“IZ” Housing Bill On Tap; Will It Work?

An ​“inclusionary zoning” (IZ) law is headed toward the final stages of approval after a debate over how, if at all, it might affect the city’s current building boom and quest for more affordable housinng.

The proposed law would require developers to set aside affordable units in new and rehabbed apartment complexes.

The proposed law is set to come before a Board of Alders committee next month for a public hearing and vote, to be followed by a final full aldermanic vote in the fall, now that it has won the support of the City Plan Commission.

That approval came along with a debate that will follow the proposed law to its final stages before the local legislature.

The City Plan Commission engaged in that debate during a meeting held this past Wednesday night online via Zoom.

After roughly an hour of public testimony and another hour of discussion and debate, the four commissioners present unanimously voted in support of recommending that the Board of Alders approve the proposed inclusionary zoning law.

Two questions lingered over much of the hours-long deliberations.

First: Will this proposed law have any substantive impact on the amount of affordable housing in the city? Or is this a drop in the bucket compared to what New Haven already has — and compared to the regional need left unfilled by recalcitrant suburbs?

And two: Will these mandatory affordable set-asides deter developers from continuing to invest in what has been a years-long building boom of mostly market-rate apartments in and around downtown?

Westville Alder and City Plan Commissioner Adam Marchand successfully encouraged his colleagues to vote in support of the matter by arguing that the inclusionary zoning law, though it will likely have a minimal impact in and of itself on the total number of affordable units in the city, ​“raises the bar on what we expect [developers] to do” when they look to build in New Haven.

“What expectation does the city have for what provision [developers] will make for affordable units? And what supports will the city provide” to help make those inclusionary developments financially feasible? he asked.

“I like it more than I don’t like it,” City Plan Commission Chair Leslie Radcliffe said about the current inclusionary zoning proposal. ​“It does have possibility. It’s better to start with something and tweak it than to take no action at all. I’m sure there will be a lot of eyes that will be kept on this.”

“You only move forward when you move forward,” agreed Vice-Chair Ed Mattison. ​“Nothing suggests that we’ll be worse off if we do this. And there’s a distinct possibility that we’re going to be better off. So let’s do it.”

The inclusionary zoning ordinance will be taken up by the aldermanic Legislation Committee for a public hearing next month. A separate accessory dwelling unit (ADU) ordinance—which commissioners also advanced Wednesday night — will next be taken up for a public hearing by the Legislation Committee on Tuesday evening. If endorsed by the committee alders during their respective hearings, the two proposals will then advance to the full Board of Alders for debate and a final vote in the fall.

City: ​“Just One Tool”

City Plan Director Aicha Woods explained Wednesday night that the proposed inclusionary zoning law marks the culmination of nearly a year and a half’s worth of research and refining by city staff and a hired consultant about how best to promote the creation of new affordable housing through the zoning code, which generally regulates building size, types, and uses across the city.

The ordinance also represents one of the most significant legal proposals to emerge from the Affordable Housing Task Force recommendations report from early 2019.

“This is really just one tool for increasing affordable housing throughout the city,” Woods said. ​“This would not in any way replace our fairly robust production of traditional affordable housing, but it does produce something. And it’s part of an overall toolkit to provide opportunities in neighborhoods of choice that otherwise wouldn’t be there.”

The proposed law would use a mix of mandates and incentives to get developers, particularly those building in the downtown ​“core market” area of the city, to include deed-restricted affordable units in otherwise market-rent apartment complexes. Some of the provisions of the proposed inclusionary zoning law include:

• Buildings that are 10 units or larger and that are subject to a public Development and Land Disposition Agreement (DLDA) must set aside at least 20 percent of their apartments at rents for tenants earning no more than 50 percent of the area median income (AMI).

AMI for the New Haven-Meriden metro area is around $91,000, Woods said, while the median income for the City of New Haven is around $42,000. That means that 50 percent AMI is a little more than the current median income for city residents.

