The impact of the financial crisis and the economic downturn is dizzying on a number of fronts: housing, community development, tax policy, revitalizing cities, climate change, energy policy, transportation infrastructure. There’s a new context for all the nation’s most pressing issues. Developers, planners, and public officials gathered in Miami this week at the Urban Land Institute’s annual fall meeting to try to prepare for the challenges ahead, and the venue was somewhat darkly fitting. Miami engaged in what might be characterized as an overly optimistic building spree, adding 25,000 residential units in midtown and downtown since 2005. The high-rise towers are dark and lifeless at night, adorned with banners reading “for sale or for rent.” Paul Volcker, chairman of the US Federal Reserve from 1979 to 1987, kicked off the ULI meeting by telling participants that the financial crisis was indeed historic, and that a revival of trust was necessary to begin the slow process of recovery.
The stock market has dropped – but so have gasoline prices, and suddenly some housing is more affordable than it was just six months ago. With that in mind, two scholars long affiliated with the Lincoln Institute delivered the second in the Lincoln Lecture series Oct. 24 on the subject of inclusionary housing in the US and Europe. Nico Calavita, a city planning professor at San Diego State University, and Alan Mallach, nonresident senior fellow at the Metropolitan Policy Program at The Brookings Institution, noted that inclusionary housing (also known as inclusionary zoning) has been successful in maintaining a level of affordability by requiring new residential development to include 15 or 20 percent of the housing below market-rate. Now that there will be a pause in the economic cycle, Calavita and Mallach said, it may be a good time for US municipalities to consider a new twist on the inclusionary housing model: tying affordability requirements to zoning changes that open up land to residential development. The concept of “land value capture” goes back to Henry George and the notion that government action (a zoning change, for example) creates value for landowners. Ireland has experimented with an affordable housing policy on this basis, as has Washington state and New Jersey, which requires that in cases where zoning is changed from non-residential to residential, any development within two years must include a set-aside for low- and moderate-income families. “This is the time when developers are acquiring land and looking for re-zoning,” Calavita said.