Transcript No Slide Title

The Affordability Challenge
Working Around Inclusionary
Zoning with a Comprehensive
Approach
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THE AFFORDABILITY CHALLENGE
• Multidimensional problem
• Diverse spectrum of need
• From very low and low income
• To moderate income
• Even to above median income in many
markets today
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THE AFFORDABILITY CHALLENGE
• Reasons for shortfall include:
• Plans that solicit jobs but don’t adequately
provide for housing
• Outdated ordinances that limit range and mix of
housing types
• Unwieldy development approval processes
• Increasing fees that add to housing costs
• Environmental/growth controls that constrain land
supply and developability
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THE AFFORDABILITY SOLUTION
• Different tools and approaches needed to
address different income segments and solve
different problems
• Some may work better than others in your
area
• Most work best as part of comprehensive
strategy
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THE AFFORDABILITY SOLUTION
• Silver Bullet Fallacy—there is no single
solution
• Yet many communities rely on just a few tools
such as IZ because of a lack of information or
local politics
• Easier than taking a comprehensive approach
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NEW NAHB RESEARCH
• Little comprehensive research done to date on
inclusionary zoning or how other state and
local approaches are working
• NAHB conducted three major studies
• Reports free and available at
www.nahb.org/housingaffordability
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NATIONAL SURVEY
• Prepared by nationally known land use attorney
Timothy S. Hollister, Shipman & Goodwin LLP
• 50-state survey of state enabling authority for
inclusionary zoning as well as ordinances across the
country
• Covers 40 elements that should be carefully
considered when drafting and implementing
ordinances
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SURVEY OF STATE STATUTES
13 states:
expressly or implicitly authorize IZ
7 states:
no express authority
2 states:
prohibit IZ (Oregon, Texas)
2 states:
IZ ordinance invalidated-- conflicted
with state rent
control laws
26 states:
no express or implied authorization-dependent on home rule
KNOW YOUR STATE STATUTE!!
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40 ELEMENTS THAT INCLUSIONARY ZONING
ORDINANCES SHOULD ADDRESS
•
General practical issues—incentives
and in-lieu provisions
•
Defining geographic and
type of construction applicability
•
Resident eligibility—very complex
•
Financial information and
management—resale provisions,
buyer equity terms
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NATIONAL SURVEY CONCLUSION
“inclusionary zoning is a complicated undertaking, one
with many more moving parts and practical
considerations than drafters realize . . . . If government
proceeds with implementation, it is essential that all of
the critical details be identified, addressed, and
molded into a workable program."
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UNIVERSITY OF MARYLAND RESEARCH
(Knaap and Bento)
• Academically rigorous study
• Extensive California data set over 17-year
period
• Controlled for many factors and influences
• Statistically significant results
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UNIVERSITY OF MARYLAND RESEARCH
• Could not find an increase in overall housing
production from IZ
• Did find 7 % drop in single family production
with shift to multifamily
• Shift increased as IZ requirements also
increased
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UNIVERSITY OF MARYLAND RESEARCH
• Increased price of new homes by 2.2 % or
$4,600
• Nationally equates to pricing 900,000 U.S.
households out of market
• 5 % price increase for more expensive homes
• Reduced size of new homes by 2.5% or 48
square feet
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NYU Furman Center for Real Estate and Urban
Policy
• Study funded by Center for Housing Policy
• Similar academic rigor
• Mixed results from three jurisdictions: DC, Boston
and San Francisco
• Three questions
– What kind of jurisdiction adopts?
– How much housing has it produced and what influenced
the amount?
– What are the market effects?
