Blog #50 – Inclusionary Zoning: Good and Bad


Blog #50 – Inclusionary Zoning: Do’s and Do-not’s. —

[Slightly revised version incorporated in Blog #53, Density, Inclusionary Zoning, Housing Planning: Cautions on de Blasio’s Plan]

Inclusionary housing can lead to neighborhoods further functionally segregated by race and income, if not controlled, and can be an inefficient use of governmental subsidies if provided.Inclusionary housing only works where the market is strong enough so that a developer or landlord can make a profit from market prices high enough to cover the provision of below-market rate units. Thus, it will only work in higher income neighborhoods, predictably more non-Hispanic white than the in the city as a whole. That effect will be particularly strong the lower the income of the target population to be benefited, in the development. And if it is limited to already higher income neighborhoods, it is likely to increase the concentration of significantly segregated residences in the city if it provides bonuses for buildings which , net, increase the proportion of high-income uses in a community. A very delicate balancing is required, with opposing dangers.

Further, the higher the effective subsidy needed, the higher the rents/prices of the market rate units needed to make inclusion profitable. If owners are permitted to select tenants providing inclusionary benefits, they will discriminate in favor of the highest permitted income and the most “responsible” (“acceptable” ) tenants, creaming among applicants by considerations other than the need for housing. With the large majority of residents of an inclusionary development paying market plus rents, their demands on neighborhood facilities and services will be very different from those of the residents of the below-market rate units, to the latters’ disadvantage. Identifying the below-market rate units as such permits a likely stigmatization and pressure to separate out their residents. The worst case scenario might be the equivalent of servant’s quarters in a private residence.

But there are good ways and bad ways of designing and implementing inclusionary zoning, if the purpose is to address housing needs in an equitable fashion.

Bad:

  • Permit the market to determine where inclusionary housing will be provided.
  • Implement it particularly in transitional neighborhoods where the probability and disadvantages of gentrification are greatest.[1]
  • Let owners determine selection of residents for below-market-rate units.
  • Permit external identification of affordable units, or their isolation.
  • Ignore neighborhood impacts of construction, and neighborhood needs for facilities and services.
  • Make inclusionary development financially profitable by allocating public subsidies , including tax and other benefits, to support their rentals, effectively reducing the pressure on market-rate rentals and reducing cross-subsidy effect.
  • Provide as bonuses deviation from neighborhood planning and construction standards and limitations, e.g. height limits, zoning restrictions.
  • Permit obligation to provide below-market rate units to expire.

Good:

  • Make inclusionary housing mandatory, and target city programs of support in such a way that they draw on the developer’s profits over subsidies to support them.
  • Require a high enough number of below-market-rate units in any building to permit the provision of neighborhood facilities and services for the needs of all residents.
  • Permit city control of tenant selection for below-market units, perhaps using Housing Authority waiting lists and criteria.
  • Hold to planning-established limits on height, set-backs, etc. avoiding the granting of zoning and building exceptions’ or bonuses for inclusionary developments.
  • Provide for major participation in design and implementation of proposed beneficiaries in need of affordable housing

Conclusion: Inclusionary housing can be an excellent program, but requires caution in its application. The devil is in the details. On-going effective participation of intended beneficiaries in need of housing is key in design and implementation.

[1] De Blasio’s plan speaks of focus on transitional neighborhoods, p.8 but it also calls for it “in all medium and high density districts where rezonings provide an opportunity for significantly more housing.” P.30

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