MANDATORY INCLUSIONARY ZONING-THE ANSWER TO THE AFFORDABLE HOUSING PROBLEM

MANDATORY INCLUSIONARY ZONING-THE ANSWER TO THE AFFORDABLE HOUSING PROBLEM

Lerman, Brian R

Abstract:

Affordable housing has always been a problem in the United States. Cities and towns originally engaged in forms of discrimination through exclusionary zoning to exclude low-income residents. While many of the social attitudes persist today, the question is how to encourage new affordable housing development. This Note introduces the concept of inclusionary zoning as a successful method for creating affordable housing. The Note examines the constitutional analyses used for land use ordinances. Then, the Note evaluates existing affordable housing programs, distinguishing between the eastern approach and the western approach. The eastern approach-represented by New Jersey, Massachusetts, and Montgomery County, Maryland-is based upon a “fair share” of affordable housing but lacks any planning requirement. The western approach, as illustrated by Oregon and California, is based upon community planning of all necessary elements including affordable housing, and have successfully required affordable housing development. Ultimately, the Note adopts a perspective that mandatory inclusionary zoning in all communities is the best option and should be valid under an impact fee-like analysis.

INTRODUCTION

Mr. and Mrs. Smith live with their three children on two incomes-totaling less than thirty thousand dollars-in the Seattle area.1 The Smiths spend nearly two-thirds of their income on rent in a community where they fear for their family’s safety.2 After much effort, the Smiths have qualified for the purchase of affordable housing in a new development.3 The home has a yard and offers ample light and ventilation.4 It is near the children’s schools and the parents’ workplaces.5 The new home will allow the Smiths to recuperate some of die money previously lost to rent and will make family life more enjoyable.6

Families throughout this country are in need of an opportunity such as this.7 The California Supreme Court in Home Builders Ass’n of Northern California v. City of Napa may have paved the way for courts nationwide to hold as constitutional inclusionary programs like the one described above-thus providing these types of opportunities to more Americans.8

This Note addresses why, from a policy perspective, mandatory inclusionary zoning is the optimal approach to affordable housing. This Note will also examine how, from a legal perspective, inclusionary zoning, because of its similarity to an impact fee, is constitutional. Part I examines the basics of inclusionary zoning-what inclusionary programs are, why they are necessary, and how they differ. Part II for cuses on the various constitutional arguments surrounding inclusionary zoning and illustrates how a constitutional determination depends upon how the ordinance is classified. It then examines the constitutionality of an impact fee. Part III describes the approaches of several states in addressing affordable housing. Finally, Part IV evaluates the most effective program for providing affordable housing. After finding that a mandatory inclusionary zoning approach is most beneficial, this Note compares the constitutional analysis of inclusionary zoning with that of impact fees and concludes that both should be viewed as valid legislative actions.

I. WHAT Is INCLUSIONARY ZONING?

Zoning has been a fundamental concept in American society since Village of Euclid v. Ambler Realty Co., which allowed cities and towns to plan for development.9 A zoning regulation is constitutional, provided that it has a substantial relation to public health, safety, or welfare.10 The substantial relation standard provides local government broad deference so long as the “validity of the legislative classification for zoning purposes [is] fairly debatable.”11

Zoning generally regulates uses and provides spatial requirements; however, land use planning should also consider the community’s need for affordable housing.12 Through “inclusionary” zoning, governments require or encourage developers-both residential and commercial-to create affordable residential units as a part of any new development.13 Typically, inclusionary zoning ordinances mandate a percentage of affordable units, designate an income level defined by median income, and provide for an affordable period-a required length of time for the units to remain affordably priced.14 In return, inclusionary ordinances often provide developers with incentives, the most common of which is a density bonus.15

The advantage of an inclusionary system to a community is that it helps provide affordable housing without a major public financial commitment.16 The developer, rather than the community, bears the cost of the affordable units.17 Moreover, the program can successfully integrate populations, while reducing sprawl and encouraging mixeduse development.18

The original movement for inclusionary zoning began in the 1960s and 1970s.19 Three forces-housing advocates fighting exclusionary zoning, a decrease in federal subsidies for affordable housing, and an increase in local governments’ use of exactions20-encouraged the creation of the first inclusionary zoning programs.21 Therefore, inclusionary zoning has only existed as a viable land use control for the past thirty years.22 More recently, this movement has been aided by rapidly rising real estate prices that have closed the housing market to many.23