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NYU Furman Center for Real Estate and Urban
Policy
• Larger; more affluent; near other jurisdictions with
IZ; with other land use regulations
• Mixed success in production
–
–
–
–
526 / yr in DC
43% of jurisdictions in Boston produced nothing
9 / yr in San Francisco
Density bonuses and small project exemptions increase
production
• Mixed impact on total production
– In SF, no impact on single family production
– In Boston, decrease in production and increase in price
(similar to U of MD results)
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ABT ASSOCIATES STUDY
• 350-page compilation of state and local means
of addressing housing affordability
• How strategies work
• How they are funded
• Where they’ve been used
• Pros and cons of each strategy
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ABT ASSOCIATES STUDY
• Most comprehensive report ever assembled on nonfederal solutions
• Details numerous strategies under three broad
categories
• Land Use
• Financial
• Other initiatives
• 30 case studies of communities successfully using
these tools, often in combination
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STATE AND LOCAL APPROACHES
• Plan for housing, not just jobs
• Regulatory barriers removal and streamlining
strategies
• Density bonuses
• Vacant land assembly
• Land supply monitoring systems
• Land trusts that help buy down land and
housing costs
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STATE AND LOCAL APPROACHES
• State and local housing trust funds that are
broadly funded
• Tax increment financing, tax credits
• Fee waivers
• Employer-assisted housing programs
• Creative public-private partnerships
• Coalitions with business and housing interests
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SUMMARY OF ALL RESEARCH RESULTS
• Price and production results suggest that IZ
acts like a tax on housing
• IZ is a complex market intervention that
may not work in all markets and may
worsen affordability for some
• There are many tools being used –often
together—that can have a far greater
impact
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SUMMARY OF ALL RESEARCH RESULTS
• Nature of local housing market will dictate
best strategies—can’t simply copy from
another community
• Most successes rely on an array of strategies
• Strategies that get the most press are not
necessarily the most effective
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Case Studies on Inclusionary
Zoning
Stories From the Field
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Case Studies on Inclusionary Zoning
•Madison, Wis.
•St. Cloud, Minn.
•Tallahassee, Fla.
•Palm Beach County, Fla.
•McCall, Idaho
•Bozeman, Mont.
•Davie, Fla.
•Montgomery County, Md.
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Madison, Wis.
• Created 173 affordable homes out of 2,075 built.
• Of the 173 affordable homes constructed, only 33
sold.
• Market rate apartments went from 660 in 2003 to 143
units in 2006, the lowest number in decades
• Wisconsin Supreme Court struck down entire
ordinance as a form of rent control.
• City Council decided not to renew ordinance in 2009
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St. Cloud, Minn.
• Adopted in 2004
• Created 28 homes
• Competing program from the Housing Redevelopment
• Authority created 83 single-family homes with no market
re-sale restrictions
• St. Cloud residents were more interested in re-developing
existing housing than building new affordable housing in
an effort to stabilize existing neighborhoods
• City Council repealed the ordinance in April 2007
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Tallahassee, Fla.
• Enacted ordinance in 2005
• To date, has not produced any affordable housing units
• HUD Consolidated Plan recognizes the housing downturn
hampers city’s ability to generate affordable housing using
this methodology
• 12-month supply of housing and high foreclosure rate
• The next two to three years the city will focus on rehabilitation for affordable housing
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Tallahassee, Fla.
• City had to cover legal costs for lawsuit against the
ordinance
• Additionally burdensome in this time of cashstrapped local government budgets
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Palm Beach County, Fla.
• Enacted in early 2006
• Area hit hard shortly thereafter by housing bust
• Over-supply in the area has led to market rate housing
units to be available for less than IZ units
• No development projects have been approved in the
last four years
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McCall, Idaho
• Ordinance struck down by the Fourth Judicial District
Court of Idaho
• “Regulations go much further than merely regulating
the use of property, they regulate ownership of property
by dictating to whom a unit may be sold or rented”
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McCall, Idaho
• “Such regulation is arbitrary and unreasonable as a land
use provision”
• “Imposition of the subsidy or (in-lieu of) fee required”
• “Under the (IZ Ordinance) are in reality a tax and not a
regulation”
Mountain Central Board of Realtors, Inc. vs. the City of McCall
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Bozeman, Mont.
• Another example of how inclusionary zoning is
susceptible to downturns in the economy
• Two years after this ordinance was put into effect,
there still have been no affordable homes built
• Home builders have requested that the ordinance be
repealed
• City Council has voted to review the program in 2011
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Davie, Fla.
• Hard hit area by the foreclosure crises
• Over 5,000 units built between 2000-2007. In 2010
only 72 units built.
• Adopted IZ ordinance in 2008, no affordable units built
to date
• 50-unit project built elsewhere due to town’s
burdensome ordinance
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Davie, Fla.
• In a time of shrinking tax base and budgetary crises loss of
development is doubly painful
• Town Council has voted to suspend ordinance for two
years
• Indicates how having an IZ ordinance on the books can
leave a municipality vulnerable and exposed when the
“good times” end
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Montgomery County, Md.
• Longest continuous program in the country, often cited
as the most successful program in the country.
• Also susceptible to economic downturns.
• In 2007 only 77 units of inclusionary zoning were built,
and all time low in the programs 36 year history
• Sharp decrease from the 500 units produced during the
height of the building boom.
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WHERE TO GO
Reports and resources available from:
www.nahb.org/housingaffordability
NAHB Land Development Services Department
800-368-5242
Debra Bassert, AVP, Land Development
ext. 8443 or [email protected]
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