Inclusionary Zoning and Institutional Contexts

Inclusionary zoning programs differ widely in their design, but their common underlying logic—using the zoning system to leverage market-rate demand for the creation and integration of affordable units—makes them more feasible and effective in certain regulatory, economic, social, and political contexts.

Lessons From a Bold Experiment: Special Zones of Social Interest in the Municipality of Sào Paulo

Daniel Montandon

In the 1980s, Brazilian municipalities turned to zoning to address the rapid expansion of precarious low-income urban settlements that had been largely invisible to the state. Over the following 40 years, a type of inclusionary zoning district known as ZEIS—Special Zones of Social Interest—have become a central mechanism to advance social goals. Looking forward, the main challenge of ZEIS lies in the difficulty of aligning it with other planning and financing mechanisms to achieve concurrent goals of the urbanization of precarious settlements and the production of social housing.

The municipality of Recife’s PREZEIS (ZEIS Regularization Plan) of 1987, perhaps the first full ZEIS prototype, demarcated precarious settlements on Recife’s zoning map—recognizing areas that had been largely invisible to the state—and mandated that any future land use interventions inside of these polygons require legalizing and servicing the settlement areas to improve living conditions for residents.

Based on the experience in Recife, several Brazilian municipalities implemented their own ZEIS practices, especially after the creation of the wide-reaching 2001 City Statute (Federal Law 10.257/01). The City Statute created a new mandate and regulation for urban policy across Brazil and recommended ZEIS as one of the primary instruments of local development policies. In practice, the implementation of the federal law resulted in the development of two types of ZEIS:

  • 1. ZEIS in precarious settlements: Guarantees secure tenure of families that live there and synchronizing the formal zoning maps with the settlement urbanization plans.
  • 2. ZEIS in empty areas: Guarantees the provision of housing for low-income families on empty or underutilized land located in urban areas.

The municipality of Sao Paulo initiated the implementation of ZEIS in the Strategic Master Plan (2002), and in revisions to the Zoning Law (2004), Sao Paulo planners expanded ZEIS to four types:

  • • ZEIS 1: areas with precarious settlements (favelas, tenements, and low-quality housing blocks); these zones are the most prevalent across the city.
  • • ZEIS 2: for empty or underutilized land; such zones are relatively dispersed.
ZEIS, Sao Paulo, Brazil

Figure 8.2 ZEIS, Sao Paulo, Brazil

Source: Secretaria Municipal de Urbanismo e Licenciamento of the Prefecture of the City of Sao Paulo, 2016.

  • • ZEIS 3: focused on central areas with infrastructure that are considered underutilized; such zones are sporadically located in the region.
  • • ZEIS 4: similar to ZEIS 2, but these zones are focused on improving water access and establishing environmental protection areas.

National housing policy has a large impact on ZEIS implementation; large-scale subsidies have incentivized most private production of social housing developments in poorly located land outside the city. The social housing production in ZEIS areas in the municipality of Sào Paulo has been primarily initiated by the government.

The municipality of Sào Paulo improved on ZEIS in the Strategic Master Plan in 2014. The revisions included the expansion of ZEIS in the territory overall by more than 8% and the addition of a fifth ZEIS category, which facilitates the private production of housing. Unfortunately, ZEIS 5 does not mandate the creation of low-income housing, which is still in dire shortage across the municipality.

Further English-language references:

Donovan, M. G. (2007). At the doors of legality: Planners, favelados, and the titling of urban Brazil. Doctoral dissertation. University of California, Berkeley. Proquest dissertation publishing.

Holmes, C. (2016, February 8). Sào Paulo is betting better urban planning can solve a housing crisis. Next City. Retrieved from features/view/sao-paulo-housing-crisis-master-plan-zeis-haddad-habitat-iii

State Regulations

As of 2018, seven US states prohibited some form of inclusionary zoning, 22 had potential legal barriers to its adoption (such as rent-control bans), 11 had neither explicit legal permission nor barriers, and 10 expressly permitted or mandated inclusionary zoning (Grounded Solutions Network, 2018). Statewide inclusionary zoning policies exist but are rare. For example, Chapter 40B under Massachusetts State Law allows for flexibility in the local approval of developments that include long-term affordable units (Commonwealth of Massachusetts, 2018).

