There is a strong correlation between racial and economic segregation in Michigan, most notably in the metro Detroit area, where wealthy, white suburbs stop abruptly at the edges of the majority black and low-income city of Detroit. Though not a silver bullet, inclusionary zoning is one tool cities can use to diversify neighborhoods, expand access to low-poverty municipalities for low-income residents, and ultimately increase access to higher-quality education for low-income students.

Senate Bill 195, introduced in 2011 by Michigan State Senator Coleman Young II, would grant municipalities the power to implement mandatory inclusionary zoning policies to either encourage or compel developers to reserve a percentage of affordable units in all new market-value developments. Despite cost-based opposition on part of developers, the social value of inclusionary zoning policies and wide range of available developer incentives make the passage of comprehensive inclusionary zoning a sensible first step to facilitating economic integration and promoting more equitable access to quality municipal services in Michigan. 

The history of inclusionary zoning

In 1971, Fairfax County, VA became the first municipality to implement an inclusionary zoning ordinance. The ordinance failed in the courts, however, on the basis that such policies required action at the state level. Montgomery County, MD, has the longest-standing inclusionary zoning policy, which has led to the creation of over 10,000 affordable housing units in new, market-rate developments since the program’s inception in 1974.

Today, over 400 municipalities across 17 states and Washington, D.C., have adopted inclusionary zoning in an attempt to increase economic diversity and extend the benefits of low-poverty neighborhoods to low-income families. Such policies require developers to reserve a specified number of affordable units either within market-value projects or at specified, offsite locations. Inclusionary zoning has risen in popularity as a private-sector alternative to affordable housing in light of decreased government funding and a general shift away from building affordable units in favor of subsidizing existing units.

Much of the opposition to inclusionary zoning arises from developers, who argue that, to the extent that the public benefits from affordable housing, taxpayers should bear the costs of providing it. Developers lose in the face of artificial price controls that restrict supply of market-value housing, and they respond by raising prices for market-value units to recoup costs.  Furthermore, inclusionary zoning may be susceptible to community backlash on part of affluent residents who fear that property values will decrease in cities with inclusionary zoning mandates, and that an influx of students from lower-performing schools will negatively impact district rankings.

The social benefits of inclusionary zoning

Inclusionary zoning promotes a general redistribution of wealth as opposed to merely extracting people and resources from low-income communities.

Inclusionary zoning is meant to promote mixed-income schools and neighborhoods more generally. Thus, the movement of people from high-poverty to low-poverty neighborhoods could create room for market-value developments in struggling cities that remain accessible to current residents. Additionally, to the extent that the number of affordable units in market-rate developments would be restricted and that low-income people have limited mobility, high-poverty districts will not see a substantial out-flux of residents as a result of inclusionary zoning. This points to a very minimal potential effect on Michigan’s school districts, who have nonetheless been shown to adapt to drastic decreases in enrollment by implementing competitive educational and extracurricular programs, creating partnerships to expand offerings, and responding more thoroughly to parents’ preferences.

Studies show that the education gap between students at the top and bottom 10% of income levels shrinks after the implementation of inclusionary zoning.

Within the past few years, Michigan students’ proficiency levels in math, reading and writing have dropped below national averages. African-American students in Michigan, who are more than three-times as likely as their white counterparts to live in poverty and about sixteen-times as likely attend low-performing schools, are falling even farther behind, with only 10% or less attaining 4th-and-8th-grade proficiencies in math and reading. Michigan’s lowest performing schools are comprised of 72% black students, whereas only 1% of white students attend such schools. Housing and zoning policies can thus be used not only as a tool to promote racial and socioeconomic integration, but also to improve educational outcomes for low-income minority students by reducing geographic restrictions on where these students are compelled to attend school.

