Out of Control Policy Blog

Sarasota County Eyes Inclusionary Zoning

In 2005, Sarasota County, FL may become the next area to translate good intentions into bad housing policy via inclusionary zoning (stealthily called "balanced housing" in Sarasota). Homebuilders are rightfully concerned:

    "We're working around the edges of the problem," [Jay] Brady, the building industry spokesman, said. "The county should do more with what it can control."

    After all, builders say, they don't single-handedly determine the prices of new homes and who can afford them.

    County zoning and other policies affect densities, land values and the various taxes and fees that get tacked onto plats, permits and certificates of occupancy. Impact and utility connection fees alone can add $10,000 or more to the cost of a typical house.

    The state has repeatedly raided a trust fund for down payment assistance, a fund fueled by a tax on real estate transactions. Sarasota County's share this year was cut by nearly half, to $2.5 million. The home building industry supported that tax on the condition that it be reserved for affordable housing.

    Employers, including public employers such as the county and the School Board, aren't paying many of their workers the wages they need to save for a down payment or keep pace with their rent increases.

    An inclusionary zoning law ignores those factors and shifts the financial burden of subsidizing work-force housing strictly onto them, home builders say. And those builders will most likely shift it to their higher-income buyers.

Reason published two groundbreaking studies on inclusionary zoning this year which should serve as a cautionary tale for Sarasota County. They found that inclusionary zoning policies in numerous California cities resulted in outcomes diametrically opposed to their stated goals; these policies led to higher housing prices and restricted the supply of new housing.

According to the first study, in 45 Bay Area cities where inclusionary zoning was enacted, new housing construction decreased by 31 percent the year following the adoption of the policies. In the 33 cities with data for seven years prior and seven years following inclusionary zoning, 10,662 fewer homes were produced during the seven-year period after the adoption of inclusionary zoning. The study also found that the price of new homes increased by $22,000 to $44,000 in the Bay Area (and upwards of $100,000 in some individual communities) to compensate for the mandatory discounts on the "restricted" homes.

The second study found similar results in Southern California. Affordable housing mandates in cities in Los Angeles County and Orange County increased the price of new homes by $33,000 to $66,000 to compensate for the mandatory discounts on affordable homes. In all 13 cites studied, average production of housing fell the year following the adoption of inclusionary zoning. And in the eight cities with data for seven years prior and seven years following inclusionary zoning, 17,296 fewer homes were produced during the seven years after the adoption of inclusionary zoning.

Sarasota County should learn from the experience of California cities before it makes its housing situation worse through inclusionary zoning. And the builders are right: If the County's goal is to deliver more homes at lower prices, then perhaps they should step back and reconsider the existing land use policies (zoning, subdivision regulations, etc.) that are already contributing to higher housing prices.

Leonard Gilroy is Director of Government Reform


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