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Incentive Zoning: Meeting Urban Design and Affordable Housing Objectives American Planning Association Planning Advisory Service Report Number 494 Marya Morris, AICP, is a senior research associate with the American Planning Association in Chicago. The author is thankful for the contributions made to this report by the plan- ners and technical experts working on implementing zoning incentive pro- grams in the cities profiled in this report. Many thanks also go to those who provided photographs for the report, including Kevin Krizek of Seattle, Eric Larsen of the Montgomery County, Maryland, Department of Housing and Community Affairs, Sidna Mitchell of the New Jersey Council on Affordable Housing, Ellen Ryan of the Municipal Art Society in New York City, and Jason Wittenberg and Blake Graham of the City of Minneapolis. Cover design by Toni Thanasouras Ellis; this report is printed on recycled paper. The Planning Advisory Service is a subscription service offered by the Research Department of the American Planning Association. Eight reports are produced each year. Subscribers also receive the PAS Memo each month and have use of the Inquiry Ansering Service. Frank S. So, Executive Director; Sylvia Lewis, Publications Director; William Klein, Director of Research. Planning Advisory Service Reports are produced in the Research Department of APA. James Hecimovich, Editor; Marya Morris, Assistant Editor; Lisa Barton, Design Associate. © September 2000 by the American Planning Association. APA’s publications office is at 122 S. Michigan Ave., Suite 1600, Chicago, IL 60603. E-mail: [email protected]. APA headquarters office is at 1776 Massachusetts Ave., N.W., Washington, DC 20036. T a b l e o f C o n t e n t s Incentive Zoning: Meeting Urban Design and Affordable Housing Objectives MA R YA MO R R I S , A I C P Preface . .1 Part 1. Historical Perspective and Statutory Overview . .3 Part 2. Incentive Zoning for Design and Smart Growth . .11 Establishing the Purposes . .11 Selecting the Desired Amenities . .12 Determining Bonuses to Be Granted . .13 Administering Bonus Programs . .15 Case Studies . .16 Critiques of Incentive Programs and Legal Issues . .27 Part 3. Zoning Incentives for Affordable Housing . .29 California . .30 New Jersey . .33 Oregon . .37 Florida . .41 Conclusions . .44 List of References . .45 Appendix . .47 Premium Bonus Provisions in the Minneapolis, Minnesota, Zoning Code . .47 Draft of a Model Incentive Zoning Statute . .51 Excerpts from the American Planning Association Policy Guide on Housing . .59 P r e f a c e he rapid growth that many communities experienced throughout the 1990s has spawned interest in planning, regulatory, and development Tapproaches and techniques that both manage growth and meet com- munity objectives, including the improvement of community design and the provision of affordable housing. Many new plans and land develop- ment regulations now subscribe to the principles of smart growth, which include: using land resources more efficiently through compact building forms and infill development; mixing land uses; promoting a variety of housing choices; supporting walking, cycling, and transit as attractive al- ternatives to driving; improving the development review process and de- velopment standards so that developers are encouraged to apply the smart growth principles; and connecting infrastructure planning to de- velopment decisions to make efficient use of existing facilities and ensure that infrastructure is in place to serve new development. Incentive zoning is a technique that has received renewed attention as communities aim to inculcate smart growth principles into planning and development processes. Incentive zoning involves a trade-off between a community and a developer. A developer gets to build a project that would not otherwise be permitted under the existing zoning regulations in exchange for providing something that is in the community’s interest— something that the city would not otherwise require of the developer (Meshenberg 1976, 43). Usually, the trade-off involves a city allowing the developer to build a larger, higher-density project. This is done by in- creasing the allowable floor area of a project above what is permitted in the zoning ordinance or by increasing the allowable number of dwelling units in a residential development. Additionally, setback, height, and bulk standards are often allowed to be modified to accommodate the added density or, in the case of affordable housing, to reduce development costs. Waivers of specific regulatory requirements or fees—such as parking stan- dards or impact fees—are also included as an incentive for a developer to provide various amenities. The common types of community benefits or amenities for which state and local governments have devised incentive programs are urban de- sign, human services (which includes affordable housing), and transit ac- cess. Some programs, particularly those that include affordable housing as a bonusable amenity, allow developers to pay cash in lieu of building or supplying the amenity for which the incentive is being provided. Some states group all types