Flashback, 2004: the progressive argument for Inclusionary Zoning and (before the Atlantic Yards version) Community Benefits Agreements

My post yesterday (link) on the book Unequal Cities and discussion surrounding it pushed me to take a look at some progressive advocacy advocacy reports aimed to influence city officials.

First, let's look at a few parts of Remaking New York City: Can Prosperity Be Shared and Sustainable? (also below), published in November 2004 by the Pratt Institute, and written by urban planners Brad Lander, then head of Pratt Center for Community Development, and Laura Wolf-Powers, Assistant Professor of City and Regional Planning, School of Architecture, Pratt Institute.

The report gave Mayor Mike Bloomberg’s administration a mixed assessment:

The Bloomberg vision for New York City’s future is compelling in many respects: its focus on livability and public space, its high design standards, its acknowledgement that adaptation to a largely post-industrial economy is needed in land use planning, workforce development and economic development policy. But the vision also implies several assumptions with which we disagree. First, it equates real estate development with economic development. Second, it posits a future city that exists primarily for its most privileged residents, with too few real benefits of growth reaching the less-wealthy 80% of the population.

The city pursued rezonings and infrastructure investments to benefit growth, they write, while it pursued downzonings to “preserve neighborhood character,” "primarily in neighborhoods occupied by white homeowners." In doing that, the city prevented affordable housing for immigrants and lower-income families.

Inclusionary zoning

The report warned that, while the Bloomberg Administration offered incentives for affordable housing, those likely wouldn't work--it would have to be mandatory:

In the areas where rezoning is creating opportunities for substantially new housing development, we particularly support mandatory IZ, which requires developers to include some percentage of affordable housing. Only through mandatory programs can the City capture the large private windfalls (in some cases as much as 800%) that landowners are receiving as a result of rezonings. Mandatory IZ programs have been documented around the country not to have a negative impact on market-rate development – in studies by PolicyLink, David Paul Rosen and Associates, the and Business and Professional People in the Public Interest. 42 Mandatory IZ programs do tend to cause a slight moderation in land costs, which is exactly what is needed for affordable housing to be created.

(Emphasis added) 

It was not mandatory--not until the next administration, of Mayor Bill de Blasio.

On CBAs

The report was somewhat positive about Community Benefits Agreements (CBAs), as it was announced before the June 2005 unveiling of the Atlantic Yards CBA, which was clearly a developer-driven effort. They write:

When public subsidy is supporting the private development of office, convention or entertainment space, city officials should insist on the negotiation of community benefits agreements that offer local residents the opportunity to share concretely in the value being generated. A “community benefits agreement,” several of which have been successfully negotiated in California, outlines a set of benefits that a developer promises to provide as part of a project in exchange for community support (including affordable housing options, living-wage jobs, first-source hiring for local residents, job training, community spaces within the facilities, and environmental improvements). For the purpose of enforceability, these benefits are typically integrated into a development agreement between the developer and the city. Groups in New York City have begun working to craft and pass a policy that would automatically trigger minimum standards, and potentially a community benefits process, when developers benefit from large subsidy deals or significant land use changes.

The key, it turned out, was oversight and enforceability.

Linkage fees

The report bring up an issue, linkage fees, that may still be relevant as rezoning efforts are pending: 

In 1983, the city of Boston began a development “linkage program” in order to redirect some of the benefits of downtown investment toward its neighborhoods. Under the program, real estate developers seeking approval of large scale commercial or institutional developments are required to make “linkage payments” of $8.62 per square foot of construction over 100,000 square feet. The payments – amortized over up to 12 years – are used by the City for affordable housing ($7.18 per/s.f.) and job training ($1.44 per/s.f.). From the inception of the linkage program through June 2000, $58.2 million has been awarded to various affordable housing projects, which allowed the construction or renovation of 5,979 housing units in 89 projects in the City’s neighborhoods. The job training component was initiated in 1998, and over the next four years $11.9 million of funds had been committed and $8.2 million of funds have been awarded resulting in the creation of 93 programs. Services funded under this program include model program designs for entry-level jobs training, school-to-work transition, family literacy, workplace-based education, private sector involvement in the design and delivery of services, and capacity building in impacted communities. The funds are targeted to neighborhoods where development projects are located, and to programs which address the specific needs of that community.

