Inclusionary Zoning

IN BRIEF

Around Vermont, communities are struggling with how to counter the rising costs of housing prices and provide housing that all residents can afford to either buy or rent.  One tool communities can consider is inclusionary zoning.  These zoning methods basically require a developer to build, or fund a certain number of units that are affordable for an identified income level.

SUMMARY

Demand for housing in Vermont, especially housing for low to middle-income individuals is increasing at an exponential rate. Rising land, labor and supply costs have communities investigating a variety of tools to meet the need for quality, safe housing that local residents can afford.

A tool that is available, but not often utilized in Vermont is inclusionary zoning. Inclusionary zoning provisions basically require that a developer build, or fund, a number of affordable units calculated as a percentage of the total units in a development. This requirement may be supplemented by incentives such as allowance of smaller lot sizes or smaller homes, or waiver of fees. In some states, statutes or court decisions require municipalities to employ inclusionary zoning methods. However, in Vermont, the use of inclusionary zoning by a municipality is optional, but if it is adopted its provisions must be mandatory for certain types of or size developments.

Inclusionary zoning is an affirmative means of preventing exclusionary zoning which is the term for zoning methods, such as large lot-size requirements, that have the effect of preventing the development of affordable housing within a municipality. In most states, exclusionary zoning methods have been found to be unconstitutional or, as in Vermont, are prohibited by statute. Details on the framework for affordable housing and inclusionary zoning in Vermont is provided in the Land Use Law section of this Toolbox.

Considerations for Implementing Inclusionary Zoning

To avoid legal challenges, an inclusionary zoning program should be carefully developed in conformity with statutory provisions for planning and implementation outlined (link to land use law – inclusionary zoning). Before implementing a program, there are many other factors that a community should consider.  Below is a list of considerations that the American Institute of Certified Planners outlines in their training CD:

  1. Should a development be a certain size before the provision applies? The typical size is between 5 and 35 dwelling units.
  2. Should the provision be applied to all or just some of the range of unit types? Different types include new construction, condo conversion, and rehab projects, single-family and multi-family attached and detached units.
  3. How should the program be applied? There are programs in existence that are mandatory, voluntary, ad hoc, and quid pro quo.  The most successful programs have been mandatory, and the trend is towards more mandatory programs. These programs are successful because under these programs, developers have a clear understanding of what is required of them. Voluntary programs usually require big incentives or some other motivating factor for developers to implement them.
  4. How much housing/what percentage of the development will be affordable? The range is typically between 10 and 15%.  This number will depend on community need.
  5. Who will the program serve? Depending on community need, the program could serve low-income, middle-income, or mixed-income individuals.  Also, the program may serve the community best by providing ownership units, rental units, or a combination.
  6. Who will pay for the program? Under an ideal ordinance, everyone pays a little and no single group is left paying a disproportionate share.
  7. Who will administer the program? Traditionally, the planning office takes on this role. A community should consider if they have the staff – a zoning administrator or planning director – ready and able to administer the program.
  8. Should the program have any flexibility? The program may have built-in options that allow multiple ways for developers to meet the affordable housing requirements.  Some programs offer alternatives like requiring developers to pay a fee in lieu of providing affordable housing.  Communities can choose to offer such alternatives depending on the goals of their program.  If a community is simply trying to raise general funds for the implementation of affordable housing, an alternative fee arrangement might be a good fit.  However, if the main goal of the program is the construction of more affordable units, this option has not been shown to be effective.
  9. How long should the homes stay affordable? One of the main criticisms of affordable housing programs is that the homes do not stay affordable after the first purchase.  Program developers should consider implementing a control period, during which time, the housing prices remain affordable.
  10. How will the affordable housing program fit with the rest of the community’s needs? As always, program developers should consider how the implementation will affect other community programs and goals.

Related Issues

Resources

American Institute of Certified Planners, Inclusionary Zoning Training CD-ROM (May 23, 2007).  Please note: A range of self-study CD-ROMs, including Inclusionary Zoning, can be borrowed from the Land Use Institute at the Vermont Law School.  Information on how to borrow these can be found on the VT Planners Association website.

Vermont Planning and Information Center, Vermont Land Use Planning Implementation Manual: Housing Regulation, provides more information on the framework for housing regulations in Vermont.