Exclusionary zoning is damaging equity and inhibiting growth and opportunity in many parts of America. Though the Supreme Court struck down expressly racial zoning in 1917, many local governments persist with zoning that discriminates against low-wage families — including many families of color.1 Research shows that has connected such zoning to racial segregation, creating greater disparities in measurable outcomes.2
By contrast, real-world examples show that flexible zoning rules — rules that, for instance, that allow small groups to opt into higher housing density while bypassing veto players, or that permit some small areas to opt out of proposed zoning reforms — can promote housing fairness, supply, and sustainability. Yet bureaucratic and knowledge barriers inhibit broad implementation of such practices. To facilitate zoning reform, the Department of Housing and Urban Development should (i) draft model smarter zoning codes, (ii) fund efforts to evaluate the impact of smarter zoning practices, (iii) support smarter zoning pilot programs at the state and local levels, and (iv) coordinate with other federal programs and agencies on a whole-of-government approach to promote smarter zoning.
Challenge and Opportunity
Economists across the political spectrum agree that restrictive zoning laws banning inclusive, climate-friendly, multi-family housing have made housing less affordable, increased racial segregation and damaged the environment. Better zoning would enable fairer housing outcomes and boost growth across America.
The Biden-Harris administration is actively working to eliminate exclusionary zoning in order to advance the administration’s priorities of racial justice, respect for working-class people, and national unity. But in many states with unaffordable housing, local politics have made zoning reform painfully slow and/or precarious. In California, for instance, zoning-reform activists have garnered significant victories. But a recently launched petition to limit state power over zoning might undo some of the progress made so far. There is an urgent need for strategies to overcome political gridlock limiting or inhibiting zoning reform at the state and local levels.
Fortunately, a suite of new smarter zoning techniques can achieve needed reforms while alleviating political concerns. Consider Houston, TX, which faced resistance in reducing suburban minimum lot sizes to allow more housing. To overcome political obstacles, the city gave individual streets and blocks the option to opt out of the proposed reform. That simple technique reduced resistance and allowed the zoning measure to pass. The powerful incentives from increased land value meant that although opt outs reached nearly 50% in one neighborhood, they were rare in many others.3 The American Planning Association similarly published a proposal to allow opt-ins for upzoning at a street-by-street level — a practice that would allow small groups to bypassing those who currently block reform in order capture the huge incentives of upzoning.
In fact, opt-ins and opt-outs are proven methods of overcoming political obstacles in other policy fields, including parking reform and “play streets” in urban policy. Opt-ins and opt-outs reduce officials’ and politicians’ concerns that a vocal and unrepresentative group will blame them for reforms. While reformers may fear that allowing exemptions may weaken zoning reforms, the enormous increase in land value created by upzoning in unaffordable areas provides powerful incentives for small groups of homeowners to choose upzoning of their own lots. And by offering a pathway to circumvent opposition, flexible smarter zoning reforms can expedite construction of abundant new affordable housing that substantially improves equity, opportunity, and quality of life for working-class Americans.
Absent action by HUD to encourage trials of innovative techniques, the pace of reform will continue to be much slower than it needs to be. Campaigners at state and local government level will continue to face opposition and setbacks. The pace of growth and innovation will be damaged, as bad zoning continues to block the benefits of mobility and opportunity. And disadvantaged minorities will continue to suffer the most from unjust and exclusionary zoning rules.xc
Plan of Action
The Department of Housing and Urban Development (HUD) should take the following steps to facilitate zoning reform in the United States:
1. Create a model Smarter Zoning Code
HUD’s Office of Policy Development and Research, working with the Environmental Protection Agency (EPA)’s Office of Community Revitalization, should produce a model Smarter Zoning Code that state and local governments can adopt and adapt. The Smarter Zoning Code would provide a variety of options for state and local governments to minimize backlash against zoning reforms by reducing effects on other streets or blocks. Options could include:4
- Allowing a street or block to opt-in to upzoning by filing a verified petition signed by a qualified majority of the registered voters residing on that street or block.
- If the petition is filed by the residents of a block of houses surrounded by streets, development pursuant to the upzoning should be required to leave untouched the fronts of the houses facing those streets (to minimize impact on residents whose lots are not included in the upzoning).
- Residents can be given the option to attach a design code to their petition.
- Anti-displacement rules. Although most development through smarter zoning will likely happen in neighborhoods dominated by owner-occupied single-family homes, all resident renters should be protected by rules that preserve existing anti-eviction and rent-control provisions. Rules should additionally ensure that no development pursuant to smarter zoning can proceed unless renters are protected, and should include provisions to prevent evasion by landlords.5
- Height restrictions and angled light planes to protect sunlight to other blocks.
- Setback rules that can be waived by adjacent homeowners to allow development of townhouses or multifamily units.
- Compensation payable by a developer to adjoining residents who are adversely affected by development permitted under zoning reform.
- Establishment of controlled parking districts surrounding a street or block that votes to upzone, with free parking stickers issued to residents of adjoining streets to protect their parking access.
- Impact fees, tax increment local transfers6, community-benefit agreements, or other methods to address spillover effects of new developments.
- Where appropriate, provisions to allow each local government to mitigate the scale of change. For example, local governments could limit opt-in upzoning to no more than four floors of housing in areas that are currently zoned exclusively for single-family homes.
A draft of a model Smarter Zoning Code could be developed for $1 million and could be tested by seeking views from a range of stakeholders for $5 million. The model code should be highlighted in HUD’s Regulatory Barriers Clearinghouse.
