In conversations about systemic racism or economic stratification, one of the main practices tied to real estate is exclusionary zoning. It’s a practice that flouts Constitutional rights and the Fair Housing Act -- yet many people who oppose it in conversation let it flourish in their own backyards.
The term "exclusionary zoning" is somewhat self-explanatory, in that it suggests using zoning ordinances to keep some people out. But how exactly it’s still used -- or how it subtly plays into some zoning ordinances without ever being named -- is worth understanding. This is especially applicable if you think it’s a priority to mitigate housing shortages in your own city, or if you appreciate vibrant cultural communities and want them to thrive.
What is zoning?
Zoning is the set of laws that regulate land use in a city. The purpose of zoning is to create a well-ordered plan for development: to optimize usage, traffic and density while protecting residential areas from industrial or commercial encroachment. Zoning is a new method of managing city planning, having existed for just over a century, which explains why these laws are not uniform across cities and states and can be pretty difficult to unravel.
What is exclusionary zoning?
Exclusionary zoning is the set of land-use regulations that keep people of lower economic brackets –- and, though not specifically stated, of different races -- out of certain neighborhoods. These regulations are not always as blatant as "no low-income housing is allowed on this block." Exclusionary zoning also can be enforced by other land use restrictions, such as single-family zoning, building height restrictions, and complicated approvals procedures that slow down development and increase the expense.
The purpose for exclusionary zoning, at surface level, is simply to drive up property values in a neighborhood and to halt overpopulation/congestion in sought-after areas. However, the nickname "snob zoning" neatly sums up its fundamental flaw. It is a system designed to keep "others" out of a neighborhood the lucky few are enjoying, in lifestyle and accumulated wealth.
People three decades ago would have immediately pointed to the wealthy suburbs where only two-car families can live -- particularly gated communities with steep dues. Or, maybe, New York co-ops where no matter how much cash a buyer has, in order to buy in, one must interview with the board and be approved by all other residents. These are certainly examples of peak exclusion.
However, there are all sorts of other examples, starting with "revitalized" urban core neighborhoods that don’t have any low-income housing buildings. Then, there are the many neighborhoods in cities like Los Angeles or the South Bay that have mysteriously never upzoned out of single-family housing, no matter how dire the housing shortage gets.
Are there upsides to exclusionary zoning?
If you own a home in an area with exclusionary zoning and feel comfortable around your neighbors, then sure, there are upsides. These are typically affluent neighborhoods with high property values. The strict rules around land use extend to everything from noise pollution to parking to rent/lease laws.
When 'good neighborhood' characteristics are actually against the greater good
Millionacres has covered the topic of when "good" neighborhoods are unfriendly to investors and renters, but exclusionary zoning crosses a line. It is anti-equality, anti-diversity by design, built into municipal ordinance. There are certainly arguments to be made -- especially from a lender appraisal standpoint -- that low-income and even medium-income developments in a neighborhood can bring down property values.
However, opponents of exclusionary zoning say that it stunts opportunity (and certainly for multifamily developers, this is true), quenches neighborhood vitality by ensuring only one class of people can live there, and prices the workforce out of their own neighborhoods.
We’ve covered before the dire need for frontline workers to live in the neighborhoods they serve -- whether these are grocery cashiers, hospital staff, cleaners, or teachers, they can't be expected to commute an hour each way to work. When exclusionary zoning was relegated to suburbs, it worked because the suburban dwellers were willing to commute. With cities becoming exclusionary, there’s a worker shortage, and Covid-19 has thrown it into sharp focus.
The backstory on exclusionary zoning policies
In the earliest days of zoning, the beginning of the 20th century, exclusionary zoning was overtly racially discriminatory in language, and "racial zoning" was common city planning practice to keep different colors in different sections of a community. This continued even after the Supreme Court declared it unconstitutional in 1917. From San Francisco to Baltimore to New Orleans, cities went to great efforts to create "legally defensible" racial zoning schemes within larger city plans. By the 1930s, though, blatantly race-based language had disappeared, replaced by more subtle measures.
Another type of exclusionary zoning, which continues to exacerbate pockets of concentrated poverty/concentrated wealth, is focused on land use. Regulations pertaining to minimum square footage, building height, and how many people may live on a specific lot are all meant to stop the growth of population density and housing inventory.
The Fair Housing Act of 1968 was a landmark moment for housing equality activists – though to be fair, much of its content had actually been in previous civil rights acts dating as far back as the Civil Rights Act of 1866. While this may not have been the first time antidiscriminatory housing rules were federally legislated, it was the most sweeping. And up to today, anyone who feels they are being discriminated against for reasons of race, religion, sex, disability, or national origin can file a complaint based on this act.
Unfortunately, it doesn’t protect people from being discriminated against because they’re too poor to afford the rent. Thus, economic segregation continues to proliferate. Even in developments that have pledged to provide housing for the low income and the working class, if you look at the actual numbers, it may be less than 10% of the overall units -- just enough to get approvals and qualify for incentives. While this can be justified from a profit-seeking standpoint, it does little to create upward mobility for the workforce or create a healthy mix of economic classes in a community.
Inclusion versus exclusion: the challenge of zoning reform
The government can’t force sweeping change by moving out 25% of single-family homeowners from a wealthy neighborhood to build highrises on their lots. Instead, zoning reform is a mix of finding opportunities to increase density where it makes sense because existing structures are teardowns, creating incentives to develop certain types of medium-income housing, and directing money into neighborhood revitalization programs so that communities which are already inclusive can thrive that way. Examples of zoning reform include:
California’s new 2020 ADU laws
This was a huge step to increase gentle-density zoning across the state in a way that can benefit all homeowners.
Transit-oriented development (TOD)
This method of urban planning incentivizes construction near mass transit hubs, thereby seeking to create housing units in the urban core and reduce pollution/congestion from auto commuters.
Government-aided neighborhood revitalization programs
Opportunity zones have gotten all the buzz for the past two years, but many programs predate this initiative, for example HUD’s Community Development Block Grant (CDBG) program.
Is there an argument in favor of exclusionary zoning?
This is a tough question to answer because those who benefit from it, or who are made more comfortable by it, want it to stay -- although they would never voice this out loud. But there are many others, particularly fair/affordable housing advocates, who sincerely don’t want it to exist in future communities. Like many of the issues surrounding economic class and the social safety net, the debate has been going for many years and shows no signs of resolving one way or the other.