Findings from Montgomery County show that students in affordable housing who attended low-poverty schools performed better than public housing students in moderate-poverty schools, and the achievement gap between poor students and their wealthier counterparts was significantly reduced. Montgomery County mandates that between 12.5 % and 15% of units in new developments with 20 units or more be reserved for affordable housing. About a third of these units are purchased by the Housing Opportunities Commission, which randomly assigns public housing to qualified applicants living below the poverty line, leading to the random assignment of poor students to one of the district’s 131 public schools. According to the study, improved academic performance is contingent on students in affordable housing having access to schools where 20% or fewer students qualify for free and reduced lunch. It is thus imperative that the most affluent localities opt to participate in inclusionary zoning and that a substantial number of units be designated affordable if maximum educational benefits are to be reaped.

As opposed to decreasing property values, integrating affordable housing within new developments can be conceptualized as diversifying the pool of potential buyers.

Because affordable housing units will be available only to those qualifying for public housing, competition between market-priced units and subsidized units within the same complex will be nonexistent. Such developments will merely attract people from two different socioeconomic categories: those who qualify for public housing and those who do not. In order to address class and potentially race-based discrimination driving the notion that inclusionary zoning will decrease property values — sentiments that arguably gave birth to Michigan’s stark economic and racial segregation in the first place — local government stakeholders and community members must be properly educated on the value of socioeconomic diversity and the long-term benefits of providing low-income children with access to higher-quality education. They must be made aware of how residential segregation leads to economic segregation, which perpetuates cycles of poverty, and how extending affordable housing to a diverse set of jurisdictions is consequently vital to reducing the negative impacts of highly concentrated poverty. Public-private partnerships between developers, municipalities, and local non-profits and housing commissions is the best mechanism for disseminating information about the benefits of inclusionary zoning and mobilizing mass support. Furthermore, it should be made known that local businesses will benefit from lessening the gap between jobs and housing in affluent neighborhoods, as inclusionary zoning would increase the presence of low-to-moderate income workers in the community.

Mandatory inclusionary zoning policies coupled with developer incentives reduce costs and uncertainty. Although voluntary inclusionary zoning policies decrease competitive disadvantages for cities who have adopted the policies compared to those who have not, voluntary policies often lead to the underdevelopment of affordable housing in areas where development would be most beneficial (in neighborhoods with the best schools and highest median incomes). Mandatory polices, however, could drive away development if not supplemented with substantial technical and monetary incentives.

Inclusionary zoning policies have the potential to create racially and economically diverse neighborhoods in which key moderate-to-low-income workers such as teachers, childcare workers, policemen, and general laborers can afford homes in the neighborhoods where they work. Inclusionary zoning policies expand beyond the nexus of housing policy and have the potential to increase access to high-quality education, given that affordable housing units are large enough to house families and are created in neighborhoods with low poverty rates and high-performing schools.

Voluntary inclusionary zoning policies place fewer restrictions on developers but lag in effectiveness due to increased uncertainty; the freedom to choose whether or not to incorporate affordable housing units into new developments incentivizes weak participation amongst developers. Though costlier and more restrictive, when paired with incentives and a good housing market, mandatory policies can lead to successful economic integration while maintaining developer profits. Density bonuses are perhaps the most popular form of incentive, while cash bonuses for each affordable housing unit remain the most attractive option for developers.

Community education is also essential to the success of inclusionary zoning policies, as deep-seated negative perceptions regarding the life choices of low-income people may hinder community buy-in if the benefits of economic and racial integration are not made clear. Finally, it is crucial that inclusionary zoning policies impact the state’s residents who are most in need of affordable housing options, which is why localities must use the state median household income as opposed to the local one to determine who qualifies for private-sector affordable housing.

India Solomon is a senior at UM's Gerald R. Ford School of Public Policy studying Comparative Urban Policy and Sustainable Development and she is passionate about the implications of land-use policy on racial disparities in income, health and education. India strongly believes in the power of diversity in decision-making to enhance social policy outcomes and foster the sense of interpersonal compassion needed to move our world forward.


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