Atlanta Moves Forward with Mandatory Inclusionary Zoning
(APN) ATLANTA — The City of Atlanta has adopted two Mandatory Inclusionary Zoning (IZ) ordinances – one for the Beltline Overlay District and one for the Westside. The City Council unanimously approved the ordinances on Monday, November 20, 2017.
While the term “Mandatory Inclusionary Zoning” might sound technical, it is actually quite significant news. Put simply, it is a requirement that new multi-unit housing developments in the Beltline and Westside neighborhoods must include a certain number of affordable housing units.
Concurrent with the new requirement, the Council created new incentives for developers to offset some or all of the lost revenue associated with potentially lower rents.
These include a fifteen percent density bonus (16-36A.008), a waiver of parking requirements (.009); and expedited application review (.010).
Advocates have been pushing for Atlanta to adopt such a policy for some time.
For example, in September 2008, the Beltline Affordable Housing Advisory Board advised: “1. The City of Atlanta should adopt a mandatory inclusionary zoning ordinance,” as its primary recommendation to mitigate gentrification.
Inclusionary Zoning is one of the national best practices around producing new affordable housing units, and Atlanta is believed to be the first city in Georgia to enact such a policy.
“Inclusionary Zoning is in about 200-plus municipalities across the nation,” Councilman Andre Dickens (Post 3-at-large), who introduced the Beltline IZ ordinance and led the legislative effort, told Atlanta Progressive News.
“The oldest one (IZ policy) on record is Montgomery County, Maryland, since the 1970s, and it’s the model that everybody follows. Theirs is mandatory. Most are voluntary, some are mandatory – that’s what we model,” Dickens said.
One of the policy benefits of IZ is that it harnesses the power of new market rate development to create affordable units that tend to be higher amenity units in lower-poverty neighborhoods.
“It’s basically stating, we need the private sector and public sector to work together on affordable housing and new developments of opportunity. Wherever the market is going, we want affordability to happen,” Dickens said.
“The market is making business decisions, and we don’t want to make affordable housing a second choice that’s a government choice. If the market says the Beltline is a good place to live, then that’s a good place to live for everybody, affordable and whatever,” Dickens said.
To the displeasure of many advocates, Atlanta’s policy, however, defines affordable housing units as to encompass rents as high as 60 or 80 percent of the Area Median Income. For a family of four, that a so-called affordable rent based on an income of 41,820 or 55,750 dollars per year.
These rents are still quite high for most working families in Atlanta who are earning up to 30 percent of the AMI, or up to 20,900 per year.
According to the legislation, developers can choose to create fifteen percent affordable units at up to 80 percent of the AMI, or ten percent affordable units at up to 60 percent of the AMI.
Alternatively, instead of producing the units, developers can choose to pay an “in lieu fee,” which the City would use to produce or rehabilitate affordable housing.
The items were approved by the Zoning Review Board on November 09, and all Neighborhood Planning Units.
AFFORDABLE FOR WHOM?
Numerous advocates criticized the proposed policy, including at a November 2016 Work Session, when it was originally proposed by Councilman Andre Dickens (Post 3-at-large), for not serving any households at 0 to 30 percent of the AMI.
At the November 2016 Work Session, Councilman Michael Julian Bond (Post 1-at-large) asked about the feasibility of producing units at 30, 40, and 50 percent of the AMI.
While the administration promised Bond to produce that information at the next meeting, APN has learned through a Georgia Open Records Act request that the City had never conducted the analysis.
APN later determined, through a second Open Records Act request to the City, that, it is just as feasible to require five percent of units to be affordable at 30 percent AMI, as it is to require ten percent units affordable at 60 percent AMI, using a typical incentive offered by the Atlanta Development Authority.
Around the same time, Councilman Andre Dickens told Atlanta Progressive News and several advocates that the City and Housing Authority worked together to create a new option for developers to create units affordable at 0 to 30 percent AMI.
“When we say inclusion, we mean including everyone, not just a certain percentage or AMI,” Sherise Brown told Atlanta Progressive News.
“We asked Andre Dickens when he was at our NPU V October meeting. Before we voted, we asked, a couple people asked the question, we ought to include 0 to 30 AMI into this Inclusionary Zoning, and he said ‘Yes, sure.’ Others asked him things in light of that with 0 to 30 and he said yes,” Brown said.