A. The Problem of Exclusionary Zoning

Many communities, especially affluent suburbs, have kept lower income families from moving into the community through “exclusionary” zoning by requiring large minimum lot sizes and large minimum floor areas,24 prohibiting mobile homes,25 and limiting multifamily residential areas.26 These types of zoning practices, which were especially common in the 1960s and 1970s, continue to be major obstacles to affordable housing today.27 Many communities disguise exclusionary zoning practices as measures to preserve the community character.28 However, the motivation behind exclusionary zoning is typically multifaceted-prejudice against those of lower income,29 financial concern for the impact on property values, and fear of infrastructural costs caused by population increase.30

The concern over providing affordable housing for residents has led some courts to strike down exclusionary zoning and require offending cities or towns to provide inclusionary zoning.31 Typically, to invalidate an exclusionary ordinance, a developer must show a denial of substantive due process or equal protection.32 Courts have found a denial of substantive due process based upon the existence of a “regional general welfare.”33 Since regional general welfare extends beyond a municipality’s boundaries, municipalities may not use the police power-the authorization for local zoning-to exclude.34

In addition to judicial action, many state legislatures have also tried to combat exclusionary practices.35 For example, some states have flatly banned exclusionary and discriminatory zoning techniques; others have required cities and towns to affirmatively plan affordable housing pursuant to the police power.36 The latter type of statewide legislation-a form of inclusionary zoning-can effectively eliminate exclusionary ordinances by requiring cities and towns to integrate affordable housing.37

B. Affordable Housing

Although it is possible to remove exclusionary techniques without requiring inclusionary zoning, this will not necessarily result in affordable housing, because developers will still not be required to create affordable units.38 Providing affordable housing is essential because it preserves housing for long-time residents,39 encourages integration,40 and protects the environment by decreasing suburban sprawl.41 Affordable housing is lacking where communities have created exclusionary zoning or where real estate prices are escalating.42 Climbing real estate prices have often occurred in areas with extreme job growth-causing longer commutes, more sprawl, and social and economic problems for lower income residents.43 Therefore, inclusionary zoning is needed to address the severe housing shortage for these residents.44

Some advocates of inclusionary zoning argue that the creation of affordable housing alone is insufficient; rather, the housing must be strategically placed within the community to prevent segregation based on income level.45 Segregated affordable housing can have a harmful effect on a neighborhood and thus has proven to be less effective than integrated units.46

Moreover, growth management-planning for all land use concerns, including affordable housing-offers the opportunity to both protect the environment and provide affordable housing.47 By providing a developer with a density bonus, inclusionary zoning offers the potential of reducing suburban sprawl.48 More residents reside in close proximity in affordable units, thus preserving open space and benefiting the environment49

Ultimately, inclusionary zoning prohibits exclusionary zoning and effectively provides for affordable housing, even in areas suffering from escalating real estate prices.50 To fill the void left in the absence of a constitutional right to housing, inclusionary zoning works toward providing affordable living spaces in otherwise unaffordable areas.51

C. Inclusionary Zoning Programs: Mandatory Versus Voluntary

There are two basic forms of inclusionary zoning statutes: mandatory and voluntary.52 Mandatory inclusionary programs require that any developer constructing a project over a certain size reserve a portion of the units as affordable, commonly referred to as a “set-aside.”53 In effect, the mandatory approach creates affordable housing with any new development54 In return for the affordable units, these mandatory provisions often provide the developer with density bonuses,55 which some commentators argue are necessary to avoid a takings challenge.56

Although incentives like density bonuses are not required for mandatory inclusionary zoning programs, the legislature must provide developers an “alternative” for the program to be upheld.57 The alternative can be in the form of off-site housing or imposed fees in lieu of on-site affordable units.58 Alternatives address developments where affordable units cannot be provided cost effectively.59 These alternatives require the developer to build or pay for a greater number of affordable units than if the developer builds them on-site.60 A mandatory program that provides developers with basic alternatives can survive both takings and due process challenges so long as there is a legitimate state interest.61

Mandatory inclusionary zoning has at least three important benefits. First, mandatory programs have been more successful than voluntary programs based upon the number of affordable units created.62 Second, mandatory programs can alleviate social problems such as crime and unemployment by mandating integration of the community.63 Third, an inclusionary program has the economic benefit of creating mixed income neighborhoods and decentralizing poverty-thereby reducing city expenditures-by providing affordable housing in otherwise gentrified areas.64

