Ever since the City of Tallahassee announced plans to enact Florida's first inclusionary zoning ordinance last year, the Florida Home Builders Association (FHBA) has been up in arms. Other Florida communities are looking on as an impending battle looms over Tallahassee's right to enforce new measures that will oblige home builders to include below-market offerings of affordable housing among their larger projects. Those other communities are considering following with inclusionary zoning rules of their own, depending on the outcome of the battle.
The state's home builders' association may go so far as to take the city to court to get the ordinance off its books. Leading the charge on behalf of home builders is Tallahassee lawyer Barry Richard, who's best known for his role in resolving the 2000 election vote-count controversy. Richard will attack the ordinance as unconstitutional.
What hangs in the balance may not only be a whiff of victory for Florida builders, but a strike against inclusionary zoning itself. Although inclusionary zoning has been prevalent in several areas—most notably in San Francisco; Los Angeles; Washington, D.C.; Boston; and Denver—for 30 years or more, builders and developers have been unsuccessful in efforts to declaw these laws of financial burdens they put on builders. If the lawsuit succeeds in proving the housing measure unconstitutional, builders across the country may have enough cannon fodder to blow holes in their own local regulations.
THE CATCH 22 Modeled after inclusionary zoning policies in effect in other markets, the rule implemented in Tallahassee requires builders with new home projects going up within a designated area in the northeast section of the city to set aside no less than 10 percent of homes in developments of 50 homes or more for affordable housing. Those homes cannot cost more than $159,378, regardless of the market price of surrounding homes.
The location is an affluent area, where land is expensive to develop, FHBA public affairs director Edie Ousley says. “Just lots are selling for $300,000 out there,” she says, adding that in other parts of the city lots go for about half that price.
However, despite the measure's worthiest of intentions, a 30-year track record tells a grim story. According to an NAHB study published in November, which examined existing inclusionary zoning ordinances in five markets, the regulations create numerous negative consequences, the worst of which include actually failing to increase the number of affordably priced units and causing market prices to inflate artificially.
The San Francisco market is a prime example. The NAHB estimates that 24,217 affordable housing units a year are needed to house new workers. However, since inclusionary zoning policies went into effect about 30 years ago, they've produced 6,840 affordable units across 27 participating Bay Area municipalities. That represents approximately 28 percent of the annual affordable housing need in that market alone.
And while the affordable housing stock grows at an abysmal pace, market prices escalate at an almost exponential rate. The correlation is no coincidence, says land planner Edward Tombari, author of the recent NAHB study on inclusionary housing. He explains, “Los Angeles and San Francisco—[these are] two markets that have most widely implemented these [inclusionary zoning] regulations, and these are the two most expensive areas.”
In Tallahassee, the FHBA estimates that market-rate home prices will jump anywhere between $22,000 and $44,000 a home, based on information from Reason Public Policy Institute, a Los Angeles-based think tank.