• Buildings that are 10 units or larger and that are in the downtown ​“core” area must set aside 10 percent of units at 50 percent AMI, and give priority for an additional 5 percent of units to renters with Section 8 vouchers.

• Buildings that are 10 units or larger in the downtown-adjacent ​“strong” area must set aside 5 percent of units at 50 percent AMI.

• Building that are 75 units or larger in all other parts of the city must set aside 5 percent of units at 50 percent AMI.

• These deed-restricted units must remain affordable for a term of 99 years.

• Developers can opt out of the affordability requirements by paying the city $210,000 to $225,000 per eligible unit in the ​“core” areas, and $168,000 to $176,000 per eligible unit in all other parts of the city.

• Inclusionary developments do not have to provide any minimum amount of parking that would otherwise be required for residential uses.

• They can have a minimum average gross floor area of 600 square feet per unit across the development.

• Developers can receive 10-year tax abatements worth 30 percent per affordable unit for core market developments, and 5 percent per affordable unit for all other parts of the city.

“Inclusionary zoning does not replace or substitute for traditional subsidized affordable housing developments,” Woods repeated. ​“Rather, it enables additional affordable units in market-rate developments without a direct subsidy.”

During testimony provided during the public hearing section of the night, city Deputy Economic Development Administrator Steve Fontana spoke up in support of the inclusionary zoning proposal — framing it as, just like Woods said, one tool among several to encourage the creation of more affordable housing.

“As part of a comprehensive affordable-housing development approach, IZ can play a small but useful role, by potentially providing new opportunities for people of varied means to access safe, quality, affordable housing options in neighborhoods and in developments which they otherwise might not be able to afford,” he said.

“This proposal is not a collection of arbitrary parameters, but a finely-balanced set of requirements and incentives designed to keep our market in balance and preserve our comparative advantage over other communities, so that we don’t adversely affect our current, positive level of investment and development,” he continued. ​“IZ’s goal is to provide developers with a clear set of rules that they can use, in addition to other programs, to develop housing here.”

IZ Proponents: Tired Of ​“Subsidizing The Wealthy”

Roughly a dozen members of the public — including a handful of Affordable Housing Commission, two local housing attorneys, and a New York City-based developer busy building hundreds of market-rate apartments in Wooster Square — came out to testify virtually on the inclusionary zoning proposal.

Their remarks ranged from praising the spirit behind the proposed ordinance but encouraging commissioners to require even greater affordable set-asides, to shrugging at the likely small impact of the proposed law and directing attention instead to regional housing needs and the hidden costs of parking minimums, to criticizing the proposal for potentially hampering developer interest in pouring more money into New Haven’s real estate market.

Affordable Housing Commissioner, Beaver Hills resident, and labor organizer Rebecca Corbett called on the City Plan commissioners to ​“strengthen” the inclusionary zoning proposal to require at least 20 percent of all units in new apartment complexes to be set aside at affordable rates.

“Developers have come in and made fortunes building luxury condos and apartments” in New Haven in recent years, she said. ​“We’re tired of working and poor people subsidizing the wealthy.”

Fellow Affordable Housing Commissioners Claudette Kidd and Jaime Myers-McPhail agreed.

As a formerly homeless person who now lives in the Hill and has a good-paying job, Kidd said, she finds ​“it very difficult to pay rent, pay bills, buy food, take care of my daughter, take care of myself.” And that’s on a decent income. ​“My concern is that I see all of these properties going up and zero available for affordable units.”

Inclusionary zoning is one important tool the city can use to promote affordable, safe, and secure housing, said Myers-McPhail, who is an organizer with the labor advocacy group New Haven Rising.

“We are witnessing a transformation of the city with developments like the Winchester Lofts, the Corsair, the Audubon, and hundreds of other” luxury and market-rate apartments, stated Myers-McPhail. ​“This wave is cutting out those who have always been cut out.” Myers-McPhail called the proposed law a step in the right direction to ensure ​“prosperity for all, not just for wealthy private developers.”

IZ Critics: Heed Capital Markets

The inclusionary zoning ordinance provoked quite a bit of criticism from several members of the public who warned that the proposed reform as written would drive away developers and stymie new housing construction citywide.

