Case Studies
Like many other cities, Denver, Colorado recognized a growing affordable-housing crisis as real estate appreciation rates outpaced incomes. In 2002, an inclusionary zoning policy was enacted to help address this issue. In addition to the ordinance, Denver rezoned large scale developments and proactively planned for affordable-housing development. As a result of these policy changes, 3,395 affordable homes were created within three years of the policy's inception. The ordinance requires that all new construction of for-sale units with more than 30 units set-aside 10% as affordable for persons earning less than 80% of the Area Median Income (AMI). These units must remain affordable for 15 years. Cost-offsets are provided to make the set-asides feasible to developers and encourage this type of development. These include a 10% density bonus, $5,000-$10,000 subsidy per unit for up to 50% of new units, parking requirement reductions, and expedited permits. Additionally, developers may be approved to pay a fee in lieu of creating the affordable units (50% of the price per affordable unit not built), or can build the affordable units off-site if the number of units exceeds the required minimum. A voluntary policy with the same thresholds exists for rental housing, except rental units must be affordable to persons earning less than 60% of the AMI. (BPI 2005) As shown by the complexity of this ordinance, the Denver ordinance illustrates the flexibility and variation in form that inclusionary zoning policies can take.
In July 2006, the Baltimore City Task Force on Inclusionary Housing released a report entitled, At Home in Baltimore: A Plan for an Inclusive City of Neighborhoods. The report outlines the process in which ten goals were established that guided the recommendations for an inclusionary zoning policy. The task force consisted of 13 members appointed by the City Council. However, the creation of recommendations for an inclusionary zoning policy took place over seven months and involved more than 100 community-based organizations, business representatives, advocacy groups, and additional stakeholders. The process included informational sessions on inclusionary zoning, workgroup meetings, interviews, and cost-modeling sessions. Through this process, great care was taken in determining an appropriate and realistic ordinance that would be effective and feasible for Baltimore.
San Francisco is such an example and has since adopted modified guidelines that have increased the benefits of inclusionary zoning. The original ordinance was enacted in 1992 and applied to only planned-unit developments (PUDs), and developments that required a conditional use permit. The nature and size of land and residential developments in San Francisco limited the number of residential projects meeting both requirements. Throughout the 1990s, the stock of affordable housing further diminished and low-income households were displaced at higher rates due to rising property values. In January 2002, the inclusionary zoning ordinance was changed to apply to all residential developments of 10 or more units. The set-aside requires 10 percent of residential development be affordable, however the developer is given the option to build the affordable units in a different location. If the developer opts to build the affordable units off-site, then a 15-percent set-aside is required. Under the new ordinance, PUDs and developments that require a conditional-use permit must provide a 12-percent set-aside for on-site units and 17-percent set-aside for off-site units. This new ordinance resulted in the development of 90 affordable units in its first two years, with an additional 745 in the pipeline as of November 2003 (Brunick, Goldberg and Levine).
The inclusionary zoning ordinance enacted by Boston in February 2000 has been described as immediately effective, although based on the data available, its effectiveness appears to be somewhat questionable. The Executive Order mandating inclusionary zoning requires a 10-percent set-aside for onsite units and 15 percent set-aside for off-site units on all residential developments that are either financed by the City of Boston or the Boston Redevelopment Authority (BRA), developed on land owned by the City of Boston or the BRA and includes 10 units or more, or requires zoning relief and is 10 units of more. Nearly all residential developments of 10 units or more require some zoning relief due to the zoning structure. (Brunick, Goldberg and Levine) This criterion of developments requiring zoning relief has been critical to generating affordable units. In its first year, the policy applied to eight privately financed developments of 10 units or more, which were largely located in high-end, more desirable neighborhoods. In its first two years, 72 affordable units have been built as a result of the policy and over $4 million have been contributed to an affordable housing trust fund by developers that chose the cash contribution option instead of building affordable units. This option requires the developer to make a contribution to the BRA of 15 percent of the total number of market-rate units multiplied by an affordable housing cost factor. (Kiely) Based on the available data for the first two years of the policy, this seems to be a choice taken approximately as often as the decision to build affordable units. The number and location of the affordable units built by the BRA with developer fees-in-lieu is not published information. Therefore, the ultimate impact of the policy is uncertain.
