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Probate & Property

May/June 2024

Land Use Update - Zoning Reform

Daniel R Mandelker

Summary

  • Exclusive single-family zoning, which dominates residential areas, contributes to housing cost overburden by excluding multi-family rental housing.
  • California has a history of zoning reform that was improved in 2023.
  • Montana adopted comprehensive zoning reform in 2023 after an extensive campaign led by the governor that included a statewide housing task force.
  • Zoning contributes to housing overburden because exclusive single-family zoning dominates residential areas and excludes affordable housing.
Land Use Update - Zoning Reform
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A crisis in housing motivates zoning reform. Thirty percent of households suffer from “housing overburden” because they pay more than 30 percent of their income for housing. Housing is unaffordable for workers earning low wages. A worker paid the federal minimum wage for a 40-hour week cannot afford a modest two-bedroom rental home anywhere. Zoning is a major cause of the high cost of housing. It increases the cost of housing at a time when housing costs are at stratospheric levels.

Zoning Exclusion

Exclusive single-family zoning, which dominates residential areas, contributes to housing cost overburden by excluding multi-family rental housing. It also excludes other affordable housing, such as single-family manufactured homes and accessory dwelling units (ADUs), a secondary house or apartment that shares the building lot of a larger, primary home.

Supplementary zoning restrictions reinforce exclusive single-family zoning. Low housing densities of one acre or more dominate suburban areas, increase housing costs, and aggravate income and racial segregation. Excessive housing setbacks and height requirements also increase housing costs, and arbitrary project denials can occur in design reviews.

Zoning exclusion is aggravated because developers must get governmental approval to raise density or build different housing types in single-family zones. Public hearings may be required, and they can provide opportunities for delay and obstructive public opposition that leads to project modifications or rejection.

Protecting Zoning Exclusion

Statutes and court decisions protect exclusive single-family zoning. State zoning legislation is facially neutral. It authorizes local governments to adopt zoning ordinances and districts but does not provide statutory criteria for zoning regulations. There is no statutory restraint on restrictive zoning that can raise the cost of housing.

The US Supreme Court stopped most constitutional attacks on zoning almost 100 years ago. A leading case, Village of Euclid v. Ambler Realty, 272 U.S. 365 (1926), upheld exclusive residential zoning in a zoning ordinance adopted by a declining Cleveland suburb. The ordinance was based on racially-inspired zoning in Cleveland and elsewhere, and its draftsman admitted the ordinance was arbitrary.

The “serious question,” the Court said, was the creation of exclusive residential districts. It held they were constitutional because “apartment houses” are “a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district.” They “greatly retarded” and “destroyed” residential areas, interfered “by their height and bulk with the free circulation of air and monopolizing the rays of the sun,” and “come very near to being nuisances.” Id. at 394-95.

The US Supreme Court has never disowned this offensive and obsolete description of multi-family housing, and courts have relied on it to uphold exclusive single-family zoning. Courts also uphold other zoning restrictions, such as low residential densities and the exclusion of manufactured housing from single-family districts.

Zoning Reform Strategies

Zoning requires reform. The neutral and unrestricted zoning authority that local governments have puts few restraints on local government reform. Local governments can adopt zoning reforms similar to those that states can adopt. Salt Lake City’s zoning reforms are typical. They allow quadruplexes in single-family zones, more housing in some areas that allow multi-family housing, streamline the planning process, and reduce parking requirements. Some new housing units must be set aside for occupants who earn below specific area median income thresholds.

State legislation has the advantage that it mandates local governments to adopt zoning reforms that state statutes require. This Update discusses recent state zoning reforms. See also Patrick Sisson, What Is Zoning Reform and Why Do We Need It?, Planning Mag. (Jan. 18, 2023), http://tinyurl.com/2kwc68rx.

Zoning Reform in California

California has a history of zoning reform that was improved in 2023. Here are some examples. California makes adopting a comprehensive plan by local governments mandatory, and comprehensive plans must include a Housing Element. It includes a land use strategy that accommodates housing by identifying properly zoned sites available for housing construction. It also includes a Regional Housing Needs Allocation (RHNA) establishing local government housing production targets. The Housing Element and RHNA are binding on local governments.

Reform strengthened the Housing Element. Cities must now assess the probability that development will occur on specific parcels. When measuring housing needs, the RHNA must consider housing cost burdens, overcrowding, and fair housing. New enforcement mechanisms have been added.

California also has a Density Bonus Law that provides a density increase for housing projects along with regulatory concessions that include a required minimum amount of affordable housing. Reform made the density bonus more attractive. It now allows 100-percent affordable housing projects and a higher 80-percent bonus, and it eliminates affordable housing fees for affordable units.

California legislation protects ADUs from restrictive zoning regulations, and reform in 2023 strengthened these protections. ADU approval is now ministerial, which means that ADU units can be built as of right and are exempt from statutory environmental review, which causes unnecessary approval delays. The reform also limits the reasons for disapproving ADUs by prohibiting occupancy requirements, restrictive lot size requirements, setbacks, and parking standards. In addition, it reduces impact fees and the time allowed for municipal approval. California has already approved 60,000 ADUs.

