Diversify Housing Types through Innovative Land Use and Zoning Policies

Dec 2015

In the housing development world, time is money. The longer it takes to gain all the necessary approvals to build a home and the more uncertainty involved in the approvals process, the higher the costs of newly built or renovated homes. While appropriate land use regulation is critical for ensuring that communities grow as intended, too much of a good thing can be burdensome and make housing less affordable and discourages innovation necessary to diversity the housing stock for future generations and changing market preferences.

What is zoning and what is “rezoning”?

Most communities have adopted zoning maps and regulations that help to guide development and growth by indicating where the various types of land use will be located within the community. Zoning may identify areas intended for residential development, commercial use, manufacturing and industrial purposes, parks and recreation, or some combination of these and other land use categories. In residential zones, these ordinances also specify allowable densities (how many homes may be developed per acre) and whether attached and multi-unit homes may be built. Allowable density can have a very large impact on the ability to diversity the housing stock to have a full range of housing choices. Generally speaking when a multi-unit home is not permitted by zoning regulations it becomes more difficult for people with modest means and changing market preferences to remain within a community.

In some high-growth communities, it is difficult to meet the demand for housing within the land area currently zoned for residential use. When the market is not able to respond to demand by producing more housing, prices typically rise. This makes housing less affordable for working families and others. In all times, but more importantly in tough economic times, it is important for a full range of housing types to be available within a community. As families and individuals experience economic difficulties they may be forced to move. If there is not a housing option at an affordable price available, they may be compelled to leave their community. The lack of stability that results from frequent moves can negatively impact children’s educational achievement, the family’s health and well-being as well as the overall sense of community.

In some areas, the housing types allowed by existing zoning regulations may be outdated. For example, in neighborhoods with large numbers of foreclosures the demand for single-family homes has waned. Amending zoning policies to allow for higher-density development, as well as mixed-use developments, can include new multifamily housing construction and also the conversion of single-family homes into multi-unit rentals. These measures can help to ensure that available housing remains in accord with local housing needs.

Some communities have tried other methods for solving these challenges. For example, some have rezoned commercial or manufacturing areas for residential use, allowing supply to better respond to demand. Other communities have increased allowable densities within existing residential areas to similarly increase development opportunities.

How can zoning be used to support a diversity of housing types?

In Minnesota, cities must adopt zoning regulations that dictate the the types of land uses that are allowed in different parts (districts) of town. Originally these rules were adopted to ensure the separation of incompatible uses. For example, to make sure heavy manufacturing projects were not built within or adjacent to residential areas.

Today however, zoning is used more broadly to shape neighborhoods and regulate an array of issues related to property use, such as density, parking requirements and building height. Zoning regulations also specify the types of structures that are allowed within each district and often restrict development in residential districts to detached single-family homes or limit the allowed number of units per acre.

Zoning regulations that are written to allow a diverse range of housing types, including multifamily homes, manufactured homes and accessory dwelling units, make it possible to deliver housing that meets a broader range of needs and price levels.

What problems are solved by zoning regulations that allow a diversity of housing types?

Requests to rezone individual lots [1] require a zoning text amendment, or the issue of a dimensional variance. These may be successful in allowing individual projects to move forward, but securing these approvals can be a lengthy process that often involves a great deal of uncertainty and adds substantially to total development costs.

Further, communities’ zoning regulations may make it difficult or impossible to develop multifamily or manufactured homes and other types of housing that differs from what is already in the community. Even when efforts to obtain a variance or a rezoning in order to proceed are successful the results can still be negative. The approval process can lengthen the development schedule significantly, increasing unpredictability and total development costs. By introducing reasonable standards for a mix of housing types and reducing regulatory constraints, communities can offer a full range of housing choices that are more affordable and attractive to households across a range of income levels.

Restrictive zoning regulations also limit a community’s ability to accommodate the needs and preferences of a changing population. Married couples with children now represent less than one-quarter of U.S. households. Seniors, couples without children and people living alone have significantly different housing and services needs. New Immigrants have difference housing preferences based upon cultural and religious traditions. By creating a community housing plan and a comprehensive revision of zoning regulations, communities can expand and diversify the local housing supply to meet the needs of a changing population.

