Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

Darien, CT gets sued by the DOJ over inclusionary zoning

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The New York Times has an interesting article about a Justice Department probe into Darien, CT’s local inclusionary zoning rules. Inclusionary zoning means essentially that multi-unit developments have to offer a portion of the project as “affordable housing,” which invariably means charging below-market rents. We here at Market Urbanism oppose it because it essentially acts as a tax on dense development that’s not levied on the sort of one-off developments that are usually large lot, detached houses, which discriminates against the very people that it purports to be helping. While the people who live in the units certainly benefit from the too-good-to-be-true rents, every other poor person loses out as their housing costs rise.

But unfortunately, the DOJ doesn’t appear worried about inclusionary zoning generally, but rather is interested in the “priority populations” provision, which determines who gets the low-rent housing, which is in high demand because of the artificially low price. Currently the town favors current residents, which the Justice Department is right to find discriminatory, since the well-healed New York City suburb is overwhelmingly white.

While I’m always glad to see inclusionary zoning challenged, the focus on the priority populations provision strikes me as a bit narrow-sighted – they should be concerned about inclusionary zoning itself reducing affordable development. And in fact, the New York Times seems to recognize this, as they quote a developer at length as she describes the difficult of developing anything affordable in Darien. Sorry for such a long quote, but it’s very interesting:

Inclusionary zoning was one strategy for accomplishing that goal. The policy hasn’t been used yet, as no qualifying developments have been approved since it went into effect in May 2009.

The federal inquiry came to light last month, when Christopher and Margaret Stefanoni, a local couple who have sought approvals for two affordable-housing developments in town, told local news organizations that they had been contacted by a Justice Department lawyer.

That lawyer “wants to understand our experience as affordable-housing developers in Darien,” including reactions to their proposals from local officials and residents, Ms. Stefanoni said.

Those interactions have often been fiery. The Stefanonis have been controversial figures since 2005, when they proposed an affordable-housing development for retirees on the site of their home in the Noroton section. The Stefanonis filed the application under the state’s affordable-housing law, known as 8-30g, which allows developers to sidestep local zoning restrictions in communities with a small percentage of affordable housing.

Opposition was fierce. After two years, when the Stefanonis had obtained nearly all of their approvals, the local land trust stepped in to buy the one-acre plot for more than $4 million.

In 2008, the two again accepted a buyout offer for a single-family property they had bought in the Tokeneke section. Mr. Stefanoni said that right after he inquired about a demolition permit at Town Hall, a lawyer for a resident of an abutting property phoned him to ask, “How much do you want for it?”

The couple are currently in litigation with the town over their 8-30g proposal for a 16-unit age-restricted condominium complex at the corner of Leroy and West Avenues. The zoning commission denied the application on the ground that the development would be too dense for the site.

Mr. Stefanoni says that he and his wife relish going up against what he calls the rich “bullies.” “I do not do this for the money,” he said. “I do it for the fight.”

This year the zoning panel approved another 8-30g application, from Garden Homes Management Corporation, which is converting an office building on the Post Road into 35 small rentals, 11 to be classified affordable.

But at the same time town officials are seeking to halt any further such developments. Earlier this year they filed an application with the state Department of Economic and Community Development for a four-year moratorium on 8-30g applications. In order to qualify, Darien must prove that at least 2 percent of its housing stock meets the standard of “affordable,” as calculated through a complex point system.

Darien wants a reprieve to plan for and guide the placement of affordable housing on its own terms, Mr. Campbell said.

“The moratorium to me isn’t what’s important,” he said. “It’s much more important to get housing in the right places.”

The Stefanonis have submitted to the state two lengthy reports disputing Darien’s point calculations. They are adamant that Darien doesn’t qualify for a moratorium, but they aren’t taking any chances that one might go into effect: over the summer, they filed two more 8-30g applications for age-restricted housing projects on two more sites.

Note that first paragraph – the inclusionary zoning rules have never been used, likely because they’ve made dense development completely unprofitable. I’m not going to go so far as some, who accuse the residents of Darien of intentionally sabotaging affordable housing, although it’s an uncomfortable coincidence that lily white wealthy neighborhoods tend to be the ones so adamant about self-defeating affordable housing mandates.

The NY Times doesn’t mention it, but the Darien Times reported last month that the town might scrap its inclusionary zoning regulations altogether as a result. This would be a local, short-term victory, but it looks like IZ still has support in Darien, and it seems easy enough to just move to a lottery system to fill units and keep the program.

The Darien Times also includes this stunningly contradictory lamentation by a local selectman:

“Our moratorium is under fire, there’s no plan for affordable housing, whatever’s happening with Edgerton, and two more 8-30g applications we’ve been hit with. What is the town doing?” Bayne said.

The “moratorium,” you may recall from the NYT excerpt, is a moratorium on 8-30g applications, which are exemptions for developers from local zoning laws if the town in question has a dearth of affordable housing. So, in effect, we have a selectman decrying the lack of affordable housing, all the while describing the town as being “under fire” and having “been hit” by people trying to force them to allow more affordable housing.

