Jurisdictions Increasingly Favor Market-Reliant Local Affordable Housing Tools

An article published by the Urban Institute, “The Rise of Market-Reliant Affordable Housing Tools,” examines the changing use of three local-level affordable housing tools: housing trust funds, mandatory inclusionary zoning, and zoning incentives. The researchers found that localities increasingly rely on policies that provide incentives for or require private-market actors to produce affordable housing as part of their regular business instead of publicly funding the development of affordable housing through tools such as housing trust funds. Density bonuses were the most popular zoning incentive employed by localities. 

The researchers employed data from the Urban Institute’s 2019 National Longitudinal Land Use Survey (NLLUS). The survey was sent to planning staff in every city or other jurisdiction with at least 10,000 residents located in the 50 largest U.S. metropolitan areas by population. Results from the 2019 survey were compared with data from the 2003 NLLUS to examine changes over time.

Zoning incentives were the most popular local affordable housing tool among communities. Forty-nine percent of communities in the United States used zoning incentives, while 16% used inclusionary zoning, and 17% used housing trust funds. Density bonuses were the most popular zoning incentive, with 36% of communities using them. Regionally, the usage of density bonuses varies, with the Northeast having 41% of communities using them compared to 70% in the West, 23% in the South, and 14% in the Midwest. In all regions, the densest cities and communities with the highest property values were most likely to use density bonuses.

While the popularity of zoning incentives such as density bonuses remained stable, inclusionary zoning became more common. Sixty-nine percent of communities used density bonuses in 2003 compared 68% in 2019. Inclusionary zoning was used in 25% of communities in 2003 compared to 35% of communities in 2019. Among repeat respondents, 23 communities stopped using inclusionary zoning during this period, while 48 communities implemented it. Communities that added inclusionary zoning were more likely to have a higher population density and be in the Midwest or South.

The prevalence of housing trust funds declined. Housing trust funds were used in 31% of communities in 2003, while only 18% of communities used them in 2019. Fifty-nine percent of communities with a housing trust fund in 2003 no longer had one by 2019. Communities with more expensive housing and higher population densities were more likely to have housing trust funds despite a general decline in the usage of housing trust funds. 

These changes in local affordable housing practices indicate a shift from relying on local government funding to relying on private market mechanisms to provide affordable housing. The authors argue this shift, combined with limited federal funding for deeply targeted subsidies, negatively impacts low-income households. Inclusionary zoning and zoning incentives often serve households higher up the income ladder and typically fail to address the housing needs of both low- and moderate-income households at a meaningful scale. The authors conclude inclusionary zoning and zoning incentives are insufficient to address affordable housing needs on their own. Additional policies are needed.

Read the article at: https://urbn.is/3wXKg5B