“We are in an unprecedented building boom, and a plan like the one in front of you tonight would have a chilling effect on private development,” land-use attorney Ben Trachten wrote in testimony pre-submitted to the City Plan Commission and read aloud by city staff during Wednesday’s meeting.

“There is no money available to fill the acknowledged ​‘funding gap’ which will total millions of dollars for projects under this proposal. Specifically, the calculations of fiscal impact are based on a 30-year cost to the developer, but the restriction period is 99 years. How does that make any sense? The time to enact inclusionary zoning, if ever, is when we are in a massive recession and private development slows and government steps in to make gap-funding available. Not now.”

Town Green Special Services District Director Win Davis warned of a potentially harmful impact on new construction that in recent years has resulted in hundreds of new mostly market-rate apartments in and around downtown.

“The District is worried that the program’s bonuses don’t adequately reimburse developers for the real cost that they’re taking on, and that they as an entrepreneurial group may determine that it’s in their best interest to make their investments elsewhere,” he said. ​“We don’t want that.”

If the financial burdens of this new affordability requirement prove too great for developers to bear, Davis said, ​“we will likely see a slowdown in all residential development in this city.”

Darren Seid spoke perhaps most candidly about housing as a financial instrument, and about how the dollars and cents of development are the most important factor for investors looking to build in New Haven.

His New York City-based development company is currently finishing up 299 new market-rate apartments on Olive Street. His company has also pitched another 186 new market-rate apartments right next door on Fair Street.

Seid said that he is ​“definitely a proponent” of inclusionary zoning, but that he has seen the affordability mandates as written in New York City cause property values to ​“plummet.”

“I’m in touch with the capital markets,” he said. He said he is often the face in the room, the person whom community members see when a developer is looking to bring new housing to town.

“However, the capital markets, the engine behind the developer, is really what sways and chooses where they go,” Seid said. ​“Based on the conditions of the cities, if the capital markets find them uninvestable due to these circumstances, if this is played the wrong way, they just flow the capital elsewhere.”

The stakes are high, he said. A well-written inclusionary zoning ordinance could entice more development, ​“more tax revenue, more permit fees, more jobs from construction, retail jobs, retail square footage, and ultimately more affordable units. If done improperly, it’s happened before, it can dry up investment in the city. That would really be sad to see.”

IZ Indifferent: Focus On Supply, Suburbs, Parking

Affordable Housing Commissioner and Yale Law School associate professor Anika Singh Lemar offered yet a different critique of the proposed land-use reform — one that expressed a similar concern to Seid’s, but for a different set of reasons.

“I don’t care about the drying up of investment because I care about developer profits,” she said. ​“I care about killing new development because I care about housing affordability.”

The creation of new housing — any kind of housing — is the best way to decrease rents and increase affordability, Lemar said. ​“New market rate housing is good for affordability,” she said.

That said, she pointed out that an inclusionary zoning ordinance would likely have a small impact on the total number of affordable units created any given year in the city — and it would require an increase in city staff time and workers dedicated to enforcement. Lemar said she’d rather see that city worker time spent on housing code enforcement than in ensuring that all 5 percent of a downtown-adjacent apartment complex is being rented out at below-market rates.

“Even as an affordable housing commissioner, I don’t have strong feelings about IZ,” she said. ​“If the city really cares about affordability, there are other things we can do.”

Advocate at the state level for regulatory changes that require exclusive suburbs to host their fair share of affordable units, she said.

Or eliminate parking minimum requirements, rather than spend 45 minutes of a City Plan Commission meeting talking about how little parking there is at a proposed development site within walking distance of two commuter rail stations (as was the case earlier in the night when commissioners debated Seid’s Fair Street apartments proposal).

“Eliminate parking requirements. Increase permitted density. Don’t cave to NIMBYs on future Gateway District proposals,” Lemar continued.

“IZ is a start” towards increasing the supply of affordable housing in New Haven, she concluded. ​“It’s a small start.”