  • epar

    Inclusionary zoning came as a response to large-lot, low density zoning that was becoming prevalent in suburbs by the ’60s. So it is precisely because of market distortions – NIMBYism, essentially – that inclusionary zoning and other affordable housing measures became necessary.
    Usually you apply your libertarian principles consistently, which I admire, but here you come across more as a defender of rich white people’s “right” to exclude poor people. And why don’t you go so far as to accuse Darien residents of sabotaging affordable housing? It’s obvious from the article!

  • epar

    Inclusionary zoning came as a response to large-lot, low density zoning that was becoming prevalent in suburbs by the ’60s. So it is precisely because of market distortions – NIMBYism, essentially – that inclusionary zoning and other affordable housing measures became necessary.
    Usually you apply your libertarian principles consistently, which I admire, but here you come across more as a defender of rich white people’s “right” to exclude poor people. And why don’t you go so far as to accuse Darien residents of sabotaging affordable housing? It’s obvious from the article!

  • I’m not quite sure that I agree with you on the genesis of inclusionary zoning. I’d be with you if it were applied on top of existing laws – that is, you got a density bonus for using it – but in a lot of cases, it seems to replace the laws, so that you need to include below-market housing to build what previously you could have built without it. And the reason I say it’s a tax on dense development is that it’s not applied to large-lot, low density one-off projects.

    I’m a little confused generally what what you’re taking issue with…in the first paragraph you talk about IZ like it’s a good thing, and then you blast me for defending their right to exclude poor people, which sounds like IZ to me.

  • IZ is kind of a mixed bag. At best, it’s using a garden hose to put out a forest fire – at worst the garden hose is spraying jet fuel…

    From what I’ve seen, it is intended to counter the affordability-crushing aspects of “exclusionary” zoning, although all zoning is exclusionary – even if the proponents are progressive. I’m a little familiar with how its done in MA, where developers are allowed (by state law) to sidestep density restrictions if a community is not considered affordable enough by some metric. It’s a top-down, authoritarian release valve to the abuses at the local level. It doesn’t really get to the core of the problem – zoning itself…

    Inclusionary zoning at the local level, in most cases is a net negative. This is where developers are required to provide a certain percentage of units they build as “affordable units”. In the long run this only stifles development and drives up prices for the ones who aren’t lucky enough to win the lotteries for these units. In Cambridge, a notoriously anti-development town, a certain percentage of affordable units is required, but if a developer provides a certain percentage higher, she can actually get a density bonus. Unfortunately, the research I’ve seen showed that the cost to the developer of subsidizing the affordable units nearly always outweighs value created with higher density (plus the various tax incentives and subsidies for affordable housing).

    In any case, affordablity is better achieved by eliminating the restrictions that prevent the market from providing housing, than by adding new layers of authoritarian bureaucracy that merely appear to address the problem.

  • epar

    My criticism comes from you framing IZ as a major problem in itself, rather than being reflective of a deeper, uglier thread running through local politics, ie resistance to living close to “those people”. This resistance, by the way, was absolutely the genesis of IZ, and I suggest you look into the Mount Laurel cases in NJ. To my knowledge, most IZ ordinance do grant a density bonus. While they typically apply to developments over some unit threshold (I’ve seen 8 or 12 units) I’d wager that very little development in major metro areas happens in smaller increments anyways.

    I also think you misunderstand the Selectman quote. If 8-30g is anything like Massachusetts’ 40B, then developers proposing affordable housing can sidestep local zoning if the town doesn’t have an affordable housing plan designed to get them to some defined level of affordability. So basically, because the town is considering scrapping its IZ it’s giving up on its affordability plan and opening itself up to 8-30g developments. The selectman isn’t decrying the lack of affordable housing, rather he’s fretting that its going to be forced upon them in a way they don’t purposefully plan for.

    At the end of the day, I agree that IZ is a blunt tool, and wouldn’t be necessary if local attitudes were more receptive towards dense development and groups seen as the “other”. But what do you do when you have intense home rule traditions that aren’t going away? Just saying that zoning should be abolished really isn’t an answer.

