In the legislative session just completed, one of the land use tools passed was inclusionary zoning (IZ). IZ had been talked about for some time as a way to address housing affordability, and is used in some high-cost communities like Park City and Summit County in an attempt to provide for housing that can be accessible to the needed local workforce that cannot afford the high resort-community prices (like teachers, police officers, restaurant workers, etc.).  The section included in HB303 allows for IZ but only through providing an incentive for the builder (usually this means increased density) and with the agreement of the builder.  I’ve argued that, while it’s nice to have this provision now in state code, the requirements really make it something that local governments could have done anyway under a development agreement, so I’m not sure what this provision really gives in the way of a new tool.

At the legislative update session held by the League and APA Utah on March 31, a comment was made when the IZ provision was brought up that this would likely see more action in upcoming legislative discussions.

But IZ is likely not all that some may hope it is as a way to address the housing affordability issue.  A recent opinion piece in Greater Greater Washington by Tom Coale, a land use attorney in Maryland, points out some of the drawbacks and limitations of IZ as a way to address housing affordability.  He says:

Inclusionary zoning, however, was not created for the purposes of meeting affordable housing needs. Instead, IZ helps ensure that new development, in which units are commonly the most expensive on the market and draw high-income purchasers, is not made up of exclusively wealthy families. But when efforts to integrate such communities take the place of meaningful efforts to create affordable housing, we all lose.

Inclusionary zoning is a tool for socioeconomic integration. Due to the fact that new development often comes with the highest price tags, policy-makers who support inclusionary zoning policies do so with an eye toward ensuring there are not pockets of extreme wealth situated amongst relative poverty.

(IZ is) inefficient. Even the most ambitious inclusionary zoning requirement of 20% will only provide two subsidized units for every eight market-rate units. As the cost of market-rate units increase, the disparity between those who can afford new housing and those who cannot … (is) resulting in a lopsided barbell income distribution whereby 80% of the housing is for the “very rich” and 20% of the housing goes to the “relatively poor”.

Second, inclusionary zoning policies offload a societal obligation of providing affordable housing from the body politic to private interests. In order to tackle the gaping deficit of units for low-income families, state and federal governments will need to dedicate resources to build housing and subsidize rents. Inclusionary zoning allows the fiction that our affordable housing needs can be met by developer mandates. This crisis will not be solved by a for-profit industry with a relative intolerance for profit-losing requirements. Governments can and should do more.

Finally, and most importantly, inclusionary zoning requirements raise housing prices on the whole. All regulatory burdens, whether they be forest conservation or design requirements, operate like a tax that is passed through to the home-buyer. The costs of inclusionary zoning compliance will be borne by the market rate purchaser, not the developer.

(I)nclusionary zoning should be viewed for what it is – a mechanism for integrating new development, not a tool to generate enough affordable housing to meet our communities’ needs.

Since it looks like we are not done with the concept of IZ in Utah land use codes, this piece is worth a look.