One major drawback of mandatory inclusionary programs is that states must have enforcement mechanisms, such as financial sanctions, to address any failure to comply with a statewide inclusionary program.65 Another drawback is the strong resistance of the development community.66 Because the burden of the program will fall on developers, they are likely to oppose any such mandatory program.67

Unlike mandatory programs, voluntary programs are dependent upon incentives provided to the developer, and therefore are devoid of much of the development community’s opposition.68 Moreover, voluntary programs provide developers with the element of choice, thereby avoiding a major obstacle of mandatory programs.69 Additionally, voluntary programs do create affordable units if the program provides sufficient incentives to the developer.70

The major disadvantage of voluntary programs is that the incentives that have to be granted to entice a developer can be detrimental to the municipality by burdening the environment and local infrastructure.71 Incentives that merely offset the cost of the affordable units may not be a sufficient inducement for developers.72 Another disadvantage to voluntary programs is that developers are provided an element of choice: if the ultimate market-rate buyer is willing to pay a premium that exceeds the public incentives for affordable housing, the developer will forego the optional program.73 On the other hand, mandatory programs require all developers to comply with the mandatory set-aside of affordable units regardless of incentives, and thus provide more benefits to the community than voluntary programs.74

D. Removing Local Politics from the Debate

Another important benefit of mandatory inclusionary programs is that they provide affordable housing for the community without a large public financial investment.75 By not placing an enormous burden on the community, affordable housing can be created quickly and efficiently.76 Public officials and the community are more likely to support this type of program because the private developer pays for the affordable units.77

Local politics can be removed from the inclusionary zoning debate through the use of regional affordable housing planning. Zoning has substantial social and economic impacts in the area of affordable housing, which arouse public opinion.78 Specifically, the public is likely to oppose inclusionary programs because the practice is counter to exclusionary zoning which preserves the status quo.79 Although the public argument is often framed as a concern about financial or environmental costs, in reality much of the opposition to inclusionary programs is rooted in discriminatory intent.80 One way to address this public concern is to apply inclusionary programs on a more regional level.81 Regional affordable housing planning allows for collaboration between the inner city and suburban communities in establishing a plan for affordable housing.82 In addition, it allows for a “fair share” approach; each municipality is obligated to provide its pro rata share of affordable units.83 To be effective, regional planning requires the participation of all segments of the community.84 When effective, regional planning results in the creation of successful affordable housing.85

E. Challenges for Inclusionary Zoning Statutes

The largest problem with both mandatory and voluntary programs is a seeming dependence upon a strong housing market.86 Both programs presuppose that a developer will permit the community to extract affordable units in return for his right to develop.87 To function properly, developers must be able to sell market-rate units before any affordable units will be developed.88 Where market-rate housing is selling well, however, inclusionary ordinances have not brought an end to development in the area.89

II. THE CONSTITUTIONALITY OF INCLUSIONARY ZONING

When a municipality is considering inclusionary zoning, it must carefully craft a program that passes a constitutionality review. A strong constitutional precedent will not only permit local government to adopt progressive inclusionary measures, but will also entice communities to adopt strict mandatory inclusionary programs.90

Inclusionary zoning statutes raise important constitutional issues: denial of due process and taking of private property without just compensation.91 The determination of the constitutionality of these ordinances has been a product of whether the ordinance is characterized as a traditional land use ordinance, an exaction, or an impact fee.92 A land use ordinance is given substantial deference by the courts, and will most likely be upheld.93 However, an exaction does not receive the same judicial deference because exactions are based on adjudicative discretion.94 Courts require exactions to have a sufficient nexus or proportionality between the impact of the development and what is taken from the developer.95 Courts provide impact fees with more deference than exactions because they are legislative rather than adjudicative, and therefore apply to all developments.96

A. Traditional Land Use Ordinance Analysis

Developers will often challenge inclusionary zoning ordinances characterized as a traditional land use ordinance as a denial of due process,97 or a taking of private property.98 The legislature is provided broad deference in relation to due process concerns; the law is upheld so long as it is to “achieve a legitimate public purpose . . . and . . . the ordinance [is] a reasonable means to accomplish this purpose.”99 In practice, any due process concern is likely satisfied because the creation of affordable housing has been approved by the courts as a legitimate state interest.100 More important, developers argue that the ordinance is a transfer of property from the developer to lower income individuals and, therefore, is a taking.101 To avoid this challenge, the legislation must advance a legitimate state interest and the developer must not be denied substantially all economically viable use of the property.102

