One of the first things young writers are often taught is to begin an opinion piece with a strong thesis statement. It’s all about laying your cards on the table and presenting an assertion that grabs the reader, delivering an opinion without equivocation.
Thus, without further ado, here is the thesis statement of this column: Inclusionary zoning doesn’t work.
Not strong enough? Ok, how about this instead: Inclusionary zoning is a counterproductive policy tool thought up by corrupt morons and adhered to by people who understand neither logic nor statistics; alas, its juvenile inanity is only matched in degree by its unwarranted popularity.
Anyway, for those less wonkish readers for whom this is a foreign concept, inclusionary zoning is simply a type of affordable housing mandate. It usually means that new multi-unit residential housing developments must offer a certain percentage of units at below-market rent to low-income persons and families.
New Orleans has been debating inclusionary zoning for some time now. An inclusionary zoning provision that provided a “density bonus” for developers who provided below-market units was placed in the Comprehensive Zoning Ordinance (CZO) in 2015. The bill’s author, Councilwoman LaToya Cantrell, proclaimed it “the first step in a long journey to fixing the affordability crisis we have in the city.”
The following year, Mayor Landrieu began a drumbeat of support for additional affordable housing measures, and in October, the City Council directed the City Planning Commission to consider both required and incentivized inclusionary zoning and offer recommendations.
In February, the Commission voted unanimously to approve a study recommending an inclusionary zoning mandate of 12% for any new housing development of more than 10 units. Thresholds for renting or purchasing below-market units would be 60% and 80%, respectively.
It’s doubtful that the council will reject the Commission’s recommendations. I expect we’ll be seeing an amendment to the CZO soon.
New Orleans is simply following the same well-worn trail as other cities with affordable housing problems. These issues are most common in cities that have historically restricted the supply of multi-unit residential housing through various laws, including height limitations, historic preservation laws, and zoning restrictions.
These types of laws are typically pushed by so-called “NIMBY’s” (which stands for “not-in-my-backyard”), who want to protect their neighborhood integrity, as well as the attendant property values, from a changing market. NIMBYs tend to have little regard for affordability; in fact, they’d prefer to restrict the supply of housing further because it increases the value of their own homes.
When NIMBYs hold sway, the end result is that even as population increases, density does not. With the market unable to respond to demand, rents spike.
For politicians, inclusionary zoning is seen as a way to have their cake and eat it too – they don’t have to stand up to the well-heeled NIMBYs, and they get to claim that they’re addressing the housing affordability crisis.. Developers are generally opposed to inclusionary zoning, but they have less clout and can, in any event, be partially mollified with favorable zoning treatment (like small waivers from height restrictions).
Alas, the problem is what I said at the beginning of this piece – inclusionary zoning doesn’t work. Indeed, it actually makes the problem of housing affordability worse.
It’s simple cause-and-effect; proponents of inclusionary zoning imagine that somehow these below-market units have little-to-no impact on the price of remaining housing stock, that developers simply eat the cost and nobody else is impacted. Obviously this is not the case. The money has to come from somewhere.
Like its big brother, rent control, inclusionary zoning is essentially a lottery. If you’re a beneficiary, you make out like a bandit, and everyone else gets the shaft. Market costs rise for developers, forcing higher rents on non-regulated units. Developers also tend to build more luxury units with higher profit margins to make up the difference, or they don’t build at all. Even below-market rent for a luxury unit may not be realistic for most low-income workers.
Because of this, inclusionary zoning is often referred to as a “hidden tax.” You don’t know that you’re paying it because the impact is spread throughout the residential real estate market, but the impact is real.
What’s worse, inclusionary zoning doesn’t actually generate a decent number of below-market units. Let’s take the example of New York, as described by Shaila Dewan of the New York Times: “New York needs more than 300,000 units by 2030. By contrast, inclusionary zoning, a celebrated policy solution that requires developers to set aside units for working and low-income families, has created a measly 2,800 affordable apartments in New York since 2005.”
Other cities boast similar numbers. The only reasonably conclusion to reach is that inclusionary zoning has no positive impact on housing affordability. It’s a smokescreen for politicians trying to appear concerned without roiling interest groups with a major stake in the status quo.
New Orleans desperately needs a comprehensive plan for improving housing affordability. Unfortunately, we’re unlikely to see that from City Hall anytime soon.
Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.