“I was shocked when it was passed at City Council,” Brown said.
“My understanding it’s for teachers, nurses, and firefighters. When I talk about affordable, I’m talking about 0 to 30 percent – they’re making stagnant wages, and they can’t afford to live in the Inclusionary Zoning,” Brown said.
On the day the legislation passed Council, Councilman Dickens’s staff provided APN with a package of information explaining how developers can receive additional incentives from the Atlanta Development Authority (lease purchase benefit) or the Atlanta Housing Authority (Housing Choice Voucher Program).
These are incentives that are available to any developer and are not specific to the Beltline or Westside IZ policies.
Nor are these additional incentives referenced in the legislation.
“There’s nothing about that in the legislation. That’s just been in conversations we’ve had on the side. That’s not Inclusionary Zoning, that’s something separate from what I understand,” Brown said.
“They’re looking for it not to be in there, because it’s in there if you ask me,” Dickens told APN.
APN asked Dickens what that meant, when there is not, in fact, language in the ordinances’ operative sections about neither the ADA incentives nor the AHA incentives.
“Let’s say 30 percent AMI – that means somebody that makes 20,000 dollars a year. That person shows up at AMLI Ponce. AMLI Ponce has a requirement, I believe, for up to 60 percent AMI. That person is not disallowed from putting in a application. They are first come, first serve,” Dickens said.
NEW POLICY PRECEDENT IN GEORGIA
What makes this so novel in Georgia is that it is a requirement for new affordable housing – not just a voluntary incentive.
The City of Atlanta currently has several voluntary incentives for affordable housing in its Zoning Code, where applicants can elect to receive additional density in return for providing affordable housing.
With Atlanta’s Mandatory IZ, while there are alternative ways to comply with the requirement–like making an in lieu fee payment–there is no way to opt out.
Now, the Atlanta ordinances, at the same time as enacting the requirement, also enacted three new incentives for developers who are impacted by the requirement.
According to Dickens and the City, if a developer takes all three incentives–the density bonus, parking waiver, and expedited application processing–they may still not fully be compensated for any lost rent in connection with the affordable unit requirements.
However, if a developer elected to take additional subsidy from AHA to serve families at 0 to 30 percent AMI–which they could stack on top of all three zoning code incentives–they would more likely receive a net benefit.
That is to say: the developer would receive any lost market rate rent back in incentives, and then some; they would profit at a rate higher than market rate by providing affordable units.
Also, the City has limited the requirement to two areas–the Beltline and the Westside–that have received significant public subsidy contributing to their current market value.
According to Dickens, the City’s Law Department has looked at this and decided it is not a “taking” under Georgia law, even where Georgia is a strong property rights state.
The Council for Quality Growth and Atlanta Apartment Association were both in support of Atlanta’s Mandatory IZ ordinances, Dickens said.
In one state where several cities have adopted Mandatory IZ, the State of Washington, most or all of those cities have done so concurrent with upzoning, as has been done in Atlanta. Advocates in Washington believe it is legally sound; however, the courts have not opined because no developer has challenged the policy.
The City of Sandy Springs, Georgia, considered adopting a Mandatory IZ policy earlier this year, which contained no incentives for the developer.
However, after significant backlash from the Council for Quality Growth, Sandy Springs City Council withdrew the proposal.
“My wish is I wouldn’t have had to spend three years on this. If this had been done at the onset of the creation of the Beltline.. It should have came with the Overlay (Beltline Overlay). In retrospect of the thousands of properties that been developed, we would have had hundreds of them to be affordable,” Dickens said.
“We should have been more proactive,” he said.
In fact, Councilwoman Carla Smith (District 1) introduced a Voluntary IZ ordinance approximately fifteen years ago and received little to no Council support.
Smith currently has a Voluntary IZ / Height Bonus Area Designation ordinance that is pending before the Zoning Review Board, which would apply to the remaining parts of the City outside the two Mandatory IZ zones. APN’s News Editor–the present writer–drafted that ordinance, which is expected to go before the NPUs and ZRB in 2018.
(END / Copyright Atlanta Progressive News / 2017)