There are several effective ways to increase the supply of housing. One is a large scale comprehensive plan or a zoning amendment to allow new homes in areas that were not previously zoned residential. Another possibility is allowing an increase in the densities of existing residential areas. Increasing allowable density not only allows production of more housing, it makes the production less expensive for two reasons.

  1. Construction costs are progressively less for single family homes to duplexes to townhomes to 3- or 4-story apartments.
  2. Fixed costs, like land acquisition, get spread over more units.
    Allowing sufficient density is one very important step in making housing broadly affordable. No matter how it is accomplished an increase in the supply of housing can help to accommodate increased demand and either moderate home price escalation or create opportunities for housing at different price levels.

Some communities also choose to build in an inclusionary housing or mixed income housing requirement or other affordability incentive to ensure that new homes made available as a result of the zoning density changes are affordable to people of low or moderate income. The ability to diversify the population by attracting people across a range of incomes and backgrounds is an important aspect in the creation of mixed-income housing. Sometimes the new housing can also be used as a vehicle to generate funds that can be used to build housing that is affordable to various income levels elsewhere in the community.

Where are these policies most applicable?

Minnesota cities are required to adopt zoning regulations. All jurisdictions can broaden the diversity of allowable housing types by amending their zoning regulations to reduce regulatory obstacles. This is critical in the creation of new mixes of housing types, styles and values. Similarly, jurisdictions with frequent requests for variances, conditional use permits and rezoning may wish to consider reassessing current regulations. It may be that current regulations fail to recognize shifting demographics as well as the importance of reducing development times and costs.

These communities may also want to consider rezoning underutilized or isolated industrial or commercial areas. These areas can be rezoned as mixed residential zones in order to better accommodate the demand for a full range of housing. As an example, Planned Unit Developments are a type of flexible zoning that can allow for a mix of housing types, densities, and dimensional variations.

Where is rezoning most applicable?

While some communities revisit their zoning maps on a regular basis, others have not conducted a comprehensive review of their zoning regulations in many years. Without regular updates, these local land use laws can quickly become outdated, reflecting land use needs and priorities from an earlier period. This can make it more difficult to address current conditions and to accommodate future growth. An outdated zoning map can result in a surplus of land reserved for manufacturing and industrial jobs that have since been downsized or relocated. Or it can lead to residential areas that have the infrastructure to absorb higher-density development but remain zoned at low densities. This can result in new infrastructure being built elsewhere at great cost.

Likewise, plans for new public amenities or infrastructure may create a new demand for housing which requires and would benefit from increased density.

Density bonuses are a useful tool for encouraging new development to serve public needs, such as for affordable housing. Cities considering rezoning that will increase permitted residential densities should consider what public benefits might result from allowing density bonuses in exchange for these benefits rather than simply permitting the increased density as of right.

Even when zoning maps are not outdated per se, they still may not allocate land as effectively as needed to accommodate growth and shifting demand. They can serve as a restriction on the availability of land for residential development and contribute to high home costs or unnecessary vacancies. Through changes to the zoning map or amendments to the zoning text, communities that have not recently revisited their zoning regulations, or that receive a large volume of requests for dimensional variances to existing land use regulations, may be able to substantially increase the land available for new homes.

What communities have diversified their housing?

The City of Chaska created Clover Ridge with the goal to provide a mix of housing types within a new traditional neighborhood framework.

The City of Anoka created flexibility in its zoning regulations to allow for residential buildings to be built in downtown Anoka, which had previously been zoned as a business district.

[1] Rezoning an individual lot to allow an otherwise prohibited land use is a practice that is sometimes called “spot zoning.” Spot zoning has been found illegal in some courts, on the basis that the new use is incompatible with existing zoning regulations and land use plans for the area. For more details view Understanding Spot Zoning. Winter 1994. By Richard C. Widner. Planning Commissioners Journal 13.
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