As mentioned above, the basic adoption of inclusionary zoning statutes causes the creation of affordable housing to be viewed as a legitimate state interest103 Once the local ordinance is proven to be a legitimate state interest, the question becomes whether the developer can be forced to provide the required affordable units.104 Although a developer may argue that the affordable units deny value to his property, the required inclusion of these units does not create a total diminution in value of the developer’s property.105 Under an inclusionary zoning regime, the developer still profits completely from the marketrate units and partially on the affordable units.106 Therefore, the developer is not entitled to compensation.107

B. Exaction Analysis-The Nollan/Dolan Test

If an inclusionary zoning ordinance is characterized as an exaction, the analysis differs.108 The takings analysis under exactions is less deferential to the legislature than for a traditional land use ordinance because it applies an intermediate level of scrutiny.109 Under such an analysis, a court will examine whether the municipality has asked for something “bear [ing] the required relationship to the projected impact of… [the] development.”110 The exaction doctrine exists to protect a developer from either paying for a public benefit that should be paid for by the public,111 or providing a benefit in excess of his impact on the community.112

The analysis vised for an exaction should not be applied to inclusionary zoning.113 First, the exaction analysis applies only in the special permit setting, not to a generally applicable statute or ordinance.114 Second, the analysis is aimed at protecting a developer from bearing a cost that should be paid for publicly.115 Therefore, because an inclusionary statute is both generally applicable and does not provide something for which the public would ordinarily bear the cost, the exaction analysis should not apply.116

C. Impact Fee Analysis

Some states impose an impact fee on developers.117 Impact fees are assessed at the time of building to pay for the infrastructure needed because of the new development118 Similar developments in a community-both in size and impact-are required to pay the same impact fee.119 To validly enact impact fee ordinances, municipalities must create a comprehensive plan representing the needs of the community in terms of capital improvements with regard to future development120 Fees are then assessed in accordance with that plan; any new project is charged a fee that represents a proportionate share of the capital costs.121

The state has the power to authorize municipalities to impose impact fees.122 The development community, however, frequently challenges municipal impact fees, arguing that they are an unauthorized tax.123 An impact fee, however, is distinguishable from a tax for several reasons.124 In determining whether a municipality has assessed a fee or a tax, courts examine several factors, such as the purpose of the fee, and the connection between the need for the development and public facility.125 Perhaps the most important characteristic of an impact fee is that, unlike a tax, it is allocated to a fund separate from the general fund.126 Additionally, an impact fee must be used for a specific service required by the development and not, as a tax would be, for a general public benefit.127 Finally, the fee must still be tailored to the impact of the development on the community to avoid being considered a tax.128

Moreover, an impact fee authorized by the state is legislative rather than adjudicative, and therefore is given greater deference by courts.129 A municipality can defend its particular fee through a plan that demonstrates the cost to the community of new development.130 An inclusionary zoning ordinance deserves similar judicial deference to an impact fee, provided that the program addresses a lack of affordable housing at a level proportionate to each development and it can be defended through sufficient planning by each municipality.131

III. INCLUSIONARY ZONING IN PRACTICE

Although, the discussion above provides a broad overview of inclusionary zoning, it is important to examine specific programs states have implemented across the country. “Eastern” states are generally nonplan states that have attempted to use non-plan inclusionary remedies to address the affordable housing problem, but have been unable to create concrete planning requirements.132 “Western” states are plan states, and thus are more progressive with respect to land use; they have taken advantage of planning in creating affordable housing programs.133 In addition to looking at specific inclusionary zoning programs, this Part examines several states which have not adopted inclusionary measures.134 These states are instructive because they suggest the possibility of adopting statewide inclusionary zoning.135

A. Eastern Approach

Most of the eastern states have not, as of yet, implemented statewide inclusionary zoning programs.136 Instead, each state’s program is tailored to a specific problem; either, exclusionary zoning137 or a lack of affordable housing.138 New Jersey and Massachusetts-leaders in eastern state affordable housing-have permitted developers to challenge local zoning as a bar to development.139 New Jersey, for example, created a “fair share” obligation-requiring each municipality to provide its fair share of affordable housing-through the courts.140 In contrast, Massachusetts has legislatively provided developers with a process for developing affordable housing that reduces the obstacles of local regulation through simple permitting and an easy appellate process for any local denial.141 The system used by Montgomery County, Maryland resembles a plan state because it legislatively requires planning of affordable housing through a mandatory inclusionary zoning measure, but the program only applies to a limited number of developments through size constraints.142

