Academic journal article Iowa Law Review

Cities, Inclusion and Exactions

Academic journal article Iowa Law Review

Cities, Inclusion and Exactions

Article excerpt

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 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 designing these ordinances to avoid political upset, or worse-legal challenges.10 As a result, either market-rate housing with inclusionary units has been profitably produced notwithstanding the inclusionary zoning requirements, or developers have been insulated from foregone rent or sale income by a combination of strong real estate markets and packages of cost offsets, such as density bonuses or other forms of subsidy.11

Despite the absence of challenges, the experience of a midsized city like Baltimore, Maryland shows a need to consider the extent to which takings law demands that developers must be subsidized to produce inclusionary housing units. Baltimore's mandatory inclusionary zoning ordinance was deliberately written to only apply if the city completely financially reimburses the developer for creating new affordable housing.12 The assumption is that each developer is required to be made whole for every affordable unit that is created, sold, and rented at the city's behest.13 The result has been an inclusionary ordinance that has produced very few affordable housing units.14

This Article uses Baltimore's ordinance to illustrate the impact that the unsettled questions quietly surrounding inclusionary zoning may have, in particular the uncertainty about whether and how the existing constitutional framework governing land use regulation applies to mandatory inclusionary zoning. The hybrid combination of Due Process, takings, and exactions doctrines that guides the analysis of this regulation means the constitutional inquiry is framed in terms of a rigid binary: whether, under Due Process and takings analysis that has traditionally been applied to zoning, inclusionary zoning is subject to the traditional deferential standard of judicial review that applies to exercises of the police power,15 or whether a more probing standard of review should apply under exactions doctrine because a developer is being required to construct a type of unit that is rented or sold at a below-market rate as a condition of being allowed to build. …

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