Making Room: Why Inclusionary Zoning Is Permissible under Washington's Tax Preemption Statute and Takings Framework

Article excerpt

Abstract: Inclusionary zoning ordinances, which typically require developers to set aside a percentage of new residential units for low and moderate income households, are a popular mechanism for ensuring the development of affordable housing in many communities. Washington State jurisdictions have been slow to introduce inclusionary zoning-particularly mandatory set-asides-perhaps because of the legal battles they would face. The Washington State Supreme Court previously relied on RCW 82.02.020 (the "tax preemption statute") to invalidate a low-income housing ordinance in San Telmo Associates v. City of Seattle1 and in R/L Associates, Inc. v. City of Seattle.2 Washington courts have also relied on a unique and complex takings analysis to invalidate low-income housing and manufactured housing laws on grounds that they constituted a "taking" of private property or a violation of substantive due process under the U.S. Constitution, or in some cases, under the Washington State Constitution. This Comment argues that inclusionary zoning is authorized by RCW 36.70A.540,3 the Affordable Housing Incentive Programs Act, which expressly amended the tax preemption statute and permits both voluntary and mandatory inclusionary zoning programs. This Comment explores the differences between the federal and Washington takings analyses and argues that the Washington State Supreme Court should abandon its unique tests in favor of the federal approach as articulated in Lingle v. Chevron U.S.A., Inc.4 Finally, this Comment explains why mandatory set-asides are constitutional under both federal and Washington takings law.

INTRODUCTION

Nationwide there is an acute shortage of affordable housing.5 A number of jurisdictions have responded to the problem by enacting inclusionary zoning ordinances, which require developers to set aside a percentage of housing units in new residential developments for lowincome households.6 The two most popular inclusionary zoning models are: (1) mandatory set-aside programs, in which a minimum percentage of units in new residential developments must be offered at affordable rates; and (2) voluntary incentive zoning programs, where developers are rewarded with extra density allowances (or other incentives) when they include affordable housing in developments.7 Many believe that inclusionary zoning programs are especially helpful for creating mixedincome neighborhoods in areas where rapid growth may drive out existing low-income tenants.8

Washington jurisdictions have been reluctant to adopt affordable housing programs, perhaps due to a number of successful legal challenges by developers.9 However, in 2006, the Washington State Legislature responded to the pressing housing needs of the state and passed legislation authorizing cities and counties to adopt "affordable housing incentive programs."10 Under the Affordable Housing Incentive Program Act (AHIPA), local governments may incentivize low-income housing development by offering density bonuses, height and bulk bonuses, fee waivers or exemptions, parking reductions, expedited permitting, or other incentives.11 As of May 2012, at least three Washington communities have adopted mandatory set-asides,12 and another nine have adopted some form of voluntary incentive zoning program.13

The City of Seattle enacted its own voluntary incentive zoning program in 2008,14 but because incentive zoning has produced far fewer affordable units than hoped for, housing advocates have called for a mandatory program that applies to all new residential developments.15 In negotiations over the rezone of the rapidly developing South Lake Union neighborhood, Seattle City Council members have explored the idea of revising the City's incentive zoning policy to produce more affordable housing.16 If the City of Seattle adopts a mandatory set-aside program, it is very likely to face a legal challenge from the local real estate community.17 This Comment reviews the legal framework that a Washington court would use when considering such a challenge and argues that mandatory set-asides are permissible on both statutory and constitutional grounds. …