2. Collect and showcase evidence on effectiveness and impacts of smarter zoning practices
As part of the list of policy-relevant questions in its systematic plan under the Foundations for Evidence-Based Policymaking Act of 20187, HUD should include the question of which types of zoning approaches, including smarter zoning, can best (i) help to address or overcome political and other barriers to meeting fair-housing standards, and (ii) support plentiful supplies of affordable housing to address equity and other issues.
HUD should also provide research grants under the Unlocking Possibilities Program8, once passed, to evaluate the impact of Smarter Zoning techniques, suggest improvements to the model Smarter Zoning Code, and prepare and showcase successful case studies of flexible zoning.
Finally, demonstrated thought leadership by the Biden-Harris Administration could kickstart a new wave of innovation in smarter zoning that helps address historic equity issues. HUD should work with the White House and key stakeholder groups (e.g., the American Planning Association, the National League of Cities, the National Governors’ Association) to host a widely publicized event on Planning for Opportunity and Growth. The event would showcase proven, innovative zoning practices that can help state and local government representatives meet housing and growth objectives.
3. Launch smarter-zoning pilot projects
Subject to funding through the Unlocking Possibilities Program, the HUD Secretary should direct HUD’s Office of Technical Assistance and Management to launch a collection of pilot projects for the implementation of the model Smarter Zoning Code. Specifically, HUD would provide planning grants to help states, local governments, and potentially other groups improve skills and technical capacity needed to implement or promote Smarter Zoning reforms. The technical assistance to help a local government adopt smarter zoning, where possible under existing state law, should cost less than $100,000; technical assistance for a state to enable smarter zoning on a state-wide basis should cost less than $500,000.
4. Promote federal incentives and coordination around smarter zoning
Model codes, evidence-based practices, and planning grants can help advance upzoning in areas that are already interested. The federal government could also provide stronger incentives to encourage more reluctant areas to adopt smarter zoning. It is lawful to condition a portion of federal funds upon criteria that are “directly related to one of the main purposes for which [such funds] are expended”, so long as the financial inducement is not “so coercive as to pass the point at which ‘pressure turns into compulsion’”.9 For instance, one of the purposes of highway funds is to reduce congestion in interstate traffic. Failure to allow walkable urban densification limits the opportunities for travel other than by car, which in turn increases congestion on federal highways. It would therefore be constitutional for the federal government to withhold 5% of federal highway funds from states that do not enact smarter zoning provisions. Similarly, funding for affordable home care proposed under the Build Back Better Act will be less effective in areas where exclusionary zoning makes it less affordable for carers to live. A portion of such funding could be withheld from states that do not pass smarter zoning laws. Similar action could be taken on federal funds for education, where unaffordable housing affects the supply of teachers, and on federal funds to fight climate change, because sprawl driven by single-family zoning increases carbon emissions.
HUD’s Office of Fair Housing and Equal Opportunity should consult with other federal bodies on what federal funding can be made conditional upon participation by state and local governments in smarter zoning programs, as well as on when implementing such conditions would require Congressional approval. HUD should similarly consult with other federal bodies on creative opportunities to incentivize smarter zoning through existing programs. If Congress does not wish to amend the law, it may be possible for other agencies to condition funding upon implementation of smarter zoning provisions at state or local level. Although smarter zoning will also benefit existing residents, billions of dollars of incentives may be needed for the most reluctant states and local governments to overcome existing veto players to get more equitable zoning.
Urgent reform is needed to address historic damage caused to equity by zoning rules, originally explicitly racist in language, that remain economically exclusionary in intent and racially discriminatory in impact. By modeling smarter zoning practices, demonstrating their benefits, providing financial and technical assistance for implementation, and conditioning federal funding upon adoption, HUD can accelerate and expand adoption of beneficial flexible zoning reforms nationwide.
Frequently Asked Questions
- Kahlenberg, R.D. (2021). Tearing Down the Walls: How the Biden Administration and Congress Can Reduce Exclusionary Zoning. The Century Foundation, April 18. [↪]
- Rouse, C.; Bernstein, J.; Knudson, H.; Zhang, J. (2021). Exclusionary Zoning: Its Effect on Racial Discrimination in the Housing Market. Written Materials, June 17. [↪]
- Gray, M.N.; Millsap, A.A. (2020). Subdividing the Unzoned City: An Analysis of the Causes and Effects of Houston’s 1998 Subdivision Reform. Journal of Planning Education and Research. [↪]
- For more detailed suggestions, see: Myers, J. (2021). Smarter Zoning by Street and by Block. Zoning Practice, 8(21): 1–8. [↪]
- See, e.g., section 65918.7 of California’s SB827, proposed by state senator Scott Wiener in 2018. Available at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB827. [↪]
- Tax increment local transfers “transfer a portion of the increase in the tax base from any new development to nearby property owners, allowing them to personally benefit from new development and offset some of the lost value of their property.” Source: Ikeda, S.; Hamilton, E. (2015). How Land-Use Regulation Undermines Affordable Housing. Mercatus Center, November 4. [↪]
- The relevant section is 5 USC 312. [↪]
- Up for Growth Action. (2021). Latest Build Back Better Package Retains Commitment to Unlocking Possibilities Program. November 4. [↪]
- South Dakota v. Dole, 483 U.S. 203, cited in National Federation of Independent Business v. Sebelius, 567 U.S. 519. [↪]