Cities, Inclusion and Exactions

Author:Audrey G. McFarlane & Randall K. Johnson
Position:Dean Julius Isaacson Professor of Law, University of Baltimore School of Law/Associate Professor of Law, Mississippi College School of Law
Pages:2145-2185
SUMMARY

Cities across the country are adopting mandatory inclusionary zoning. Yet, consensus about the appropriate constitutional standard to measure the propriety of mandatory inclusionary zoning has not been fully reached. Under one doctrinal lens, inclusionary zoning is a valid land use regulation adopted to ensure a proper balance of housing within the jurisdiction. Under another doctrinal lens,... (see full summary)

 
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2145
Cities, Inclusion and Exactions
Audrey G. McFarlane* & Randall K. Johnson**
ABSTRACT: Cities across the country are adopting mandatory inclusionary
zoning. Yet, consensus about the appropriate constitutional standard to
measure the propriety of mandatory inclusionary zoning has not been fully
reached. Under one doctrinal lens, inclusionary zoning is a valid land use
regulation adopted to ensure a proper balance of housing within the
jurisdiction. Under another doctrinal lens, challengers seek to characterize
inclusionary zoning as an exaction, a discretionary condition subject to a
heightened standard of review addressing the specific negative impact caused
by an individual project on the supply of affordable housing in a jurisdiction.
Drawing from the experience of Baltimore, Maryland’s inclusionary zoning
ordinance, this Article considers the impact that the uncertainty in the law
may have had on the type of inclusionary zoning ordinance adopted by the
city. This Article argues that the conversation about inclusionary zoning,
land use regulation, and exactions has been formulated in the context of
imagery about development that leaves places like Baltimore out. The imagery
in these narratives is of an individual landowner powerless in the face of
government overreach. The reality is different in those places where land
developers are not powerless and instead are often politically influential repeat
players. Thus, the real problem presented may be not how to craft doctrine to
prevent cities from asking too much of developers, but instead to craft doctrine
that ensures cities do not give away too much.
I. INTRODUCTION ........................................................................... 2146
II. INCLUSIONARY ZONING ............................................................... 2151
A. HOW ZONING SHAPED THE NEED FOR INCLUSIONARY
ZONING ................................................................................ 2151
B. THE MECHANICS OF INCLUSIONARY ZONING ........................... 2155
1. Mandatory or Voluntary ............................................. 2155
*
Dean Julius Isaacson Professor of Law, University of Baltimore Sch ool of Law. Thanks
to the participants at the Association for Law Property and Society conference held at Queens
University, Belfast, Northern Ireland where an initial version of this article was presented and
thanks to fellow panelists and discussants at the Lutie Lytle Workshop, Carole Brown, Patience
Crowder and Serena Williams. Expert research assistance was provided by Syesa Middleton.
**
Associate Professorof Law, Mississippi College School of Law. Special thanks to Dean
Patricia W. Bennett, the 2017 Mississippi College Publications Grant Program and the editors of
this law review.
2146 IOWA LAW REVIEW [Vol. 102:2145
2. Which Projects are Subject to Inclusionary
Zoning? ........................................................................ 2156
3. The Financial Costs of Inclusionary Zoning—
Incentives for Developers ........................................... 2157
4. Social Preferences and Opt-Outs from
Inclusionary Zoning .................................................... 2158
5. Set-Asides and the Tipping Point ............................... 2159
6. How Long Will Inclusionary Housing Remain
Affordable? .................................................................. 2159
7. Critical Assessments of Inclusionary Zoning ............. 2160
C. BALTIMORES MANDATORY INCLUSIONARY ZONING
ORDINANCE .......................................................................... 2162
III. THE DOCTRINAL PARAMETERS OF INCLUSIONARY ZONING ........ 2168
A. INCLUSIONARY ZONING AS AN ORDINARY LAND USE
REGULATION ......................................................................... 2168
B. INCLUSIONARY ZONING AS AN EXACTION ................................ 2173
IV. WHY INCLUSIONARY ZONI NG SHOULD SURVIVE EXACTIONS
ANALYSIS ..................................................................................... 2180
V. CONCLUSION .............................................................................. 2184
I. INTRODUCTION
The project of addressing the need for affordable housing in the United
States presents an ongoing dilemma for local government: how to pay for the
construction of affordable housing units; and how to find geographic
locations to build such units without local opposition thwarting the projects,