Another reform requires the ministerial approval of multi-family housing projects in infill areas in cities that are not meeting their RHNA production goals, again eliminating the lengthy statutory environmental analysis requirement. There is a minimum requirement for affordable housing depending on project size and jurisdiction. The reform also strengthens the state’s Housing Accountability Act by prohibiting the denial of projects that comply with objective local land use regulations. For more detail, see William Fulton et al., New Pathways to Encourage Housing Production: A Review of California’s Recent Housing Legislation (Terner Center 2023), http://tinyurl.com/22hpfrk2.

Zoning Reform in Montana

Montana adopted comprehensive zoning reform in 2023 after an extensive campaign led by the governor that included a statewide housing task force. The reform created a new statutory structure that mandates zoning and planning that meets housing needs and removes exclusionary zoning barriers. The legislative statement of purpose states that the intent is to provide “sufficient housing units for the state’s growing population that are attainable for citizens of all income levels.” Here are some examples.

A statutory requirement, similar to California’s regional housing needs allocation, requires local governments to “identify and analyze existing and projected housing needs” and “provide regulations that will allow for “the number of housing units needed” as identified in the land use plan. Local governments must accommodate existing and needed housing types to meet population projections and prepare a site inventory. They must also analyze zoning and other constraints to housing development and identify market-based incentives. Land use plans must identify “adequate sites to accommodate the type and supply of housing needed for the projected population.”

Reform eliminates problems created when development must obtain site-specific approval by limiting public participation and comment at the approval stage. If a development “is in substantial compliance with the land use plan,” public participation and comment during site-specific development approval is limited to impacts or significantly increased impacts “not previously identified and considered” in the land use plan or the zoning or subdivision regulations. This reform means that public participation and comment must occur upfront at the planning stage, not in isolation, when a development must obtain approval. The legislature also intends that “comprehensive planning allows for streamlined administrative review decisionmaking for site-specific development applications.” Subdivision review is streamlined.

Reform restricts abuse in design review, such as adopting vague and ambiguous design standards that permit arbitrary denial. Reform requires design review standards to be “clear, objective, and necessary to protect public health or safety or to comply with federal law.” This reform will prohibit abusive design decisions, such as rejecting manufactured housing design because it is limited to standardized design formats.

To strengthen the purpose of zoning reform, the legislation requires zoning regulations to include 5 out of 19 reform requirements that apply in the majority of the areas where residential development is permitted. Examples are allowing duplexes where a single-unit dwelling is permitted, allowing an ADU on a lot with a primary single-family residence, eliminating or reducing minimum lot sizes and setbacks, and eliminating aesthetic requirements such as bulk, floor area, and massing requirements for multi-unit dwellings and mixed-use developments. The legislation explicitly prevents a zoning ordinance from treating manufactured housing and low occupancy community residential facilities differently from other uses. Municipalities must allow housing development in commercial zones and permit ADUs without parking or owner-occupancy requirements. Duplexes are allowed in all single-family zones in cities with populations over 5,000.

Zoning Reform in Other States

Several other states adopted zoning reform in 2023. Washington allows duplexes, fourplexes, and sixplexes in major metropolitan areas depending on city size and proximity to transit and requires the inclusion of affordable units. Reform broadly legalized ADUs and prohibited impracticable building requirements for ADUs. It tightened permitting rules and exempted most housing development in planned “urban growth areas” from time-consuming and burdensome review under the State Environmental Policy Act. Reform also made it easier to subdivide existing multi-family buildings to create smaller units and limited design review, which is a major headache for Seattle builders, to “clear and objective” standards.

Vermont reform includes limits on residential density to no more than five or more units per acre, allows multi-family housing up to fourplexes when served by sewers and duplexes elsewhere, limits required parking to 1.0 or 1.5 spaces per unit, restricts the use of the onerous state-level development review process, and requires administrative approval for plats and minor subdivisions.

Rhode Island makes it easier to acquire discretionary development permission, broadly revises and clarifies several categories of development approval, creates a statewide density bonus of 5 to 12 units per acre for developments 25 percent to 100 percent deed-restricted to low- and moderate-income housing, and streamlines the approval process.

For more details on zoning reform in these states, see Eli Kahn & Salim Furth, Breaking Ground: An Examination of Effective State Housing Reforms in 2023 (Mercatus Center 2023), http://tinyurl.com/2tw252x9. Not all states reformed zoning in 2023. Other states that considered but did not pass high-profile reforms include Arizona, Colorado, New York, and Texas. These reforms may be resubmitted. Some state reforms are being litigated, usually without success.

Conclusion

Stratospheric housing overburden motivates zoning reform. Zoning contributes to housing overburden because exclusive single-family zoning dominates residential areas and excludes affordable housing. Exclusive residential zoning can include excessive setbacks, building heights, and low-density zoning. Zoning reform can eliminate these zoning barriers and improve opportunities for affordable housing.

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