Monday, December 14, 2009

Affordable Housing Toolkit: Inclusionary Zoning

Rarely has there been a topic that engenders more instant heat than zoning proposals.
And, whenever the word 'inclusionary' is included that heat is turned up to high.

It seems the development community, including land owners/speculators, builders and the real estate industry see inclusionary zoning as a threat to their very existence; a slippery slope to be avoided at all costs - despite the clear potential for generating some very tangible and beneficial results.

Actually, these folks are simply protecting the status quo, which they know and want to keep - and in the process, their profit margins.
That's OK, but it does externalize the often heard problem of housing affordability to 'others', including financially strapped local governments.

Here, I must make clear the definition of 'affordable housing' that I'm talking about; it is the HUD definition used by the US Government that is based upon actual household income, compared to local averages.

While there are some private developments that are built specifically for lower income households, our local Housing Authority, the city's Community Development Department and other non-profit organizations like Habitat for Humanity and Kulshan Community Land Trust [KCLT] provide for most of this housing, whether for rental or purchase, rehabilitated or new.

But these organizations chronically fall short of meeting affordable housing needs.
The Housing Authority generally has a waiting list of 2 years or more.
Community Development Block Grant [CDBG] funds from the US Government are inadequate and have steadily fallen most of this decade despite growing needs.
A few years ago, Habitat for Humanity reported the lack of building sites as its greatest single need.
Kulshan has been very successful in both raising grant monies and promoting the creation of opportunities for permanently affordable housing in our area, but the need far outstrips its ability to provide this type of critical housing.

Both Habitat and Kulshan have found their homeowners to be excellent citizens who truly appreciate the housing provided, which is largely scattered in neighborhoods throughout the city.

What inclusionary zoning [IZ] can provide is a more steady supply of building sites for affordable housing, concurrent with new development.
The State of Washington legally allows IZ as long as certain guidelines are followed, but it is up to individual municipalities to take advantage of this provision.

Two articles by Jared Paben appeared in the Bellingham Herald recently on this subject which illustrate some history and pro and con arguments.
The first dealt with a City Council proposal and related information at this URL.

The second listed a synopsis of a study on possible IZ impacts at this URL.

A few years ago the City Council considered inclusionary zoning as a fair and reasonable way to provide more building sites for affordable housing.
That effort morphed into a countywide task force which took about 18 months to conclude it couldn't agree on recommending IZ.
Instead, the task force ended up essentially reviving an old study done in 1991.

I think Bellingham should adopt a reasonable IZ policy on its own.
Here is a summary of my rationale:

• Up-zoning creates an instant windfall for landowners, sometimes increasing value by 10, 20 or 50 times.
Transfer of Development Rights [TDR] -based Zoning was proposed over 35 years ago as a means for sharing windfalls with municipalities to help pay for public improvements.
Unfortunately, this concept never caught on widely, but remains a useful potential tool.

• If the cost of growth is to be fairly shared by development, system development charges, impact fees and inclusionary zoning are mechanisms to help achieve this result.
Otherwise, the municipality, taxpayers and rate-payers end up over subsidizing new development.

• As onerous as permitting fees, sdc's and impact fees seem to be, they are preferable to having none, for the reason above.

• City policy is to create livable neighborhoods with ready access to schools, jobs, parks and transportation, not exclusive gated developments. IZ can help do this.

• Since the cost of a lot may cost up to one third [1/3] of home costs, setting aside lots for affordable housing can dramatically lower their cost.

• Setting aside 10% of lots in a multi-dwelling unit development is a reasonable policy that can greatly help insure affordability by effectively leveraging scarce public funding and charitable gifts.

• In lieu of land dedication, payment of a reasonable monetary amount could be allowed.

• Inclusionary Zoning should not be considered a panacea, but another tool in the city's toolkit to benefit the entire community.

• Inclusionary Zoning probably fits urban areas better than rural areas or small towns, so it is no surprise that the countywide CHAT Task Force failed to agree in recommending it.
That should not prevent the City from adopt this idea on its own.

• Scare tactics and misinformation loudly proclaimed by elements of the development community should be taken with a grain of salt.
There is no reason why a well-considered Inclusionary Zoning policy can not work for the greater good of Bellingham.
But, voluntary compliance doesn't work very well, which is why a fair, mandatory regulation is necessary.

There are likely other thoughts that could be added to this list, but this will suffice for now.

I'm glad the City Council has renewed its interest in this subject, but it will still take perseverance and courage to get a reasonable ordinance ready for public comment and eventual approval.
That is often the way it is with controversial issues.