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INCLUSIONARY ZONING: Six Insights from International Experience by Martine August and Giuseppe Tolfo

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INCLUSIONARY ZONING: Six Insights from International Experience by Martine August and Giuseppe Tolfo INCLUSIONARY ZONING: Six insights from international experience By Martine August and Giuseppe Tolfo n April 2018, the Province of Ontario SUMMARY RÉSUMÉ passed legislation enabling municipalities Inclusionary zoning (IZ) is Le zonage inclusif (ZI) est de plus en Ito craft inclusionary zoning (IZ) policies. increasingly viewed as a best plus considéré comme une pratique Ontario now joins British Columbia, Quebec, practice in planning, and a potential exemplaire en matière de planification and Manitoba in having authorized some form solution to crises in housing et une solution potentielle aux crises of IZ. In Ontario, IZ is viewed with hope as a affordability. For jurisdictions de l’abordabilité du logement. Pour potential solution to affordable housing crisis. considering this approach, we les territoires qui envisagent cette While increasingly viewed as a best practice offer six insights into IZ from the approche, nous offrons six points de in planning, enthusiasm for IZ often draws on international experience. IZ was vue sur le ZI à partir de l’expérience limited research-based evidence, which can originally conceived as a suburban internationale. Conçu à l’origine comme easily be misinterpreted or misunderstood. policy, and is far from monolithic, une politique suburbaine, le ZI est loin With this article, we share insights into IZ with a vast range of potential designs d’être monolithique, avec une vaste that will guide planners and policy makers in that influence its effectiveness. gamme de conceptions potentielles making better sense of this policy. European adaptations of IZ are qui en influencent l’efficacité. Les To begin, what is IZ? It is a tool used in based on different conceptions of adaptations européennes du ZI sont planning to require that affordable housing property that may inspire Canadian fondées sur différentes conceptions be provided in new residential developments, planners. As a market-driven de la propriété susceptibles d’inspirer and it can be implemented in various ways. policy, IZ is limited in its potential les urbanistes canadiens. En tant IZ can be voluntary or mandatory. Policies to produce affordable housing and, que politique axée sur le marché, differ in the quantity and type of affordable in areas with hot property markets, le ZI présente un potentiel limité de units required, the depth and duration of IZ has the paradoxical potential production de logements abordables affordability, and in the thresholds that to be exclusionary, generating et, dans les régions où les marchés trigger IZ requirements (e.g., 10 or more gentrification and displacement. immobiliers sont très actifs, le ZI peut units in Ontario). In addition, they may paradoxalement avoir un effet exclusif, include incentives, cost offsets, in-lieu entraînant embourgeoisement et payments, and off-site provision of affordable déplacements. units. While the expected outcomes of IZ policies will differ depending on local 6 PLAN CANADA | WINTER • HIVER 2018 priorities (as we will describe), one measure A second goal was to shift the costs of new reasons – to provide deeply affordable of “success” is that IZ produces affordable affordable housing onto private developers. housing, and to do so in all areas of the city. housing that would not otherwise be built. A third goal was to “open up the suburbs” to Transferring a policy conceived for the IZ is a market-based affordable housing lower-income families and racial minorities, suburbs into an urban context, and expecting program, which accounts for its popularity in providing access to opportunity in amenity- it to produce deeply affordable units, may a context of declining government funds for rich communities, while dispersing poverty not work; indeed it can have unexpected housing. It works by tapping into real estate away from inner cities. consequences. In new-build suburbs, inflation and leveraging market pressure to What did these early policies look like? displacement is a minor concern. In cities, promote affordability goals. In practice, this One of the first in the US was launched in by contrast, new developments – even with means linking the construction of affordable Montgomery County, Maryland, a bedroom IZ-required affordable units – can remove housing to market-rate development, and community outside of Washington, D.C. with existing affordable units from the market. shifting the responsibility for affordable 950,000 residents. Responding to growth Development may also spur property value housing to private market developers. pressure and up-market development, increases that intensify gentrification and Because it mandates developers to produce the county launched its now-famous exclude lower-income households. affordable units, IZ is a polarizing policy. Moderately-Priced Dwelling Unit (MPDU) Housing advocates point to its potential to program to produce workforce housing. For (2) IT’S A MARKET-BASED PROGRAM THAT produce affordable