Executive summary

This policy brief analyzes the types of exclusionary zoning policies and how they have created segregated neighborhoods where marginalized identities face a disproportionate rate of poverty. Exclusionary zoning and its impact on affordable housing is a contentious topic between YIMBYs and NIMBYs. This brief will propose alternate proposals to exclusionary zoning, such as including multi-family zoning and removing parking limits as well as incentivizing inclusionary zoning measures, to allow for socioeconomic integration and more diverse communities.

Overview

Exclusionary zoning laws have existed since the early 20th century. In 1910, Baltimore passed the first zoning law segregating neighborhoods by race. White Americans justified this racist law by claiming segregation would increase property value of white homeowners, reduce disobedience, and prevent spread of disease. Although Black Americans initially protested segregation, city council members were effective in packing Black Americans in poorer neighborhoods. Baltimore’s ordinance inspired cities in Virginia to adopt racial zoning policies. Concurrently, other cities like Atlanta, Georgia; Greenville, South Carolina and Birmingham, Alabama adopted racial zoning policies. 

Buchanan v Warley was a significant Supreme Court case relating to this topic. Prior to Buchanan v Warley, there was no federal ruling that acknowledged the racial zoning laws were discriminatory. In the 1910s, an ordinance in Louisville, Kentucky prohibited Buchanan, a white man, from selling his property to Warley, a Black man, in a majority-white block. Buchanan soon after sued Warley to complete the transaction and claimed the ordinance was racially discriminatory. The case was heard by the Kentucky Court of Appeals before the case was heard at the Supreme Court. In a unanimous decision, the Supreme Court ruled the city ordinance was an overreach of the city’s power in regulating property and violated the 14th Amendment’s due process clause. Additionally, the court also ruled the ordinance deprived Black citizens of their right to property guaranteed under the 14th Amendment. This was the first Supreme Court case that limited discriminatory, racial zoning. However, despite the ruling in this case, racial zoning was very much prevalent afterwards. 

Although the Fair Housing Act (1968) prohibited discrimination on the basis of race and declared it was the government’s duty to provide fair housing, it did not prohibit discrimination on the basis of class. This opened up loopholes for cities to target low-income citizens through requirements for minimum lot size and single family zoning ordinances. Many of these ordinances, which still exist today, prevent low-income people of color from buying affordable housing.  

In the case Village of Arlington Heights v. Metropolitan Housing Development Corp (1977), Metropolitan Housing Development Corp. (MHDC), a developer working with the Village of Arlington Heights, applied for a permit to build low-income and moderate-income housing units designed for people of color. Nevertheless, the planning permit was denied. MHDC claimed the denial of the permit was racially discriminatory and violated the 14th Amendment’s Equal Protection Clause. The court ruled the denial of the permit was not unconstitutional because the intent could not be proven to be discriminatory. Even if the city’s action results in racial inequality, the court established a precedent that “de jure” segregation is not a violation of the 14th amendment. 

Pointed Summary

• Exclusionary zoning has existed since 1900 and while overtly discriminatory housing policies are gone, cities have developed modern-day loopholes. As of today, exclusionary zoning primarily comes in the form of single family housing and building requirements by a municipality.
• The effects of exclusionary zoning laws have culminated to today as Black and low income Americans continually to be segregated from wealthier, whiter neighborhoods. 
• Advocates across the political spectrum believe exclusionary zoning contributes to a lack of supply in housing, excavating inequity. Adding multi-family units, removing parking minimums, and building more affordable housing would reduce housing costs and thereby allow more low-income buyers of color to live in well-resourced neighborhoods.  

