The Guru Is In
Powerful New Housing Tools for Politically Courageous Local Governments
By David A. Smith
4 min read
Depend upon it, when a mayor knows she is to be voted out in the next election, it concentrates her mind wonderfully. – Dr. Samuel Johnson, rebooted
What’s a big-city mayor facing an affordable housing crisis to do?
What was a candidate’s campaign rallying point has, upon assuming office, become a newly elected incumbent’s intractable inheritance that can no longer be politically deferred. The Millennial and Gen Z backlash against two-dimensional zoning—technologically obsolete, spatially exclusionary and now couched as racially suspect—has moved the Overton Window of the politically thinkable. Now many cities’ media and job-creating anchor institutions are beating the drums for solutions, and with the Federal government having long since abdicated leadership in housing policy, states and localities have been thrown back on their own resources.
As such, cities are looking at every link in their housing production value chains across the full range of income levels, tenure modalities, municipal and state tools and motivated actors. Most remarkably, some city governments are challenging liberal NIMBY shibboleths in refreshing ways. How are they doing it? Here’s my list of tools or levers, from the most familiar and established to the most emergent and conceptual, that require little if any new municipal budgetary money, only that rarest of commodities, resolute political courage:
1. Inclusionary zoning mandates, either in situ or via off-site replacement or linkage payments, are now used in more than 730 municipalities in 31 states, led by New Jersey, Massachusetts and California.
2. Other density bonuses for businesses that either create affordable housing or finance others that create it. New York City air rights were the first example that has spawned several proven international examples ready to be imported. In Mumbai, a developer building (or financing) affordable housing gains a Transferable Development Right certificate for increased density elsewhere in the city, which may be sold to another developer. São Paulo’s Certificados de Potencial Adicional de Construção (CEPACs) operate similarly and Brazil’s city of Curtiba has likewise used the transferable-certificate concept for housing, heritage preservation and environmental protection.
3. Community Land Trusts, in cities where development land is scarce and its value rises dramatically based on rezoning or urban redevelopment, especially as long-term holders of land atop which affordable housing is built. Used in dozens of cities, including places as unlikely as Houston and Oakland.
4. Local zoning overrides mandatory inclusionary housing, preferably with a concomitant density bonus that adds value to the land and makes affordable housing or cross-subsidized development economically viable. Pioneered with Massachusetts’ Chapter 40B, which dates back 45 years and was reaffirmed in 2011 despite a statewide referendum to repeal it.
5. Tax Increment Financing (TIFs) enables a municipality to sell additional bonds whose debt service will be repaid from expected increases in real estate taxes arising from the redevelopment. Although commonly used (in multiple states) for classical urban economic development, it also works for mixed-income affordable housing when the city is envisioning a substantial increase in density to generate high-end market housing whose inherent profitability will not only repay the TIF loan but also provide cross-subsidy for the affordable apartments.
6. As-of-right Accessory Dwelling Units (ADUs) and ADU-related incentives, such as fast-tracking approvals. These have revolutionized urban infill development in California and are rapidly being taken up in other strongly liberal states, like Massachusetts.
7. Fundamental zoning reform to reduce downsizing and increase mixed-use and mixed-income density, such as Minneapolis’s elimination of single-family zoning, Cambridge’s comprehensive overlay zoning that creates new density opportunities organically, especially in commercial corridors, and Los Angeles’s combining the two as a city-wide end-run around legacy down-zoning that had more than 70 percent of the inventory permanently zoned for single-family.
8. Transit-oriented development (TOD) where the introduction of a new higher-capacity, traffic-reducing system is coupled with around-station inclusionary upzoning that includes mandatory broad-range affordable housing as part of the resulting development, such as in Atlanta.
9. ‘Empty homes’ real estate surcharges on residential dwellings (usually condos) that are unoccupied for most of the year, as used for global-destination mononym cities, as used in London, Vancouver and the province of British Columbia, and under consideration in New York.
10. Converting ‘stranded asset’ office buildings into housing. Large floor plates (lack of potential exterior window space) and limited-load water (no baths or showers) make the design and engineering logistics of this challenging, but as the prices of office buildings fall and keep falling, cities like Boston and New York are taking baby steps.
Courage is not what you say, courage is what you do. Does your mayor have political courage? Many cities are about to find out.