units, detractors fear it developments of 20+ units, the program PRODUCES LIMITED AFFORDABLE HOUSING will suppress the market, and researchers required 20% be set-aside as ownership and In order to produce affordable units, IZ argue that both its effects on delivering rental housing affordable to people earning works best in places with strong real affordability and cooling down markets have 65-70% of the area-median income (AMI). estate markets. Even in hot markets, there been grossly over-stated.1 MDUP did not provide incentives or offset are limits to the quantity and depth of For this article we share insights from developers’ costs, but did allow for greater affordability it can generate. scholarly literature on IZ with readers of development density in return for extra Plan Canada. Rather than reproducing affordable units. Program elimination and reduced funding excellent work on recommendations and In California, IZ was first launched for social housing has put pressure on best practices,2, 3, 4 we have pulled out six in the small city of Palo Alto in 1973. affordability in Canadian communities insights into IZ learned from international Like many suburban communities, it since the mid-1990s. Today, IZ is seen by experiences, for planners to consider as was experiencing ‘spill over’ inflationary municipalities as a potential silver bullet municipalities in Ontario craft their own housing market pressures, and adopted IZ – it relies on the private market to deliver policies, and as jurisdictions across the to ensure workforce housing for middle- affordable housing with little or no public country consider this approach. income residents would be built. Since expense. In part, municipal decision makers then, 170 communities in California and have come to view IZ with hope because it is (1) IT’S A SOLUTION 400 communities across the US have the only game in town. As a market-based BUILT IN THE SUBURBS followed suit with their own policies. Most solution, however, there are limitations on its IZ is a policy designed in the American of these are small and mid-sized cities or effectiveness in delivering affordability. suburbs to provide moderately-priced suburban communities, aiming to produce The first limitation is that IZ requires workforce housing in the face of moderately-priced housing. a strong real estate market in order to ‘exclusionary’ practices and policies. It Because IZ was designed to provide work, a pattern identified not only in North may not easily transfer to urban contexts affordable options in the suburbs, early America, but in Australia, New Zealand, and or produce deeply-affordable housing. advocates believed it had no role to play in England.5, 6, 7, 8 According to Emily Paradis the inner-city. From their perspective, the (2018), the policies that have provided the Canadian planners can better understand IZ goal was to get lower-income people out of most affordable housing and at deeper with some knowledge of its history. IZ is often poor inner city communities into the suburbs. levels of affordability, are in places with seen as a big-city policy tool used to harness Using IZ in inner cities seemed nonsensical rapid growth and strong development development pressure in heated markets because housing was already cheap. pressures, like New York City. to create affordable housing. In fact, IZ was The urban context today has changed. Strong real estate markets, however, originally designed in the US in the 1970s as Affordability crises are ubiquitous across are not present everywhere, and cannot a suburban policy. It has largely been adopted the US and Canada, and gentrification is be counted on forever. For this reason, IZ in smaller places and suburbs, with a goal to putting pressure on inner-urban housing delivers affordability unevenly. It favours overcome exclusionary suburban practices in cities of all sizes. These pressures strong markets over areas with weak markets like large-lot zoning, NIMBY-ism, and are driving lower-income and racially- that may equally need affordable housing. restrictive ordinances barring lower-income marginalized residents from central areas Depending on economic growth in order to and often racialized residents. where housing costs are high. At the same deliver affordability is also risky, in that it Early IZ policies had three early goals. The time, cuts to social housing programs have links the provision of an important social first was to thwart homeowner resistance to left municipalities scrambling for ways to good to volatile real estate markets. If new affordable housing proposals by making provide affordable accommodation. In this markets soften, planned units can be cancelled it a requirement for all developments. context, municipalities are turning to IZ for and IZ programs can lose their appeal. WINTER • HIVER 2018 | PLAN CANADA 7 As a case in point, researchers Mukhila and government’s Low-Income Housing Tax As Canadians consider best practices, it’s colleagues (2015) found that the market Credit (LIHTC) program. To take the state of important to realize that there is no single crash in 2008 “dented the zeal” of policy California as an example, only 29,000 units IZ policy.
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