1. New Jersey-Judicial Intervention

New Jersey originally had prohibited exclusionary zoning in Southern Burlington County NAACP v. Township of Mount Laurel (Mt. Laurel I).143 However, when striking the exclusionary ordinances failed to create affordable housing, eight years later in Mt. Laurel II, the New Jersey Supreme Court imposed a “fair share” obligation on

each community, and permitted municipalities to adopt inclusionary measures to meet that fair share.144 In response to Mt. Laurel II, the state legislature adopted the Fair Housing Act.145 The act instituted fair share housing and created an administrative agency, the Council on Affordable Housing (COAH), to oversee the program.146

COAH operates by establishing a fair share for each community.147 Each community must conduct a study to determine present and future affordable housing needs based upon factors such as employment opportunities and area income.148 Each municipality is then required to submit a housing plan to COAH to ensure compliance with the community’s fair share.149 Although the New Jersey program attempts to plan on a regional level, COAH has no authority to enforce the fair share requirements should a community propose a housing plan that does not meet minimum standards.150 Therefore, the program is solely voluntary, and the primary benefit to a community is that it pr.otects the municipality from an exclusionary zoning suit151

Moreover, New Jersey’s fair share program is insufficient at providing affordable housing.152 The courts provide the only remedy for a citizen who believes a community is engaging in exclusionary zoning.153 The administrative mechanism of COAH does little to protect the individual’s right to housing because it is voluntary.154 In summary, New Jersey requires an individual developer to pursue costly litigation to achieve a victory on affordable housing without the help of COAH.155

2. Massachusetts-“Anti-Snob” Zoning Act

Unlike the New Jersey approach, which requires municipal action, Massachusetts has adopted a program that permits a developer to initiate the affordable housing process.156 The Massachusetts Comprehensive Permit Law (40B) was adopted in 1969 to address a divide between the urban poor and the suburban wealthy.157 The law permits a developer to submit a proposal to a local zoning board of appeals for an affordable development.158 A developer need not comply with local regulations, including density, setback, and wetland protection requirements, if the municipality has not provided sufficient affordable housing, thus penalizing the municipality.159

If a development is denied or is approved with conditions that the developer considers impractical, 40B permits the developer to appeal the local zoning board of appeals decision to the Housing Appeals Committee (HAC), an administrative court.160 The decision of the HAC is dependent upon whether the town has adequately provided for affordable housing, generally denned as ten percent of its housing stock; if the town has not so provided, the developer will almost certainly prevail.161 The remedy in Massachusetts belongs exclusively to developers, and therefore does not necessarily result in the construction of affordable units.162

The number of affordable units created by 40B-in a process that penalizes municipalities for lacking affordable developments-has been rather small.163 Moreover, those units have been swayed toward two segments of the population, the elderly and current residents of the community, thus failing to provide affordable housing for the larger population.164 Therefore, the Massachusetts program fails to encourage diverse and integrated affordable housing.165

3. Montgomery County, Maryland-Moderately Priced Dwelling Unit Program

Montgomery County has one of the more successful affordable housing programs in the country.166 The program, referred to as the “Moderately Priced Dwelling Unit Program,” was passed in 1974 in an effort to meet the public policy goal of providing housing for every person who worked within the community.167 The program addressed potential takings arguments by providing the developer with incentives to comply.168 The program applies to all residential developments between thirty-five and fifty units.169 Developers are required to reserve between 12.5% and 15% of the units as affordable, and in return receive up to a 22% density bonus.170 The units are then restricted-to keep them affordable-for ten years for owner-occupied units, and for twenty years for rental units.171

The success of the Maryland approach has been in the integration of affordable units into the community.172 The county has only in very limited cases allowed developers to build off-site units in place of the on-site affordable units, thus placing affordable units in the same areas as market-rate housing.173 By placing the affordable units in areas of market-rate housing, the projects place a minimal burden on the local government and therefore generate the support of local officials.174

However, one difficulty with the Montgomery County approach is that there remain only 3805 units designated as “affordable” within the inclusionary zoning system.175 The limited duration of affordability-ten to twenty years-creates a constant need for new affordable units.176 Another difficulty is that the program applies to fewer new projects because it only pertains to developments between thirtyfive and fifty units.177 Thus, because the program only applies to a select group of developments, the program cannot provide as much affordable housing as a mandatory inclusionary zoning program that applies to all developments.178