Relevance

In 2022, 37.9 million Americans lived in poverty, a 5.4% increase from the previous year. Poverty has risen sharply from previous years, with some U.S. census tracts being classified as an area of concentrated poverty, where 40% of residents live under the poverty line. Neighborhoods with concentrated poverty often lack the resources to provide a quality education and safety, which leads residents to experience poorer outcomes in mental and physical health. However, it must be noted that people of color face disproportionate rates of high-poverty. 1 in 4 poor Black-Americans and 1 in 6 poor Hispanic-Americans live high-poverty areas, compared to 10% of poor people nationwide. Exclusionary zoning increases the concentration of poverty by limiting affordable housing through zoning ordinances. Given there currently is a shortage of 7.3 million homes for low-income buyers, zoning laws are keeping low-income, especially families of color, out of high and middle income neighborhoods. As a result, low-income families of color continue to face income and health disparities extending into adulthood.     

Current Stances

Currently, many of the exclusionary zoning policies come in the form of single-family zoning and restrictions on minimum lot size, density, height, parking minimums etc.. Oftentimes, these requirements limit the supply of housing, which creates a sharp increase in prices that make housing unaffordable to low-income buyers. In fact, researchers from Drexel University argued low-density zoning requirements contribute to segregation by race and social class. Through these requirements, effectively keep low-income and people of color out of whiter, more affluent neighborhoods with more resources. 

Exclusionary zoning and its effect on affordable housing has been contentious between YIMBYs and NIMBYs. YIMBYs (Yes in My Backyard), who advocate for increasing the supply of housing, exist across the political spectrum. Although YIMBYs may have different rationales, most agree that exclusionary zoning policies, especially single-family zoning, limits the supply of housing and keeps housing costs unaffordable. NIMBYs (Not in My Backyard), who also exist across the political spectrum, oppose new developments to preserve the existing quality of their neighborhood. For example, NIMBYs may support maintaining single-family zoning to maintain the safety and quality of the neighborhood. However, some NIMBYs may oppose developments with the intention to exclude poorer and non-White residents. Overall, there are conflicting stances on the issue of exclusionary zoning. 

Tried Policy

To solve the housing affordability crisis and address exclusionary zoning, cities and states across the U.S. have adopted ordinances allowing "Missing Middle Housing" (duplexes, triplexes, quadplexes) to be built. The city of Sacramento, in an attempt to minimize the effects of gentrification, have allowed two accessory dwelling units (ADUs) per single-family unit without parking requirements, which has added to the supply of affordable housing. Cities like Minneapolis and Portland have both adopted policies to increase Missing Middle Housing while eliminating common barriers to housing such as parking minimums. On a national level, President Biden had granted $5 billion in funding to expand housing options to local jurisdictions and erase common barriers (such as minimum size lot requirements) in 2021 through his American Jobs Plan. 

Policy Problem

A. Stakeholders

Low income residents of color are most likely to be affected by this decision, given that exclusionary zoning can lead to segregation. These neighborhoods are often under-resourced and people growing up in these neighborhoods tend to experience poorer life-outcomes.  Historically, governments have practiced exclusionary zoning through size minimums and single-family zoning mandates. However, by adopting zoning to allow for more multi-family housing and affordable units, governments can also create more integrated neighborhoods. Developers may also be interested in building affordable-housing in certain areas, seeing opportunity for development. Finally, community members—mostly NIMBYs and YIMBYs—may voice their opinion on development projects in an area, influencing local zoning laws.  

B. Risks of Indifference

Exclusionary zoning exacerbates inequity and often segregates residents by race and class. It also keeps low-income buyers of color from moving into single-family zoning areas, which often provide the safest and well-funded schools. These neighborhoods often contain more job opportunities, accessible park space, medical services, and are away from environmental hazards. Poorer neighborhoods also contain higher crime rates and poorer physical and mental health outcomes, which extend into adulthood. However, its effects are more broad-reaching, as housing is becoming unaffordable in the United States and exclusionary zoning plays a role in this. Rents have increased by 30% since 2017 and half of renters dedicate 30% toward paying rent. Given exclusionary zoning favors single-family zoning, it limits the supply of affordable housing readily available. As a result, housing becomes expensive and low-income buyers often have to compete with high-income buyers for housing. 

