Zoning Regulation in America

7 min read

The Hidden Costs of Urban Control

In theory, building codes, zoning and urban planning make up the engine that drives municipal growth. Born from progressive-minded responses to early 20th-century public health crises, the first wave of these defined zoning codes was passed starting around 1908. These codes focused on use-based land regulation, and quickly swept the country; according to a 2002 paper by William Fischel, by 1936, over 1,300 American municipalities adopted zoning laws.

In practice, however, those same codes that were once set in place to protect residents quickly became primary barriers to the construction of high-quality affordable housing. This was a natural byproduct of such use-based zoning codes, which favor low-density single-family homes, says Toccarra Nicole Thomas, American Institute of Certified Planners (AICP), who is the executive director of the Form-Based Codes Institute (a program of Smart Growth America). “The number one thing that conventional zoning has done to affect affordable housing is limit the supply of land available for housing,” she says. “If you live in a community where 95 of 100 parcels are zoned for single-family, three are zoned for multifamily and the rest are for multifamily high-density, the price is driven up significantly” for building on land that can hold naturally dense low-income housing.

Further, Thomas says, specific land development controls work to affect the overall quality of affordable housing once built. Things like “floor area ratio, lot lines, setbacks and height limit of the actual building all conspire to constrain the type of product you can build, which also drives up prices.”

Traditional land-use approaches have caused particular barriers when it comes to Low Income Housing Tax Credit-assisted construction. In a 2017 report for the American Planning Association, architect Woo Kim points out that beyond basic constraints, like density limits and dimensional standards, site-specificity within zoning codes can derail many potential LIHTC projects in their infancy based on inabilities to satisfy location efficiency measures. “Single-use zoning districts where land uses that help satisfy location-efficiency measures, such as supermarkets, pharmacies, farmers markets and libraries, are far removed from residential districts,” Kim points out. “Isolated shopping centers along major highways contain many ‘Qualified Allocation Plan points’ that cannot be used.”

In sum, all these restrictions come together to make it harder and more expensive to build affordable housing, further widening a funding gap already severely challenged by increased labor and materials costs, lingering supply chain issues and perennially oversubscribed building subsidies. A 2017 analysis by The Cato Institute’s Vanessa Brown Calder found that, overall, increased regulation nearly always increases the costs for developers, and thus increases both home ownership and rental prices. These cost increases were particularly acute for high-density coastal cities, with zoning rules causing an estimated 50 percent increase in rents in Manhattan, San Francisco and San Jose. “In the absence of regulatory reform,” Calder writes, “it is problematic for local government to rely on federal programs, like Section 8 housing vouchers, the Low Income Housing Tax Credit and public housing, to ease housing affordability issues. Reforming local regulation is both inexpensive and addresses the housing affordability problem directly.”

Zoning Reform Enters the National Conversation
Relentless housing supply crises coupled with growing awareness about zoning’s effects on the construction of affordable housing have caused zoning reform movements to pick up steam across the country. According to the Lincoln Institute, 13 states—Arizona, California, Connecticut, Maine, Maryland, Massachusetts, Montana, Nebraska, North Carolina, Oregon, Utah, Virginia and Washington—have all proposed sweeping state-level reform packages within the past five years.

Thomas points to Montana as having “made a really big splash with their bipartisan housing bill.” Through interventions, such as making multifamily and accessory dwelling units legal, eliminating discretionary design review, making residential parking requirements optional and allowing for housing to be in commercial zones, Montana has taken “an intentional, smart growth approach, allowing for location-efficient mixed-use communities. You’re creating a healthy community, you’re creating a place where people can choose how they interact with the built environment, instead of being told you have to drive a car to get to all your needs.”

Alongside state efforts to reexamine and rewrite zoning codes, the Department of Housing and Urban Development recently deployed an $85 million grant program aimed at helping municipalities undergo zoning reform projects. Though it is still too early to see significant impacts from the program, Thomas says that the dollars are a welcome relief to communities that otherwise wouldn’t have the planning infrastructure to draft and implement comprehensive plans and consider zoning changes and nonprofits, such as Smart Growth America, are gearing up to help guide these communities in using HUD dollars most effectively. “Communities are eager, they’re partnering with us, and they’re sharing information, which allows us to give recommendations that can make zoning reform work for their community. Everybody’s realizing that their community has a housing crisis and that they need to pull every lever possible to address the crisis through zoning reform.”

A similar Washington State grant program that began in 2019 has already garnered effective results, allowing small- and medium-sized cities, like Tacoma and Walla Walla, to begin rewriting their zoning codes. In all, according to Route Fifty, the Washington Department of Commerce has given 65 cities a combined $4.7 million in grants, a fair drop in the bucket compared to the $644 million in tax credits and $732 million in bonds that the State’s Housing Trust Fund administered in 2017 to build affordable housing.

In simpler terms: a small investment in zoning reform can pay big dividends, particularly by saving developers money that will eventually be passed to both subsidy-providing entities and, ultimately, tenants.

Form-Based Codes: A Modern Alternative
One wholesale approach that communities can take when rewriting their zoning codes is to reorient their system of regulation from a traditional use-based model to one based on form. This approach, known as form-based codes, is a land development regulation that uses public-facing physical form—rather than separation of uses—as the organizing principle.

Three hallmarks set form-based codes apart from other approaches to zoning, says Thomas. First, it focuses on form versus segregating use type. This means the dissolution of the barrier between things, like commercial and residential zoning.

Second, form-based codes are “people-oriented, and at people scale. It’s really about bringing people back to the streetscape and having buildings in the streetscape that are scaled for a person to move about with any modality they choose.”

Finally, form-based codes, though still partially prescriptive, don’t have the same types of arbitrary land development controls as conventional zoning. “You do have standards, but it doesn’t get to the point of where you have a floor-area ratio, setbacks, density controls and things like that or these controls will be included in a different format.”

These three principles work together to make form-based codes ripe for the construction of affordable housing. “Developers love communities with form-based codes,” says Thomas. “It’s predictable, it’s easy to read, it’s easy to understand. And when a community has adopted a true form-based code, the permitting is completely by-right.”

This latter piece may be the most enticing for developers of affordable housing. Whereas in conventional zoning, developers often must go through lengthy rezoning processes to legally build dense, high-quality structures, with form-based codes, “if a community has adopted it, and your project fits the design guidelines, you get a permit almost over the counter.”

Indeed, Thomas says that, though the Form-Based Codes Institute initially hypothesized an increase in rent with form-based code adoption, a 2021 Smart Grown America report, Zoned In: Economic Benefits & Shared Prosperity With Form-Based Codes, found that the opposite occurs, with rent in form-based code areas growing at about half the rate of conventionally zoned municipalities.

All told, Thomas says, form-based codes provide an enticing option for cities looking to overhaul outdated zoning regulations, particularly when planners center their community’s vision. “Conventional zoning has forced us to live in this one type of land use pattern that is very specific, where you have to drive to access every need.” Smarter approaches to zoning, like utilizing form-based codes, mean “that you can live next door to your job. You can live next door to your community center, and you can live next door to your coworker or your daycare. It is just that mentality of bringing choice back to communities.”  

Abram Mamet is a freelance writer based in Washington, DC, whose work focuses primarily on the social histories of the community. He currently works as the assistant editor for CapitalBop.