Unsurprisingly, jurisdictions located in states that require or permit inclusionary zoning are more likely to adopt policies; indeed, one national study estimated that almost 90% of localities with such programs are located in three states with supportive frameworks (New Jersey, California, and Massachusetts; Thaden & Wang, 2017). Among large cities, 77% of those in states that allow (or do not present barriers to) inclusionary zoning have programs, compared to 38% in states that have barriers. Cities in supportive states are more likely to have inclusionary zoning in place even after accounting for other local economic, political, and demographic conditions.9

162 Adèle Cassola

Economie Conditions

Internal economic conditions also affect inclusionary policies. Places with stronger market-rate housing demand are more likely to introduce programs and produce units through them. Among cities in my data set, 81% of those with the top third of property values have an inclusionary zoning program—a substantially higher rate than in areas with lower property values. Property values are significantly and positively associated with the likelihood of having an inclusionary zoning program even when accounting for other contextual features, including housing affordability. Inclusionary zoning programs are also most productive where demand for development is high (Jacobus, 2015; Mallach & Calavita, 2010; Williams et al., 2016).

Another key economic indicator of program adoption is the level of housing need, as localities with greater affordability pressures have stronger cause to intervene. My analysis found that inclusionary zoning programs are more likely to exist in jurisdictions with a higher percentage of rent-burdened households, and a separate national study found that programs are adopted earlier in such places (Stromberg & Sturtevant, 2016). However, this relationship may not hold in all contexts. For example, an analysis of Bay Area jurisdictions found only tentative evidence of a relationship between housing costs and inclusionary zoning adoption (Meltzer 8c Schuetz, 2010).

Political Context

The political context determines the level of pressure and support for the introduction of inclusionary zoning. Community-based advocacy and established nonprofit organizations play a critical role in pushing inclusionary zoning adoption forward by providing political support and local expertise (Levy et al., 2012; Mallach & Calavita, 2010; Meltzer & Schuetz, 2010). On the other hand, owner-occupiers often oppose inclusionary zoning in their jurisdictions because they perceive it as threatening property values or community cohesion by bringing higher-density development, below-market-rate units, or newcomers of a different socioeconomic and racial group to their neighborhoods (Brown, 2001; Massey et al., 2013; Ryan & Enderle, 2012; Stromberg & Sturtevant, 2016).

Pro-business and real estate industry organizations opposed to regulations on private development also often fight inclusionary zoning. Their involvement can influence program design or impede policy adoption. For example, real estate industry input led Montgomery County to add density bonuses to its original MPDU ordinance, among other revisions (Levy et al., 2012). Nashville’s 2016 ordinance that tied affordability requirements to approvals of increased development capacity was challenged in court by a pro-market organization and was later nullified by a state bill that business and real estate groups participated in developing (Garrison, 2017; Metropolitan Planning Commission of Nashville and Davidson County, 2016; Reicher, 2018a, 2018b; Tennessee Senate, 2018).

Demographic Factors

Demographic conditions can also affect the feasibility of inclusionary zoning, although these associations vary across contexts. Nationally, inclusionary zoning programs are adopted earlier in less-populous and higher-density places (conditions that often typify fast-growing inner-ring suburbs), as well as those with younger and more highly educated populations (Stromberg & Sturtevant, 2016). In my analysis, more populous cities were more likely to have inclusionary zoning programs, but no association was found between this outcome and an index variable measuring demographic factors such as educational attainment, single-person or nonfamily households, and the percentage of the population aged 18 to 44.

The Import of Institutional Context

Different associations between conditions and outcomes across geographic contexts highlight the need for careful attention to local institutions when designing inclusionary zoning programs. This involves considering needs across neighborhoods, as contexts can vary widely in different parts of the city. Even in a market like New York City’s, where many areas have experienced dramatic price increases in recent years, there remain lower-cost neighborhoods where density-based incentives are insufficient to make below-market-rate construction attractive to for-profit developers without additional subsidies (Madar & Willis, 2015).

Jurisdictions also need to reevaluate their program design when local conditions change. For example, when a California court ruled in 2009 that inclusionary mandates without cost offsets violated a state act giving developers control over initial rent levels, many jurisdictions responded by establishing in-lieu-fee alternatives to their inclusionary policies or suspending their programs until greater legal clarity emerged (Crispell, Gorska, & Abdelgany, 2016; Hollingshead, 2015). Inclusionary zoning’s reliance on strong markets also means that governments may have to revise their programs when demand weakens, whether by requiring fewer affordable units, targeting higher income levels, reducing affordability terms, shifting to a voluntary policy, or temporarily suspending regulations (Kroll, Mun, Rosenthal, & Singal, 2010; Schuetz et al., 2009).

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