August 2, 2019

People Are Talking About Up-Zoning: Here’s What You Should Know

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By Zion Campbell, state and local policy intern, and Jacob Share, public policy intern

The need for affordable housing has finally hit the national stage. Several 2020 presidential hopefuls, including Sen. Cory Booker (D-NJ), Former HUD Secretary Julián Castro and Sen. Elizabeth Warren (D-MA), have already offered detailed proposals on how the federal government could encourage or pressure jurisdictions to create more affordable housing

This leap into housing policy by presidential candidates is likely due to its relevance to the large number American voters who are increasingly feeling the affordability pinch. In fact, more than 10 million American renter households are severely cost-burdened, spending more than 50 percent of their income on housing costs. 

The Administration is jumping into the mix, too. In June, President Trump signed an executive order establishing the White House Council on Eliminating Barriers to Affordable Housing. With Secretary Carson as its chair, the new council aims to reduce federal barriers to affordable housing development. 

From a state and local policy perspective, the council will offer support and advice on the most effective ways to lessen regulatory and administrative burdens, including incentives to revisit local land use laws. This is very timely, as local governments are increasingly addressing affordability with a racial equity lens, creating an opportunity to reverse the legacy of discriminatory housing and investment policies that have created persistent challenges. These pressing challenges include racial wealth and homeownership gaps, concentrated poverty and disinvestment, and inequality in access to opportunity.  

How We Got Here 

For a little more than a century, zoning has been a legal tool used by local governments to determine the allowable uses for land, which guide the design and growth of a city. Known as “exclusionary zoning” for preventing particular uses of land like factories or apartments, many advocates for its adoption had segregationist intentions, particularly after the Supreme Court outlawed municipal segregation ordinances in 1917. The explicit segregation of single-family housing from other land uses considered to be “nuisances” aimed to reserve the most affluent and desirable neighborhoods for white, Protestant households. Generally, African-American, Catholic, Jewish, and immigrant households were excluded from affluent and desirable areas. Later on, neighborhoods that were predominantly made up of these households were deemed undesirable by discriminatory housing and lending policies that have created persistent challenges in those areas.  

In the 1930s and 40s, government-sanctioned segregation continued. The Federal Housing Administration (FHA) began employing the practice of “redlining”, systematically limiting or denying mortgage insurance in those neighborhoods with high rates of African-Americans and other minorities. The FHA’s Underwriting Manual even dictated that, “Incompatible racial groups should not be permitted to live in the same communities.” 

The FHA used the Depression-Era Home Owners’ Loan Corporation (HOLC) residential security “redlining” maps, which divided neighborhoods by categories like income and ethnic and racial composition of residents, to guide its mortgage issuance process, often refusing to back mortgages in neighborhoods with high shares of households of color. While these federal policies and practices exacerbated racial segregation, recent research found that private mortgage lenders were already more conservative and often refused to issue loans in neighborhoods with high shares of households of color prior to the usage of the HOLC redlining maps by the FHA. Enterprise and Designing the We have launched Undesign the Redline, an interactive, rotating exhibit that uses powerful narratives of people and communities, maps and other documentation – all tailored to the city where the exhibit is appearing, to connect the intentional and systematic racial housing segregation of the Depression Era to political and social issues of today. 

Some developers and homeowner associations also began using private restrictive covenants as a way of barring African-American, Asian, and Jewish families from their neighborhoods. Restrictive covenants in home deeds prevented the homeowners from selling their homes to minority households by creating restrictions in the covenant on the race and ethnicity of eligible buyers. Since these covenants were considered “private contracts,” they were legally enforceable until Supreme Court struck down their validity in 1948.  

After the Supreme Court struck down restrictive covenants, other practices soon followed. Many communities began to adopt “economic-based” zoning laws that required minimum lot sizes and the construction of single-family homes, creating de facto white neighborhoods. Today, these same neighborhoods are largely still zoned for single-family homes. 

Long-Term Impact 

Today, there is an enormous disparity in homeownership rates between African-American and white households - a direct consequence of redlining and segregation. Between 2001 and 2006, the homeownership rate for white and African-American households increased by 1.6 and 0.8 percent, respectively, to 73.9 and 46.6 percent. However, between 2006 to 2016, the homeownership rate for white households decreased slightly to 71.3 percent, but the rate for African-American households dropped 5.6 percent to 41 percent. Enterprise’s quarterly report on Housing Tenure Trends shows that the African-American-white homeownership gap continues to grow and explains that African-American households are the only racial/ethnic subgroup to experience a net decrease in homeownership rates since 2016. 

It’s no wonder, then, that the average white household currently has 10 times the wealth of African-American households. And the effects extend beyond homeownership – it has kept African-Americans out of high-opportunity neighborhoods with access to better schools, jobs, transit and quality health care. 
 
African-Americans continue to face barriers in accessing mortgage financing - even when controlling for factors such as income and zoning regulations. Given the legacy of discriminatory policies and challenges in accessing high-opportunity neighborhoods, more state and local governments have been exploring ways to reverse these practices. Up-zoning is just one strategy for making small increases in the allowable density in single-family neighborhoods, creating more housing options so that low-income families can access high-opportunity neighborhoods.  

Changing History 

Minneapolis made national headlines last December when it took the unprecedented step of permitting duplexes and triplexes in single-family home zones across the city. This attempt at citywide up-zoning was part of the city’s comprehensive plan known as Minneapolis 2040, which the City Council passed in a remarkable 12-1 vote. The zoning reform was a direct effort to confront its history of redlining and segregation. The Minneapolis 2040 plan affords greater density in single-family neighborhoods and allows for more mixed-income housing. 

Further west, Oregon is set to become the first state to address single-family zoning on a statewide basis. This summer, the legislature passed House Bill 2001, which would strike down local bans on duplexes in every low-density residential area in all cities with more than 10,000 residents and all urban lots in the Portland metro area. In cities of more than 25,000 and within the Portland metro area, the measure would authorize triplexes, fourplexes, attached townhomes and cottage clusters on some lots in all areas zoned for residential use. 

Other state and local governments are taking up the cause, too. Earlier this year, Seattle’s city council unanimously voted to up-zone 27 neighborhoods, hoping to generate about 3,000 new low-income apartments over the next ten years. And in California, the legislature has made 2 consecutive attempts to reduce zoning regulations: SB 827 of 2018 and SB 50 of 2019 would have allowed for greater density near major transit hubs. Both bills died in committee over concerns related to gentrification and displacement, but the ongoing dialogue reflects an acknowledgement that land use must be addressed. California is expected to take up the legislation again in 2020.  

What’s Next 

Land use can be a critical tool for addressing affordability as well as the legacy of housing segregation. Enterprise’s research on Understanding the Small and Medium Multifamily Housing Stock has shown that addressing the national scarcity of “missing middle” housing is key to expanding the supply of affordable homes, since this housing type accounts for 54 percent of all rental homes nationwide. 

However, zoning changes alone cannot address the nation’s affordability challenge and will not guarantee that any new housing is built – the gap between availability and need is too wide a gulf for one idea to solve. As we note in our research on Bending the Cost Curve, many other regulatory barriers to development beyond limits to by-right development, including excessive parking minimums, strict building codes and lot size minimums, can inhibit the development of affordable housing and create cost challenges. 

Planning for equitable and flexible land use must be complemented with additional resources, policies, and programs that can help increase the production and preservation of affordable housing. Therefore, we urge the interagency Council on Eliminating Barriers to Affordable Housing to complement any recommendations on land use with a robust set of policies that aim to increase resources for production and preservation and fully fund housing assistance commensurate with the needs of our communities.