Equitable Adaptation Legal & Policy Toolkit

 

Regulatory Tools for Housing

Regulatory tools like zoning ordinances and building codes, which govern uses of the land and regulate the building of structures, can form part of a comprehensive affordable housing and climate resilience strategy. For example, in Miami, the city’s strategy to address climate-induced gentrification includes the dedication of $100 million for affordable housing (part of a $400 million general obligation bond that funds municipal infrastructure projects)See footnote 1 and the adoption of inclusionary zoning policies to promote denser development.See footnote 2

Inclusionary Zoning Programs

An increasingly popular tool for city governments,See footnote 3 inclusionary zoning (IZ) — also called “inclusionary housing” — generates affordable housing through the private market by requiring or incentivizing developers to designate a percentage of units in new housing projects at below-market rate (BMR).See footnote 4 The majority of IZ programs are mandatorySee footnote 5 and required by law for developers to set aside affordable units in exchange for subsidies to the developer that can help offset the cost of producing affordable units to low-income households. By contrast, under voluntary IZ programs, developers provide affordable homes in exchange for density bonuses (the right to build larger and a higher number of units above existing zoning regulations), relaxed design guidelines, reduced property taxes, and other incentives.See footnote 6

Aside from differences in mandatory or voluntary participation, other key distinctions in the design and implementation of local IZ programs may include:See footnote 7 

  • the type of incentive in voluntary IZ programs (e.g., density bonuses, zoning variances, fee reductions);
  • whether the affordable units are developed on-site or at a different location;
  • the required percentage of affordable housing (most commonly between 10-20 %);
  • targeted income group;
  • whether the program applies to rentals or properties for sale; and
  • the geographic coverage of the program (i.e., whether the program applies to a specific location, housing type, or an entire jurisdiction).

Zoning Ordinances and Building Codes

In addition to IZ programs, cities can also incorporate climate resilience measures in zoning ordinances and building codes to increase the flood-resilience of new housing or retrofitted buildings.See footnote 8 For example, ordinances may require increasing the freeboard standard for new construction in a 100-year floodplain, or the use of permeable surfaces surrounding the building to improve stormwater management practices. Zoning ordinances and building codes can also be used to prevent development of housing and other structures in flood-prone areas — for example in the floodplain or in-stream buffer zones — or require structures to be built to higher standards to account for future flood risks from sea-level rise. A 2019 study found that for, every dollar invested in adopting model building codes that include climate resilience, the country could save $11 in future disaster costs.See footnote 9   

Considerations of Regulatory Tools for Resilient Affordable Housing

Economic

  • Developers may pass on the cost of selling or renting units at BMR to renters and buyers. Similarly, IZ policies may lead to a reduction in the construction of new homes. Research on the impact of IZ programs on the private market is mixed, with evidence indicating both a statistically insignificant impact in cities like San Francisco, as well as a correlation with increased housing prices and reduced construction in other cities.See footnote 10
  • The efficacy of IZ programs is dependent on local housing market conditions. In general, stronger housing markets tend to produce more affordable units under IZ programs than weaker housing markets.See footnote 11 

Environmental

  • IZ programs can be used to encourage higher density development in areas that are less at risk to climate change impacts, especially under programs that apply broadly across an entire city rather than concentrate on high-poverty areas that are more at risk of flooding and extreme heat.
  • Like other land-use strategies that increase urban density and reduce sprawl, IZ programs also bring environmental co-benefits such as reducing vehicle miles traveled and greenhouse gas emissions.

Social/Equity

  • IZ policies can lead to the creation and preservation of mixed-income neighborhoods by providing low-income residents with opportunities to enter and integrate into neighborhoods with greater economic, education, and employment opportunities.See footnote 12 In additional economic integration, IZ may also lead to greater racial integration in communities.See footnote 13
  • Moderately low-income residents, rather than the lowest-income residents, are more likely to benefit from IZ programs since most IZ policies target families that earn between 60 to 120% of the AMI.See footnote 14
  • Building codes should apply consistently to all buildings within a community in order to avoid leaving behind certain structures and the people who live in them.

Administrative

  • IZ programs require limited to no subsidy from city governments. However, IZ programs are more readily adopted in states that grant home rule (where localities have increased local autonomy) or expressly authorize local IZ programs.See footnote 15 
  • IZ programs that permit off-site construction of BMR units (as opposed to requiring on-site units) may face less opposition from developers and landowners.See footnote 16
  • IZ programs are one approach out of many options to address the nationwide housing shortage and should be implemented concurrently with other policies suggested in this chapter. Although the use of IZ has become increasingly popular, the number of affordable housing stock produced through IZ programs varies significantly across jurisdictions.See footnote 17

Legal

  • IZ programs that are required by law have been shown to produce more affordable housing than programs that are voluntary and incentive-based.See footnote 18
  • Zoning ordinances and mandatory IZ programs may face opposition from developers and builders who challenge the constitutionality of IZ laws under the takings clause of the Fifth Amendment, which provides that “private property [shall not] be taken for public use, without just compensation.See footnote 19
  • A zoning or building code may not comply with the American with Disabilities Act (ADA) if it requires the elevation of new construction in a flood zone without also requiring structural modifications (e.g., ramps) that can improve access for disabled persons.

 Lessons Learned

  • IZ programs that encourage developers to build BMR units on the same site as non-BMR units can facilitate better racial and economic integration of residents. Additionally, requiring on-site affordability can help ensure that affordable housing is available in specific areas that enhance access to other resources, for example, green space, public transit, and jobs. On-site development is usually less expensive than other affordability requirements, including building BMR units off-site or contributing to a local affordable housing fund.See footnote 20 
  • IZ programs that are adopted on a city-wide basis, as opposed to targeting specific neighborhoods, can reduce the likelihood for developers to concentrate the affordable units in neighborhoods that face increased exposure to climate change impacts like flooding, or are far away from public transit and job opportunities.

 

Related Resources

 
Mandatory Inclusionary Zoning Ordinance, Miami, Florida

In 2018, Miami passed a mandatory inclusionary zoning (IZ) ordinance that requires the inclusion of affordable housing in the Omni Community Redevelopment Agency (CRA) district, a 30-block area north of downtown Miami. Miami currently ranks lowest in the  availability of affordable rental units among cities in the nation. Meanwhile, low-income communities in the city’s inland neighborhoods that are historically black and Latinx now face development pressures from wealthier residents seeking to relocate from the city’s low-lying coastal neighborhoods to the city’s inland neighborhoods. Miami’s IZ ordinance, the first of its kind in Miami-Dade County, requires rental developments in the Omni CRA district to set aside a minimum of 7% affordable units or 14% workforce housing units. Similarly, condo developments are required to include at least 5% affordable units and 10% workforce units. In return, developers would be permitted to increase the square footage of their projects.

Building a Better Norfolk: A Zoning Ordinance of the 21st Century - Norfolk, Virginia

In 2018, Norfolk adopted a zoning ordinance that requires all new developments, including single and multi-family residential units, to meet a set of climate resilience criteria, or a “resilience quotient.” The city faces a variety of climate challenges, including sea-level rise and recurrent flooding, as well as a shortage of housing for low-income residents. To help address these challenges, under the regulations, all proposed developments are reviewed for its ability to reduce flood risks, promote energy efficiency, manage stormwater, and other practices that enhance climate resilience.See footnote 21 Additionally, the ordinance established a Coastal Resilience Overlay (CRO) zone, where new development and redevelopment are required to comply with new flood resilience requirements, as well as an Upland Resilience Overlay (URO), designed to encourage new development in areas of the city with a lower risk of flooding.

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