An inclusionary zoning policy was put into place in the five city St. Cloud area, located approximately 70 miles northwest of Minneapolis. The policy, known as the Joint Powers Agreement for Affordable/Life Cycle Housing ordinance, has not reached expected results since its inception in 2002. The ordinance was implemented with the objective to meet a 15% target of affordable new construction single and multi-family units. This agreement was put into place to maintain at least the current ratio of affordable housing to ensure an adequate supply of housing options. To lessen the cost to developers, subdivision design standards were modified to allow for greater density and a portion of fees to cities were reduced. Despite these off-sets, the program was not reaching its goals. This is primarily due to insufficient public and private grant funding as well to changes in the housing market. The program was based on a broad regional effort rather than being project specific, which reduced its competitiveness for certain grant funding. The housing market changes included a rash of first time home- owners and existing home-owners purchasing higher cost housing, resulting in vacant more affordable homes. In 2007, it was decided that the program should be terminated at least until market conditions are more appropriate for such a program.
Table 1. Regional Affordability in 2000
County
|
Affordable Units in 2000
|
% of Total Housing
that is affordable in 2000
|
Cook
|
901,621
|
47.11%
|
Cook w/o Chicago
|
308,165
|
36.14%
|
DuPage
|
56,339
|
19.18%
|
Kane
|
51,358
|
38.59%
|
Lake
|
56,255
|
28.62%
|
McHenry
|
15,493
|
25.62%
|
Will
|
50,582
|
44.64%
|
Total*
|
1,131,648
|
41.75%
|
* Including Chicago |
Table 2. Universal Inclusionary Zoning Policy with a 10% Set-Aside (aggregated to county)
County
|
Affordable Units in 2000
|
% Affordable in 2000
|
Annual Growth Rate
|
Additional AF Units Created by IZ in 2030
|
% Affordable w/ IZ in 2030
|
Cook |
901,621 |
47.11% |
0.05% |
14,482 |
47.77% |
Cook w/o Chicago |
308,165 |
36.14% |
0.04% |
7,472 |
36.91% |
DuPage |
56,339 |
19.18% |
0.06% |
4,925 |
20.57% |
Kane |
51,358 |
38.59% |
2.16% |
7,865 |
41.70% |
Lake |
56,255 |
28.62% |
1.15% |
5,748 |
30.70% |
McHenry |
15,493 |
25.62% |
2.95% |
6,310 |
29.98% |
Will |
50,582 |
44.64% |
3.15% |
11,362 |
48.60% |
Total* |
1,131,648 |
41.75% |
0.86% |
50,693 |
43.20% |
* Including Chicago |
Table 3: Municipalities with Greatest Net Increase in Affordable Units w/10% Inclusionary Policy as Percentage of Total Units
City |
County |
Annual Growth Rate |
Total Number of Units in 2000 |
2000 % Affordable |
Additional
Affordable Units Created by IZ in 2030 |
2030 % Affordable with IZ |
Chicago |
Cook |
.05% |
1,060,972 |
55.94% |
7010 |
56.51% |
New Lenox |
Will |
5.39% |
5,822 |
19.98% |
1789 |
26.32% |
Sugar Grove |
Kane |
9.71% |
1,289 |
9.70% |
1762 |
18.17% |
Elgin |
Kane |
2.03% |
31,532 |
45.42% |
1430 |
47.89% |
Naperville |
DuPage |
.96% |
43,715 |
9.03% |
1324 |
11.31% |
Plainfield |
Will |
5.19% |
4,284 |
13.61% |
1318 |
20.35% |
Frankfort |
Will |
5.36% |
3,420 |
6.90% |
1206 |
14.27% |
Huntley |
McHenry |
6.66% |
2,369 |
14.73% |
1195 |
22.03% |
Aurora |
Kane |
1.24% |
46,577 |
48.46% |
1068 |
50.05% |
Manhattan |
Will |
9.24% |
1,153 |
38.86% |
927 |
44.54% |
Table 4: Tiered Policy by County
County
|
Affordable Units in 2000
|
% Affordable in 2000
|
Annual Growth Rate
|
% Affordable in 2030 w/o IZ
|
Additional Affordable Units Created by IZ in 2030
|
2030 % Affordable with IZ
|
Cook |
901,621 |
47.11% |
0.05% |
47.25% |
14,839 |
47.93% |
Cook,w/oChicago |
308,165 |
36.14% |
0.04% |
36.37% |
7,828 |
37.17% |
DuPage |
56,339 |
19.18% |
0.06% |
18.93% |
5,365 |
20.45% |
Kane |
51,358 |
38.59% |
2.16% |
36.54% |
7,557 |
39.53% |
Lake |
56,255 |
28.62% |
1.15% |
28.51% |
6,771 |
30.96% |
McHenry |
15,493 |
25.62% |
2.95% |
25.29% |
6,683 |
29.91% |
Will |
50,582 |
44.64% |
3.15% |
38.56% |
11,816 |
42.68% |
Total* |
1,131,648 |
41.75% |
0.86% |
40.53% |
53,029 |
42.04% |
*IncludingChicago |