B. Western Approach-Planned, Inclusionary Zoning

In general, western states have taken a planning approach to affordable housing by zoning through a comprehensive plan.179 These western states require more from municipalities in their planning and zoning and therefore can easily implement affordable housing requirements.180 In these states, mandatory planning for affordable housing benefits from preexisting enforcement mechanisms that are used for other statewide planning and zoning requirements.181 Oregon’s program demonstrates the benefit of a strong planning approach, but also illustrates how the development community, even in a plan state, can create major obstacles to mandatory inclusionary programs.182 California has a similar planning approach-without being derailed by the development community-that has effectively permitted mandatory inclusionary programs arid thus created affordable housing.183

1. Oregon

Oregon’s program requires municipalities to ensure housing opportunities exist for those who work in the community when creating a local comprehensive plan.184 The program provides that when an income level appears to have insufficient housing within a community, the local government must create adequate housing opportunities.185 For example, a municipality may be required to alter zoning from single family to multifamily to permit lower income residents to find affordable housing.186

One major difficulty in the creation of affordable housing in Oregon is a statute passed in response to lobbying by the development community that prohibits mandatory set-asides.187 The statute provides that developers cannot be required to allocate a percentage of their units as market-rate housing.188 Therefore, the Oregon program does not have the tools necessary to require developers to incorporate affordable housing within their market-rate developments.189

2. California

California state law requires housing to be included as part of each municipality’s comprehensive zoning plan-referred to as the “housing element,”190 The housing element must analyze a municipality’s current housing situation, set forth goals, policies, and objectives, and provide a method of implementation through zoning and land use controls.191 The adoption or amendment of a municipality’s housing element must first be approved by the state’s Department of Housing and Community Development.192 The local government, in implementing the housing element, is further required to work with the state and other local governments to meet its goals.193 The system becomes one of “fair share,” requiring each community to provide housing for its share of low- and moderate-income individuals.194 It also permits the temporary transfer of the share of one municipality to another which can reduce community resistance to the program overall.195

In addition to the housing element, California has successfully created affordable housing through the California Coastal Commission and the California Redevelopment Law.196 The California Coastal Commission successfully encouraged municipalities within its jurisdiction to adopt ordinances requiring twenty-five percent of the municipality’s housing stock to be affordable housing.197 The California Redevelopment Law created affordable units by requiring that tax benefits of any redeveloped area be spent on affordable housing.198

Although each municipality in California makes a determination about what type of affordable housing program is necessary, the state has encouraged a form of inclusionary zoning.199 In Grafting an affordable program, the municipality decides to whom the affordable ordinance will apply, what income level will be included, and whether the developer will be offered density bonuses.200 The state law also prohibits the denial of permitting to an affordable developer without satisfactory findings for the denial.201

One mandatory inclusionary program in California-the City of Napa’s-has been upheld as a constitutional land use ordinance.202 The progressive program requires a mandatory set-aside of ten percent affordable units for all new developments without any incentives provided to the developer.203 The success of Napa’s ordinance may have opened the door for this type of mandatory program to be used more frequently because of its proven constitutionality.204

Western states, given their planning approach to zoning, have had more success in implementing inclusionary programs. The western states’ approaches, especially that of the City of Napa, illustrate the potential for inclusionary programs.205

C. Judidal Trends Toward Inclusionary Zoning

While imposing a “fair share” requirement on municipalities successfully creates affordable housing, some courts have also suggested that it may be possible to implement inclusionary zoning without this imposition.206 New Hampshire courts have provided such a remedy to developers.207 The New York judiciary has gone further in requiring zoning to consider regional needs.208 These types of programs suggest the opportunity for more widespread inclusionary zoning, but only at the request of the development community.209 Thus, it appears that developers may have an opportunity to challenge zoning as an obstacle to affordable housing.210

1. New Hampshire

New Hampshire has addressed one of the more difficult problems for developers challenging exclusionary zoning ordinances.211 The court has permitted a constitutional attack without finding a due process or equal protection violation.212 These challenges have been allowed based upon a definition of the general welfare that extends beyond the community-similar to the definition in New Jersey-but without requiring municipalities to provide a fair share of affordable housing.213 For example, the court in Britton u Town ofCliesterheld that once the zoning ordinance is found suspect, the developer is entitled to construct his development provided it is reasonable and creates low- or moderate-income housing.214

The New Hampshire court held that it will not accept exclusionary zoning measures.215 Drawing conclusions from Britton, it appears that the state has adopted a general welfare concept that extends beyond the individual municipality to the community at large without mandating a fair share approach.216