of incentives (e.g., those for urban design, affordable housing, or transit) into an umbrella statute that authorizes local govern- ments to use innovative land-use regulations. In several states (California, New Jersey, Oregon, and Florida), the zoning and regulatory incentive statutes for affordable housing are part of a broader statewide housing program and thus are enacted separately. R e s e a rch for this report was conducted as part of A PA's Growing SmartS M p roject, a multi-year effort to draft the next generation of model statutes gov- erning planning and the management of change. Model state legislation for incentive zoning and zoning bonuses will be provided in Chapter 9 of the G rowing SmartS M Legislative Guidebook ( A PA, forthcoming Spring 2001). A n excerpt of a draft of the model legislation governing the use of incentives is p rovided in the appendix of this report. 2 Incentive Zoning: Meeting Urban Design and Affordable Housing Objectives Part 1 of this report provides a historical perspective on incentive zon- ing for all purposes, contains an overview of state enabling legislation, and describes the key substantive and legal issues local governments must address in crafting such regulations. Part 2 is a description of incen- tive zoning for urban design and smart growth implementation. Case studies from Arlington County, Virginia, Chicago, Minneapolis, New York City, and Seattle are presented to demonstrate how incentives can be used to achieve smart growth objectives. Part 3 describes the use of den- sity bonuses for affordable housing as the chief mechanism used in sev- eral states and municipalities to implement inclusionary housing pro- grams. Case studies from California, New Jersey, and Montgomery County, Maryland, are provided in that section. P A R T 1 ONING INCENTIVE SYSTEMS CAME INTO USE IN THE LATE 1950S AND 1960S. CITIES WERE LOOKING FOR WAYS TO ENJOIN PRIVATE DEVELOP- Historical ZERS IN IMPROVING THE APPEARANCE OF THE CITIES WITHOUT SPENDING PUBLIC MONEY. Planners were also looking for ways to lessen the rigid- Perspective ity of Euclidean zoning that, in its preoccupation with separating land and uses, was resulting in sterile, sometimes dysfunctional central busi- Statutory ness districts and neighborhoods. Euclidean zoning also made it more difficult to meet social objectives, such as affordable housing and day Overview care. What began as an experimental technique at using zoning to im- prove community design has mushroomed into a fairly common tool for meeting a range of planning objectives. To wit: Jerold Kayden, an attorney, Harvard University professor, and an acknowledged zoning expert, estimated that at least one-half of all cities and towns that have zoning ordinances include bonus provisions in one form or another (Kayden 1999). In 1957, as part of a comprehensive revision of its zoning or- dinance, Chicago became the first city to enact a zoning bonus system. That system encourages developers of downtown office buildings to provide public plazas and arcades in exchange for additional density. Unlike other cities that instituted bonus programs to exact public benefits from develop- ers, the impetus for the Chicago bonus system was to stimulate development of high-rise office buildings, too many of which, in the view of the late mayor Richard J. Daley, were being built in New York rather than Chicago. The City of Chicago’s enthusiasm for offering bonuses created what is now thought of as an overly per- Downtown Chicago, page 17 missive system that has resulted in very large buildings with minimal public benefit at the street level (Smith 1999). Beginning in 1998, Chi- 3 4 Incentive Zoning: Meeting Urban Design and Affordable Housing Objectives cago planning staff undertook a comprehensive examination of the zon- ing bonus provisions. In July 2000, a study of the provisions was released and a draft amendment to the zoning ordinance that will substantially overhaul the process was introduced in the city council. The report and staff recommendations are presented as a case study in this report. New York City began its zoning incentive program in 1961 and now has the most extensive system of any city. The city uses bonuses for two pur- poses: to secure street-level amenities, such as plazas, arcades, and shop- ping galleries in high-density residential and commercial districts, and to protect the character of special districts and neighborhoods, such as the- ater districts. The New York system, like Chicago’s, is also under scrutiny in 2000. Inclusionary housing programs and ordinances, including voluntary or mandatory density bonuses for affordable housing, first appeared in the 1960s as a policy response to exclusionary zoning practices by local gov- Inclusionary housing programs ernments. (Exclusionary zoning means zoning that has the effect of keep- and ordinances, including ing out of a community racial minorities, low-income residents, or addi- voluntary or mandatory density tional population of any kind.) The problem of housing exclusion was bonuses for affordable housing, brought to the fore by the 1968 report to Congress (U.S.
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