The Cost and Quality of Housing Affects The Quality of Life in America

If you look at the master plan of most metropolitan cities in America, it is almost guaranteed to be a section that outlines the objectives and plans to address economic development in the city’s urban core as well as a section that addresses the need for affordable housing for all residents. It is estimated that in the United States, there is currently a shortfall of 4.9 million affordable units needed to address our housing crisis (Evans, 2018). While research shows that income inequality has broadened, countless variables affect the increasing problem of unaffordable housing in the USA (Evans, 2018).

Homeownership in America has become a tool to stimulate consumption and increase production while improving Americans’ housing conditions (Shlay, 2006). The cost and quality of one’s housing are among the most important factors influencing the quality of life in America (Tighe, 2010).

The task of implementing affordable housing policy presents several challenges that include but are not limited to high land costs, inflexible zoning codes, and lack of adequate financing all limit the success of low-income housing policies (Tighe, 2010).

Municipalities face the tall task of creating equitable social and economic prosperity for citizens while muddling through decades of injustice and inequalities for marginalized citizens in their communities. One can acknowledge the grand task local governments face when addressing housing affordability in low-income communities. If there are one thing planners, civic leaders and citizens should all be able to agree on is that the development and rehabilitation of affordable housing provide their communities with economic benefits.

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Nationwide, low-income homeownership is now a policy goal for the government at the local, state, and federal levels (Shlay, 2006). While municipalities employ innovative practices to address the housing affordability in their communities, these innovations function within the parameters of traditional rules. The efforts of municipalities and more specifically the city planning team to persuade public opinion should be made to focus on the benefits of affordable housing, framing them as promoting opportunity, not a government handout (Tighe, 2010).

Affordable housing in America affects our urban core greatly, but municipalities are learning that a lack of affordable housing has an impact on other populations as well. In 2009, 19.4 million households spent more than half their income on housing (Withers, 2012). In 2014, reports showed that roughly 27% of renters pay more than 50% of their income on housing (Evans, 2018). The court system in this country has a long history of involvement in housing battles, whether based on the discriminatory sale or rental practices (Shelley v. Kraemer; Jones v. Mayer Co.) to the overturning of exclusionary zoning (Mt. Laurel) (Tighe, 2010). The task of implementing affordable housing policy presents several challenges that include but are not limited to high land costs, inflexible zoning codes, and lack of adequate financing all limit the success of low-income housing policies (Tighe, 2010). Nationwide, low-income homeownership is now a policy goal for the government at the local, state, and federal levels (Shlay, 2006). While municipalities employ innovative practices to address the housing affordability in their communities, these innovations function within the parameters of traditional rules.

Issue Importance

In the landmark case, Village of Euclid v. Ambler Realty Co. in 1926 the Supreme Court recognized the power of state and municipal governments to regulate land use through zoning as part of their constitutional police power to promote health, safety, morals, and general welfare (Vail, 2016). The establishment of the Federal Housing Administration (FHA) in 1934 made homeownership possible for many US households by guaranteeing payment in the event of default (Shlay, 2006). Affordable housing in America affects our urban core greatly, but municipalities are learning that a lack of affordable housing has an impact on other populations as well. In 2009, 19.4 million households spent more than half their income on housing (Withers, 2012). In 2014, reports showed that roughly 27% of renters pay more than 50% of their income on housing (Evans, 2018). Municipalities find themselves limited in their housing finance innovations and mortgage lending product innovations to address low-income housing disparities (Shlay, 2006).

Primary Objective

Municipalities face the tall task of creating equitable social and economic prosperity for citizens while muddling through decades of injustice and inequalities for marginalized citizens in their community. One can acknowledge the grand task local governments face when addressing housing affordability in low-income communities. If there are one thing planners, civic leaders and citizens should all be able to agree on is that the development and rehabilitation of affordable housing provide their communities with economic benefits. Legislative efforts have been utilized to provide developers as well as municipalities with a win-win approach to addressing affordable low-income housing. The California Supreme Court paved the way for courts nationwide to hold constitutional inclusionary programs (Lerman, 2006). The original movement for inclusionary zoning began in the 1960s and 1970s and has existed as a viable land-use control for the past thirty years (Lerman, 2006). The primary purpose of this capstone is to identify whether inclusionary zoning policies are an effective housing strategy that local governments can use to address a lack of affordable housing within their respected jurisdictions.

Background

Inclusionary zoning (IZ), also referred to as inclusionary housing programs or incentive zoning is a land-use-based ordinance used by local and state governments to require or encourage developers to create affordable units for low- and moderate-income households among housing developments (Scheutz et al, 2009). The premise behind inclusionary zoning programs is to expand the supply of affordable housing and promote social and economic integration (Hickey et al, 2014). Inclusionary housing policies were initially established in progressive, suburban communities outside of Washington, DC in the 1970s and in California, New Jersey, and Massachusetts where state laws either required or provided incentives to local municipalities to create an intentional share of affordable housing (Hickey et al, 2014). The use of inclusionary zoning programs in response to the rising home process is now common in other larger urban city centers such as New York, San Francisco, and Chicago, in addition to small communities in the southwest, Midwest, southeast, and Rocky Mountain in response to rising home prices (Hickey et al, 2014). Inclusionary housing policies can be found in approximately 507 local jurisdictions expanding across 27 states and the District of Columbia.

There are two basic forms of inclusionary zoning statutes: mandatory and voluntary (Lerman, 2006). Approximately 83 percent of identified IZ programs were categorized as mandatory and 17 percent were identified as voluntary (Hickey et al, 2014). Mandatory inclusionary programs require that any developer constructing a project over a certain size reserve a portion of the units as affordable commonly referred to as a “set-aside” (Lerman, 2006). The mandatory approach to inclusionary zoning creates affordable housing with any new development (Lerman, 2006). In return for the affordable units, these mandatory provisions often provide the developer with density bonuses, which some argue are necessary to avoid a takings challenge (Lerman, 2006). A mandatory program that provides developers with basic alternatives can survive both takings and due process challenges so long as there is a legitimate state interest (Lerman, 2006). Voluntary programs are dependent upon incentives provided to the developer, and therefore are devoid of much of the development community’s opposition (Lerman, 2006). Additionally, voluntary programs create affordable units if the program provides sufficient incentives to the developer (Lerman, 2006). Under an inclusionary zoning rule, developers are still able to profit from market-rate units and partially on the affordable units, therefore, the developer is not entitled to compensation (Lerman, 2006).

Developers typically set aside a specified proportion of market-rate housing units – 10–15%, as affordable units, also known as below-market units (Mukhija et al, 2015). Based on the language of IZ ordinances, affordable units are rented (or sold for homeownership) at the below-market rate for some time. This affordability period ranges from a minimum of 10-15 years per unit to what is called perpetual affordability (indefinitely). Eighty-four percent of homeownership inclusionary housing programs and 80 percent of rental programs require below-market units to remain affordable for at least 30 years; and 33 percent of inclusionary housing programs require 99-year or perpetual affordability for rental and/or for-sale housing (Hickey et al, 2014).

The primary goal of any inclusionary zoning program is to increase the supply of affordable housing units in local municipalities to promote social and economic equity integration. Inclusionary zoning is considered to be an important tool for producing and preserving affordable housing as research suggests that such policies locate affordable housing in low-poverty, high-opportunity neighborhoods more effectively than other affordable housing programs, including the Housing Choice Voucher (formerly Section 8 Housing) and the LIHTC (Low Income Housing Tax Credit) programs (Hickey et al, 2014).