Kansas City should consider a broad, inclusionary housing policy
The recent debate at the Kansas City Council and in The Star’s opinion pages over whether the city should proceed with plans to spend $17.5 million to subsidize development of the Three Light apartment complex without requiring any on-site affordable housing has been important. Yet the one-off nature of the negotiations with the developer in this case highlights a serious gap in the Kansas City land use policy framework: namely, the lack of a broader inclusionary housing policy.
More than 800 jurisdictions across the United States have passed inclusionary housing laws. These laws are a response to our ongoing national housing challenges related to affordability, residential racial segregation and displacement.
This is not a particularly new land use innovation. Inclusionary zoning laws date back to the 1970s. A typical ordinance requires the developer of a multifamily residential project to set aside a certain percentage of units — say 10 to 20 percent — for occupancy by low- or moderate-income households. Developers are often given the option of paying a fee in lieu of providing the affordable units equal to the cost of providing similar units off site.
To help offset the cost, developers frequently are offered options from a menu of incentives: density bonuses, expedited permitting, fee reductions or waivers, zoning variances and various tax benefits.
Other inclusionary housing policies, known as linkage fees or impact fees, take a different approach. They are based on the notion that new market-rate development — office, retail, hotel, industrial, multifamily residential — has an impact on the need for affordable housing in the area by new employees who come from a spectrum of income levels. Developers are required to pay a modest fee, typically into a trust fund, to help fund affordable housing for these new workers.
Those fees can be put to a variety of productive purposes, such as helping to finance the development of new affordable housing, purchasing rent restriction covenants on privately-owned housing, rehabilitating older low-cost housing, or funding a community land trust.
Discussion of inclusionary housing policies raises valid concerns about the impact on development. If the policies are so onerous that they stifle new development, nobody wins. Luckily, this is an empirical question and policymaking need not rely on casual speculation.
Most jurisdictions that pass inclusionary housing policies conduct what are known as nexus studies prior to enacting law. These are robust analyses of local market data that consider both the extent to which new development impacts the need for new affordable housing and the financial feasibility of various regulatory regimes with respect to their effect on development.
The upshot of a nexus study is not likely to be a binary answer that dictates whether an inclusionary housing policy will or will not work across all of Kansas City. Rather, these policies have evolved away from blunt, one-size-fits-all instruments and into dynamic land use tools that are responsive to local conditions.
In December, Los Angeles passed a citywide linkage fee following a comprehensive nexus study. The final ordinance incorporates maps of the city — one for residential markets and one for non-residential — and imposes a per-square-foot fee on new development that varies by neighborhood, depending on how hot the market is in which the project is located. The fee is estimated to generate $100 million annually.
Kansas City no doubt differs from other cities. We need a robust conversation about the policies most suited to our local context. What the Three Light situation demonstrates, however, is that such important questions should not be determined on a case-by-case basis.
The city is currently in the process of developing a new housing policy. Consideration of a broad inclusionary housing policy should be a key part of that process, with ample opportunities for community input, draft review and comment. A good place to begin would be for the city to commission our own nexus study as a data-driven starting point for conversation.
Brandon Weiss is an associate professor at UMKC School of Law.
This story was originally published March 27, 2018 at 8:30 PM with the headline "Kansas City should consider a broad, inclusionary housing policy."