2. New York

Although New York has not created a “fair share” approach, the test for reasonableness for zoning ordinances has contributed to creation of affordable housing.217 In Berenson v. Town of New Castle, the Court of Appeals of New York required that municipal zoning “provide for the development of a balanced, cohesive community which will make efficient use of the town’s available land” and that each municipality consider regional affordable housing needs.218

The benefit of the position that the New York court has taken is that it allows a developer to challenge a zoning ordinance as unreasonable for not providing for the municipality’s fair share of community housing.219 However, the flaw of the approach is that each municipality is not affirmatively required to provide its fair share of affordable housing without a reasonableness challenge-unlike in New Jersey.220 The developer’s challenge becomes an essential element in proving that the municipality has not provided its share of regional affordable housing.221

IV. STATEWIDE MANDATORY INCLUSIONARY ZONING IS CONSTITUTIONAL UNDER AN IMPACT FEE ANALYSIS

Mandatory inclusionary zoning approaches offer developers, municipalities, and low- and moderate-income residents advantages over other inclusionary zoning techniques. The optimal approach is state legislation requiring mandatory inclusionary zoning by every municipality-permitting the municipality to determine the proper set-asides through general statewide guidelines-based upon a municipal comprehensive plan.222 Because all municipalities will have an affordable requirement, developers will have little incentive to take development elsewhere, thus preventing a race to the bottom.223

The fundamental element of such an approach is state adoption of an affordable housing planning requirement for each municipality.224 This approach recognizes that some land use concerns extend beyond the municipality and therefore should be planned for accordingly.225 All states, including non-plan states, should require comprehensive planning of affordable housing.226 A plan for affordable housing should consider present and future needs based upon factors outlined in the statute, including population, housing supply, and buildable land.227

In addition to creating a plan, municipalities should be required to legislatively enact an inclusionary program, specifying the “percent of units required, affordability level, resale provisions, deed restrictions, physical standards for the affordable units, price and rent levels, [and] selection of tenants and buyers.”228 This municipal legislation should include goals and policies for the creation of affordable housing.229

Ultimately, this type of program has the benefit of providing affordable housing at a low cost to the general public.230 In addition, the program ensures the creation of a “fair share” of affordable units by all municipalities,231 provides adequate enforcement techniques,232 and is constitutional based upon an impact fee-like analysis.233

A. A “Fair Share”-The Creation of Real Affordable Housing

All inclusionary programs have some relationship to a community providing its “fair share” of affordable housing.234 The benefit of a mandatory approach is that the fair share must be part of the planning of each community-not something judicially imposed without sufficient enforcement mechanisms.235 This planning, which has proven successful in California, requires municipalities to submit affordable housing plans to state and regional government for approval.236 A coordinated effort ensures that affordable needs are considered together with other land use needs.237 Therefore, the planning process for affordable housing becomes part of the municipality’s land use plan, not superior to other land use concerns.238

Unlike the eastern state approaches, which have enacted programs whereby a developer can reduce the obstacles to affordable housing, a widespread solution should create affordable housing with any new development239 The inclusionary program of each municipality should require contributions from both residential and commercial development.240 For commercial development, the program should require creation of affordable housing off-site sufficient to house employees from the jobs created by the development.241

For residential units, the program should model Napa, California’s program, whereby the units are built on-site absent special approval.242 In the event that the developer is able to obtain this special approval, the city must require additional off-site units or a fee in excess of the cost of on-site units.243 This type of program will encourage on-site development that has the benefit of integrating the community, and therefore provides significant economic and sociological benefits.244

Unlike the Maryland approach-which limits its affordable housing program to specific lot and project sizes-a mandatory inclusionary zoning program should not have exclusions that permit a developer to construct outside of the inclusionary requirements.245 The program should require that the construction of even single family residential units require a fee to be paid toward the creation of affordable housing.246 By requiring municipalities to adopt mandatory inclusionary zoning based on a comprehensive plan, the program can effectively create affordable housing with any new development.