C. Nonpartisan Reasoning

Exclusionary zoning has negative economic and social effects, regardless of one's political affiliation. Restricting the amount and type of housing that can be built slows growth and limits upward mobility, which has exacerbated the housing affordability crisis. Economists Gilles Duranton and Diego Puga project that removing restrictive zoning requirements would boost America’s GDP by almost 8% in their study, as restrictive zoning limits people from living in areas generating more revenue. By solving the problem with exclusionary zoning, families can enjoy lower housing costs and more innovation. Calls to reform exclusionary zoning have been popular with advocates across the political spectrum, from progressives to libertarians. 

Policy Options

Many policy solutions have been proposed to combat exclusionary zoning and provide affordable housing. A commonly proposed solution is allowing for more multi-family units and removing parking minimums, given they are the biggest barriers to affordable housing. Single-family housing can often limit the supply that can be readily available in housing markets. Changing a zone to include more multi-family housing can make housing more affordable. Many states in the past have implemented this policy due to the lack of housing affordability in certain areas. However, it’s important to consider adding multi-family housing on a case by case basis, as sometimes it can contribute to gentrification and displacement. Instead, spreading out multifamily housing across a jurisdiction can be beneficial. Parking minimums, on the other hand, can make up to 17% of a buyer’s rent. Furthermore, building parking minimums is expensive for the developer and could cost from $4,000-10,000 up to $35,000, presenting another reason to remove the charge. If a city wants to add more affordable housing near areas with working public transportation systems, it does not make sense to add parking minimums. Evaluating when to reduce parking minimums in a zoning ordinance on a case-by-case basis would be beneficial. 

Inclusionary zoning has also been a popular proposal from housing advocates. According to the U.S. Department of Housing Development, inclusionary zoning often requires developers to build a percentage of affordable units. Often, inclusionary zoning does not require governments to spend taxpayer money and instead encourages private sector development. Oftentimes, inclusionary zoning initiatives incentivize developers through expedited approval rates. Inclusionary zoning would likely significantly increase housing supply and allow more integration of low-income and people of color. However, some critics of inclusionary zoning believe it takes away developer revenue, which as a result limits the amount of construction. Despite this, being cognizant of the amount of market-rate housing and its affordability to low-income residents can still make it a viable solution. In an article published in the University of Connecticut's Law Review, people have even proposed increasing existing affordable housing mandates in states like Connecticut, as it could force developers to produce more housing to fulfill these requirements.       

Finally, giving developers an incentive to create affordable housing units would likely increase the stock of affordable housing. For example, giving developers a 10% reduction in property tax for allocating 10% of their units to affordable housing would increase the amount of housing available. To avoid developers and landlords from abusing this policy, municipalities could require developers to submit prices of the property each year, like the federal requirement in their Payroll Protection Program during COVID-19. Currently, the U.S. federal government offers up to $10 billion to local housing agencies to issue tax credits, so this is an economically feasible proposal. 

Conclusions and Recommendations

Exclusionary zoning has existed for a long time in America since the 1900s and it still exists today through single-family zoning and limits to affordable housing. One of the biggest barriers to providing affordable housing is NIMBYism, as NIMBY residents are often vocal in opposing new development for a variety of reasons. On the other hand, housing-advocates exist across the political spectrum and advocate for increasing the supply of housing. To facilitate socioeconomic integration, housing must be affordable, and this can be achieved by adding more multi-family units, reducing parking minimums, encouraging inclusionary zoning, as well as incentivizing developers to build more affordable housing. These policies have the potential to reduce the disparities low income residents may face in future health, financial, and safety outcomes.

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Acknowledgment

The Institute for Youth in Policy wishes to acknowledge Paul Kramer, Carlos Bindert, Gwen Singer, and other contributors for developing and maintaining the Programming Department within the Institute.

References (Should Also Be Hyperlinked)

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