reconcentrating poverty, or perpetuating racial segregation. These endeavors
are a work in progress, and inclusionary zoning has become an increasingly
popular, but partial, solution.1 Under an inclusionary zoning approach, a
local government zoning or related housing law will either encourage or
require a developer who proposes a new residential construction project to
“set aside” a certain number of units for income-restricted sale or lease.2 This
1. See Jenny Schuetz et al., 31 Flavors of Inclusionary Zoning: Comparing Policies from San
Francisco, Washington, D.C. and Suburban Boston 1 (Furman Ctr. for Real Estate & Urban Policy,
Working Paper No. 08–02, 2008), http://furmancenter.org/files/publications/31flavorsofIZ9-
9-08.pdf (“As housing costs have risen in the U.S. and federal subsidies for affordable housing
programs have declined, inclusionary zoning . . . has become an increasingly popular local policy
for producing low-income housing without direct public subsidy.”).
2. See generally Robert Hickey et al., Achieving Lasting Affordability Through Inclusionary Housing
(Lincoln Inst. of Land Policy, Working Paper No. 14RH1, 2014), http://www.lincolninst.edu/
sites/default/files/pubfiles/achieving-lasting-affordability-through-inclusionary-housing-full.pdf
(analyzing a set of twenty inclusionary housing programs).
2017] CITIES, INCLUSION AND EXACTIONS 2147
approach encourages the private production of new affordable housing that
is geographically and economically integrated.3
Although increasingly widespread, the propriety of inclusionary zoning
under the U.S. constitutional doctrine that governs local land use and
individual property rights is still somewhat unsettled; the way in which the
rights and governmental exercise of authority are framed shapes different
answers to whether an inclusionary zoning ordinance is valid.4 This ambiguity
presents two unresolved questions. The first question is whether private
developers, by being asked to include units of low- to moderate-income
housing in market-rate developments, are being asked to do something
extraordinary that unfairly impinges on their property rights—especially
when it is costly, either financially or in terms of the upscale image or message
that a developer wants to sell.5 The second question is whether developers are
asked to do something both ordinary and consistent with land use regulation
because inclusionary zoning promotes uses of land that improves the general
welfare of the populace by ensuring housing types that meet the variety of
residents’ needs. Tailoring housing types to differing abilities to pay is
particularly appropriate considering land use regulation’s history of
exclusionary zoning and its pernicious effect in facilitating segregation.6
For the most part, there have been relatively few successful challenges to
inclusionary zoning ordinances.7 This is likely so because developers have still
found it lucrative to fulfill inclusionary zoning requirements and build
profitable residential developments.8 Some developers even consider it the
right thing to do.9 Also, local governments have mostly been careful in
3. Id. at 1.
4. Tim Iglesias, Fra ming Inclusionary Zoning: Exploring the Legality of Local Inclusionary Zoning
and Its Potential to Meet Affordable Housing Needs, ZONING & PLAN. L. REP., Apr. 2013, at 1, 4 (arguing
that the way the ordinance is framed, as an ordinary land use regulation or a permit with
conditions, affects state courts’ receptiveness to either uphold or strike down inclusionary zoning
ordinances).
5. See Is Inclusionary Housing the New Normal for High-Cost Places?, HOW HOUSING MATTERS
(Mar. 5, 2015), http://howhousingmatters.org/articles/is-inclusionary-housing-new-normal-high-
cost-places (“Courts have overturned inclusionary zoning ordinances in some communities,
ruling that they are illegal forms of rent control.”).
6. See John Mangin, The New Exclusionary Zoning, 25 STAN. L. & POLY REV. 91, 91 (2014)
(“Decades of scholarship—legal and sociological—outline how [zon ing] policies left low-income
families stranded in faltering cities whose abandonment by suburban homeowners-to-be at least
left behind a large supply of low-cost housing.”).
7. See Igles ias, supra note 4, at 7–9 (describing the various types of legal challenges to
inclusionary zoning ordinances, few of which have been successful).
8. See Nicholas J. Brunick, Inclusionar y Housing: Proven Success in Large Cities, ZONING PRAC.,
Oct. 2004, at 1, 3 (finding, in one city, that “[n]ew housing development continues to boom . . .
and development projects remain lucrativ e, even with the affordable unit set-aside requirement”).
9. See URBAN INST., EXPANDING HOUSING OPPORTUNITIES THROUGH INCLUSIONARY
ZONING: LESSONS FROM TWO COUNTIES 18 (2012) (“Because [Moderately Priced Dwelling Units
(“MPDU”)] are required in nearly all developments and subdivisions in Montgomery County,
developers think it is fair.” (footnote omitted)); see also id. at 24 (“Some developers have even
expressed pride in their involvement with the MPDU progra m. They agree that MPDUs are

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