B. Enforcement Mechanisms

While the creation of an inclusionary program may be possible in every state, there must be a way to enforce such a program for it to be effective.247 The difficulty with eastern programs is that they are based upon regional planning of affordable housing-originating from a “regional general welfare.”248 This regional planning is especially difficult when these states have no existing regional planning structure.249 Without adequate planning, the only remedy to provide affordable housing in these eastern states is through lawsuits by would-be developers.250

A mandatory, statewide, inclusionary zoning program, however, would resolve these enforcement difficulties. Inherent in state government is a preexisting structure to enforce statutes on municipalities: administrative agencies and the courts.251 Currently, many inclusionary statutes require municipalities to submit their affordable housing plans to a regional or state administrative agency for review.252 California, as illustrated earlier, uses such an arrangement, whereby the Department of Housing and Community Development must approve any new or modified municipal housing plan.253 This type of built-in enforcement allows the state to retain a check on local government housing policy.254 However, in the absence of local inclusionary zoning, alternate enforcement can be achieved through an override of local land use regulation,255 financial sanctions,256 or judicial action.257 The most effective solution seems to be empowering municipalities with the ability to plan for affordable housing in conjunction with state oversight

C. The Impact Fee Analysis Ansioer to Inclusionary Zoning Challenges

The difficulty with these programs, as discussed above, is courts’ unwillingness to see these mandatory inclusionary zoning ordinances as traditional land use ordinances that deserve broad deference.258 However, the problem can be solved through state authorization of mandatory set-asides of affordable units which should be given deference by the courts.259 Although the development community will likely continue to argue that such a program violates due process and affects a taking, both analyses are dependent upon whether the ordinance implicates a legitimate state interest260 As we have seen, affordable housing can be justified as a legitimate state interest261 When a court applies an impact fee analysis to a mandatory inclusionary ordinance, it will likely find that the ordinance passes constitutional muster.262 Both impact fees and mandatory inclusionary ordinances attempt to compensate a community for the impact of development.263 From a constitutional analysis, both are legislative actions and therefore are entitled to deference by the courts.264

Having found the ordinance constitutional, the only remaining analysis for a court would be whether the municipality complies with the statutory requirements.265 The rationale for providing substantial deference to impact fees is that they are legislative and based upon a plan created with regard to the impact of development.266 Inclusionary zoning ordinances that are authorized by the state legislature deserve the same general deference because they are also legislatively enacted.267 The municipality must be able to demonstrate that the inclusionary ordinance is based upon the need for affordable housing in the community.268 To determine whether an inclusionary zoning ordinance is constitutional, the court need only consider whether the municipality has acted within the scope of its authority.269 If the law is outside the scope of the authority it will be found to be arbitrary or capricious and therefore void.270

In addition, the similarities between an impact fee and mandatory inclusionary zoning illustrate why an exaction analysis is misplaced in this context271 Exactions require closer scrutiny because of the potential for abuse when a decision applies exclusively to a single landowner.272 Unlike an exaction, both mandatory inclusionary ordinances and impact fees are not adjudicative but rather are legislative.273 Therefore, unlike exactions, both impact fees and inclusionary zoning ordinances deserve broad deference by the courts.274

Finally, neither impact fees nor mandatory inclusionary zoning ordinances are takings because they do not deny developers substantially all economic use of their property.275 Both programs require developers to pay for the public costs of their development-in money or affordable housing.276 Rather than being denied their right to develop, developers are forced to pay a fee for that right.277 Similar to rent control, developers are not being denied their investment by mandatory inclusionary ordinances.278

CONCLUSION

To effectively create affordable housing, a community should adopt a mandatory inclusionary zoning regime. Each community should create a comprehensive plan for the provision of this affordable housing based upon a “fair share” of the regional need for such housing. The program would create affordable housing with any new development.

Many states have already authorized some type of inclusionary zoning. However, even in states that have yet to enact such legislation, the judiciary seems to provide room for inclusionary approaches. In addition, the Home Builders Ass’n of Nortliern California u City ofNapa decision further illustrates that the constitutional rights of developers will not bar inclusionary programs.

Any legislative affordable housing program deserves broad judicial deference. Like an impact fee, once the program is authorized it should be considered constitutional. Therefore, in looking to the future, the Home Builders argument should be advanced in favor of inclusionary programs; inclusionary programs are legislative, like an impact fee, and therefore deserve deference by the courts. This constitutional analysis will permit these programs to address a serious social concern-providing affordable housing to Americans nationwide.

BRIAN R. LERMAN*

* Editor in Chief, BOSTON COLLEGE ENVIRONMENTAL AFFAIRS LAW REVIEW, 2005-06. B.A., Boston College, 2003. The author would like to thank his friends and family, and Professor Jon Witten, without whom this article would not have been possible.

Copyright Boston College, School of Law 2006

Provided by ProQuest Information and Learning Company. All rights Reserved