research updates a June 2007 study by NAHB. Both the updated sources and the original 2007 report are at the link above.

[3] Urban Land Institute, Terwilliger Center for Housing, “The Economics of Inclusionary Development” (2016), available at http://uli.org/wp-content/uploads/ULI-Documents/Economics-of-Inclusionary-Zoning.pdf, quoting a Center for Housing Policy brief published by the National Housing Conference in 2016 titled “Separating Fact from Fiction to Design Effective Inclusionary Housing Programs.”

[4] Calavita, Nico and Alan Mallach, eds. Inclusionary Housing in International Perspective. Lincoln Institute of Land Policy (2010).

[5] Ibid, 9.

[6] Housing Trust Fund Project, “Survey of City Housing Trust Funds 2016” 2016, available at https://housingtrustfundproject.org/wp-content/uploads/2017/01/City-htfund-admin-and-date-2016.pdf

[7] The Housing Fund, Vanderbilt University, “2011 Comprehensive CLT Survey,” January 2012, available at http://community-wealth.org/sites/clone.community-wealth.org/files/downloads/paper-thaden12.pdf. This survey does not list any land trusts in Louisiana, but the Crescent City Community Land Trust was established after the completion of this most recent survey.

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