  • I suppose you’re right about the Mount Laurel cases and the genesis of IZ, but as MarketUrbanism (which was not me…sorry if that’s confusing) points out below, most local level IZ (such as the Darien one, it appears) is added to developments that didn’t at one point need it, and are applicable even when you’re not taking advantage of a density bonus.As for very little development happening in smaller increments, I don’t think that’s true in the sorts of very rich suburbs, like Darien, that do IZ. In these places the land is usually either so built up or so NIMBY’d out that there are very few McMansion-type developments (if at all), and basically no new apartments/townhouses. The vast majority of redevelopment in these places happens in the form of a large plot being divided into two or a house being torn down and a new one being built in its place.And I don’t believe that the 8-30g is contingent on either having or not having an IZ plan…according to the NYT article it’s calculated based on the amount of affordable housing already built, not what the rules for future development are. It looks like the 8-30g’s would have gone forward even with IZ, since it’s not like the IZ’s even ever been used. I could be wrong about this though? But it looks like I was wrong about the exact nature of the 8-30g system…I thought it was more like Pennsylvania’s system, which didn’t involve IZ.As for alternatives to IZ, obviously you’re right that abolishing zoning in one fell swoop is unthinkable. Luckily I’m not a politician, and I don’t try too hard to be politically palatable, but if I had to pick an intermediate step I’d point to the Pennsylvania court precedent of having the state simply force municipalities to allow for denser development on the margin, without IZ-style set-asides. (Denying state/federal transit and highway funding to municipalities that didn’t at least allow for TOD would also be an interesting idea.) I wrote about PA’s alternative in an earlier post where I linked to a summary of Mitchell’s comparison of the two systems.

  • Alon Levy

    In New York, inclusionary zoning does not force people to provide affordable housing, at least not in principle. The rules state that a developer providing affordable housing can build to a floor area ratio 20% higher than the basic zoning code allows. In practice politicians routinely blackmail developers into providing more affordable housing, but the process they use is denial of permits, not zoning.

  • Paul Joice

    I’m a relatively new reader of this blog, and I love that you all are advocates of both urbanism and free market principles. I agree with a lot of what you have to say, despite the fact that I’m generally a Democrat and I work in the affordable housing field. But I strongly disagree with your stance on inclusionary zoning.

    If the government could be allowed one, and only one, strategy for helping poor people through housing policy, it should be inclusionary zoning. There are certainly more efficient ways of providing affordable housing. Removing density restrictions to increase the housing supply is a great idea that would facilitate TOD and should make housing more affordable across the board. Encouraging developers to build housing in inexpensive land would be efficient. But we shouldn’t just stick poor people in the least desirable land. Inclusionary zoning is the best way to efficiently create housing for low-income people in good neighborhoods, where they will have economic and social opportunities that might otherwise only be available to the most privileged.

  • Stephen Smith

    Unfortunately, I don’t think there’s any way to get economically diverse neighborhoods without fundamental economic growth at the bottom – especially not through mandates like this. (Although if the poor become richer, then we’re not more diverse, just more equal, which seems better to me.) I’d concentrate more on bringing the bottom up in a more basic way (I think ending the drug war would probably be about 40% of the solution…I’d venture to say it’s probably even more important than allowing for density and transit), and hope that eventually market forces will make us a more egalitarian society.

    Anyway, I’m not going to try to change your mind in this comment, but hopefully with time the accumulated weight of our blog posts will do the job itself. 😉 Thanks for reading, though! I really do value diversity in readership – I don’t want to be preaching to the choir – and feel free to disagree!

  • Paul Joice

    Follow up: Here is a research paper that demonstrates how inclusionary zoning does more than just provide affordable housing: http://tcf.org/publications/pdfs/housing-policy-is-school-policy-pdf/Schwartz.pdf. The Low-Income Housing Tax Credit doesn’t generate outcomes like that.

  • Bfager

    Darien residents are not opposed to the “other” or affordable housing, just city-style density and development that the neighbors have no control over. Darien abuts Stamford and Norwalk, sizable cities. Some people just prefer single-family homes to apartment living and shared walls. Check out the issue with the Allen O’Neill homes, an existing affordable housing complex in Darien (100% affordable, not mixed levels) that the housing authority is trying to redevelop to be twice the size. Neighbors don’t object to affordable housing (after all, it’s already there), but to having a giant increase in traffic, noise, density, light bleed, etc. No one in town in favor of the project has said how this will not hurt property values.

  • Stephen Smith

    I guess the problem with this kind of thinking is that everybody seems to feel that way (or at least everyone who votes or shows up to community meetings). People in Stamford will say go to New York if you want density, people in Brooklyn will say go to Manhattan if you want density, people on the UWS will say go downtown if you want density, people in the Village will say go to Midtown if you want density, and people in Midtown will say no, we don’t want that. At some point, there has to be a limit on how much you can stall development on parcels of land that you don’t own (which is ultimately what this comes down to – you don’t own the land, but you want to be able to determine what gets built), or else nothing would ever get built anywhere.

    The fact of the matter is that while you consider Darien to be an unacceptable place for density, it is actually pretty well connected to the most important city on the planet. The train station that sustains the town is heavily subsidized, despite the fact that it serves one of the wealthiest places in the world. It doesn’t really seem fair to continue to receive this subsidy if the citizens are not willing to allow for the density that would make the project half-way decent. Perhaps towns that limit affordable housing (and don’t give me that I-like-affordable-housing-but-not-apartment-buildings bullshit…in places with high values, you cannot have low density affordable housing) should be forced to pay the full, unsubsidized cost of their rail service? (In the case of Darien, I imagine ticket prices would double from their already-high price.)

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