Why IZ works40 Years of Success

Oregon Legislative WorkgroupApril 17, 2014

Introduction Inclusionary zoning is a land use tool used by

local jurisdictions to ensure economic diversity First tested in Montgomery County, MD in 1974

IZ helps create mixed-income developments IZ provides developers with economic offsets in

exchange for affordable housing set-asides IZ combats economic and racial segregation IZ creates opportunities for working families to

live in areas of growing prosperity

Place matters. A strong predictor of a person's future health is the ZIP code in which they're born and/or raised.

Neighborhood supermarkets and park access are top predictors of childhood health

In Portland Metro, East Portland and East County residents, especially children, are projected to have greater health risks and lower life expectancy

Saelens, Brian E. PhD, et al. Obesogenic Neighborhood Environments, Child and Parent Obesity The Neighborhood Impact on Kids Study. American Journal of Preventive Medicine, 2012 DOI: 10.1016/j.amepre.2012.02.008

Clapp Elizabeth and Moriah McSharry McGrath, BUILT ENVIRONMENT ATLAS: Active Living, Healthy Eating. Multnomah County Health Department, Health Assessment & Evaluation, Office of Health & Social Justice, June 2011: https://web.multco.us/news/how-healthy-your-neighborhood

Variety of IZ approaches IZ can be customized to adapt to each

community’s unique housing market Some programs are mandatory; others voluntary Some programs require on-site set-asides; others

allow for construction of AH units in other locations Each jurisdiction gets to determine specific unit-size

thresholds, set-aside requirements, affordability levels, control periods and combination of economic offsets and incentives to include

Inclusionary Zoning Ordinances Across the US Montgomery County, Maryland was the

first to adopt IZ in 1974 IZ produced over 11,000 AH units over first

30 years in suburban area of prosperity IZ is commonly used in areas experiencing

growth such as California, Massachusetts , New Jersey , Colorado , and DC Half of jurisdictions amended IZ ordinance

at least once since inception Over 100 cities in CA use a form of IZ,

producing over 34,000 AH units in 20 years

History of IZ in Oregon 1998: Metro studied IZ as part of Housing-

Technical Advisory Committee (HTAC) Mandatory IZ was identified as tool to employ

if voluntary incentives did not work 1999: Oregon Homebuilders Assn. lobbied

to amend ORS 197 to ban mandatory IZ Oregon joined Texas as only states in country

to prohibit jurisdictions from using mandatory IZ

Metro Regional Affordable Housing Strategy (RAHS) has failed to produce any real gains AH has become concentrated in poorer areas

Various Incentives Type of Cost-offsets What It Does and Why It Helps Developers

Density bonus 

Developers build at greater density than residential zones typically permit, allowing for additional market-rate units

Unit size reduction 

Developers build smaller or differently configured AH units, reducing costs 

Relaxed Parking Requirements Developers can offer reduced parking, tandem parking or no parking to reduce costs

Design Flexibility 

Developers get flexibility in design guidelines to help lower costs

Fee waivers, reductions or deferrals Jurisdictions waive, reduce or defer permit and/or impact fees triggered by development

Fast track permitting Jurisdictions streamline the permitting process for projects including AH units, reducing carrying costs

Source: PolicyLink.org

Residential Segregation and Economic Mobility Residential income segregation has

steadily increased since the 1970s Exacerbated by housing bubble Families of color face additional housing

burdens; racial segregation increasing Concentrated poverty is strongly

correlated with lower educational attainment levels and lowers overall economic mobility

Public Benefits of IZ IZ is part of the solution to concentrated poverty

Areas with concentrated poverty typically have higher crime rates and school dropout rates

IZ expands the supply of AH while dispersing the units across jurisdictions by linking to private development Allows private developers to be a part of the solution

New market-rate development generates needs for low-wage jobs and working families IZ works best at developing “workforce housing” for

public school teachers, janitors, civil servants and childcare workers who earn too little to afford market-rate housing, but are needed to support “complete” communities

IZ and Education Inclusive housing gives lower income children

access to low-poverty, high-performing schools “Over the course of elementary school, highly

disadvantaged children with access to the district’s lowest-poverty neighborhoods and schools began to catch up to their non-poor, high-performing peers, while similar disadvantaged children without such access did not”

Schwartz, H. (2010). Housing policy is school policy: Economically integrative housing promotes academic success in Montgomery County, Maryland. Century Foundation.

Healthy Neighborhoods and Sustainable Development Concentrated poverty results in

unnecessary economic, environmental and social costs Income segregation results in negative health

impacts that increase health care costs Income segregation results in additional

vehicle miles traveled, air toxics and greenhouse gas emissions

Exclusive housing limits density, contributing to energy inefficiency

Voluntary vs. Mandatory IZ Out of 107 local IZ policies throughout California, 101 were mandatory

and produced far more affordable units than the 6 voluntary programs Three of the six voluntary policies produced no units at all, and two locales, Los

Alamitos and Long Beach, “blame the voluntary nature of their programs for stagnant production despite a market rate boom.”

Many jurisdictions are replacing ineffective voluntary programs with mandatory ordinances, resulting in increased AH production Cambridge MA, Irvine CA, Pleasanton CA and Boulder CO, among others, all

replaced voluntary programs with mandatory ones Orange County, CA did the opposite, replacing an effective mandatory

program with a voluntary policy in 1983 The county produced 6,389 units in 4 years under the mandatory policy, and

produced only 952 units in the 11 years after the switch to a voluntary program.

Non-Profit Housing Association of Northern California. (2003). Inclusionary Housing in California: 30 Years of Innovation. p. 8Brunick, N. (2004). The Inclusionary Housing Debate: The effectiveness of mandatory programs over voluntary programs. Zoning Practice, 9(1), 1-7.

Case Study: North Bethany, Washington County Washington County was the fastest growing county in

Oregon from 2000-2010, and currently has the highest median family income in the state.

The North Bethany area was slated for residential development in 2002 with the expectation that it would include affordable housing. Metro and Washington Co. leaders set a target of 20% of

owner-occupied properties for families making less than 80% of the Area Median Income, and 20% of rentals for families making less than 60% AMI

In 2010 the Washington County Board of Commissioners adopted a voluntary IZ policy to reach those targets. The County offered a mix of incentives to developers, such as

density bonuses, tax abatements and fast-track permitting

North Bethany, Cont.’d County officials negotiated with West Hills

Development Co. to include affordable units in the new Arbor Oaks development in North Bethany in exchange for incentives

The private developers rebuffed those offers, insisting that they keep the incentives without having to meet AH targets

The developer characterized the County’s voluntary IZ program as “coercive and disadvantageous.” West Hills is the largest property owner and landbanker

in the North Bethany development area, and has continuously refused to participate in the County’s voluntary IZ program

Our Questions: Could mandatory IZ be effective in

helping local jurisdictions in Oregon address their economic, environmental and social needs?

How can local jurisdictions better engage private developers to be part of the solution?