In other words, if developers and/or landowners are getting a windfall from an upzoning, why shouldn't they share some of the wealth. 

Growth with equity

Wrote the authors:

Our critique of the City’s far-reaching plans for up-zonings, down-zonings, and new development projects across the five boroughs is based not on opposition to development, but on the premise that its benefits – and its costs – should be more evenly shared among the people of the city. Our strategy for growth with equity is grounded in the conviction that new tools such as inclusionary zoning, community benefits agree- ments and measures to “make service work pay” can realize greater equity without smothering economic growth. We look forward to ongoing dialogue with the administration about how to reshape proposed rede- velopment plans to create more shared and sustainable prosperity in New York City.

 

Inclusionary zoning

The above report also references Increasing Housing Opportunity in New York City: The Case for Inclusionary Zoning (also at bottom), a Fall 2004 report by PolicyLink and the Pratt Institute Center for Community and Environmental Development, authored by Kalima Rose, Brad Lander, and Karoleen Feng.

The authors recommended:

Apply mandatory inclusionary zoning to all future neighborhood-wide zoning changes. Many of the proposed large-scale rezonings create substantial density and land value increases for property owners. The city can and should require that all developers receiving this benefit create some affordable housing units. Evidence from cities coast to coast makes it clear that mandatory IZ programs produce more affordable housing than voluntary ones. For New York City, mandatory IZ should be applied to the rezoning of manufacturing areas, to the upzoning of mixed-use business districts, and to residential areas that are rezoned for more density. Where downzonings limit development, they should be balanced with nearby density increases that contain IZ requirements.

Maximize affordable housing production by offering inclusionary zoning incentives in high- density residential neighborhoods.

In neighborhoods not going through dramatic rezoning, developers should have the opportunity to participate in New York City's voluntary inclusionary program. In particular, the program, which offers developers a modest density increase if they choose to include some affordable housing, should be expanded to wide streets and other appropriate areas within neighborhoods zoned from R6 to R9 (generally three to 17 story buildings).

They also recommended that income levels for affordable housing reflect community housing needs; that would've required more subsidies. And while they said an IZ program could be adjusted to meet neighborhood needs, that could add complication.

They proposed that inclusionary units be permanently affordable--after all, the benefit of greater density is permanent--and said that such units should be on-site or "nearby in the same community," rather than the early practice of "allowing in-lieu payments or distant off-site units."

The problem was that Bloomberg either thought voluntary incentives would work or didn't want to alienate developers. But the record, even as of the time of the report, was that far fewer affordable units were built than projected. From the report:

In Park Slope, where balanced neighborhood rezoning was approved in 2003, no affordable units have been created or initiated, despite the city's commitment of $6 million. After the rezoning, a project slated to create more than 80 affordable apartments for middle-income families was instead sold to a developer who is producing twice as many units, all at market rate.

An Atlantic Yards note

From the report's Appendix:

Brooklyn Atlantic Yards: Forest City Ratner has proposed developing a mix of market-rate, middle-income, and affordable housing (retrieved from www.bball.net). The community organization ACORN believes FC Ratner has committed 50 percent of the housing at below market. Without concrete figures, it is estimated that 20 percent of the units would be affordable (assuming an 80/20 development). Additional units would likely require additional subsidy from HPD.

This was before the Affordable Housing Memorandum of Understanding was signed in May 2005, which, like the subsequent CBA signed in June 2005, did promise that 50 percent of the rental units--not the overall housing would be affordable.

In the end, 2,250 of 6,430 (35%) approved housing units were to be below-market, but there was no mechanism--other than that unenforceable CBA--to hold the developer to the promise of balancing middle-income units with low-income ones.

Moreover, as I've written, New York State offered crucial slack, allowing a broad definition of "affordable"--units participating in a government program. 

The upshot is that, while many of the additional units do not require additional subsidy from HPD, the New York City Departmentof Housing Preservation and Development, they are aimed at middle-income households earning at or near six figures, as allowed by the 421-a tax break, and not particularly burdensome to developers.