INCLUSIONARY ZONING: LIVING - AND LEARNING - TOGETHER
By David Rusk [1]

The education of our children may be our society's most important task.   Increasingly, in the Information Age, our economic future depends on the level of skills and education of the American workforce.

In America, housing policy is school policy.   Where a child lives largely determines that child's educational opportunities.

Affordable housing programs must not be measured just in terms of providing safe, affordable shelter for low- and moderate-income families.   Such housing must also integrate low- and moderate-income children into mainstream, middle-class communities.   Affordable housing must be opportunity housing.  

Let me illustrate these points from my visit to Gainesville four years ago.   I analyzed data for all 26 elementary schools in the Alachua Public Schools.   One statistic - the percentage of low-income children in each school (as determined by eligibility for free or reduced price lunches) - accounted for 87% of the school-by-school variation in fourth grade reading and math scores.

In effect, to predict a school's average score on state standardized tests, I didn't need to know anything about the principal or the teachers' experience, pupil-teacher ratio, age of building, money spent per pupil, etc.   Just tell me a school's percentage of low-income children and I could predict the school's average test scores (plus or minus six points) with 95 percent accuracy!

My analysis of the Gainesville-Alachua County schools illustrated again the most consistent finding of educational research for the last 35 years.    The most important predictors of a child's academic performance are the income and educational attainment of the child's parents followed closely by the same factors for the parents of the child's classmates.   Children learn from their peers - skills, attitudes, and aspirations.   "The educational resources provided by a child's fellow students," sociologist James Coleman wrote, "are more important for his achievement than are the resources provided by the school board."

Why does where a child lives shape the child's educational opportunity?   It's not how much the school board spends.   It's who the child's classmates are.

If that sounds too deterministic and negative, there is substantial research on a second, more optimistic point.   Poor children learn best when surrounded by middle-class classmates in a predominantly middle-class school.

Mixed-Income Classrooms

My own studies have found that, for every one percent reduction in the percentage of a poor child's classmates that are also low-income, on average, that child's test scores will increase two- to three-tenths of one percent.   In other words, moving a low-income child from a low-income school where 80 percent of classmates qualify for a free lunch to a middle-class school where only 20 percent of classmates qualify for a free lunch will, over time, yield a 12-18 percent improvement in the child's test scores.   The results are even more dramatic in terms of high school graduation rates, continuing on to college, and other measures of lifetime opportunities.

What happens to middle-class children in more mixed-income classrooms?   A smaller body of research finds that the academic performance of middle-class kids is unaffected until a school approaches majority low-income status.   Even then, the academic decline of middle-class children observed may be more the result of higher income families pulling their children out of that school than any actual decline in performance by remaining middle-class children.

In short, economic integration works.   In fact, economic integration produces consistently greater educational improvement for low-income children than any of the educational reforms - more money, lower pupil-teacher ratios, new school buildings, etc. - commonly advocated. [2]

That's the good news.   The bad news is that America's public schools are becoming more economically segregated.   This trend is confirmed by a study that I am just completing for the Century Foundation.   The Urban Institute and I are examining enrollment trends by race and income, state by state, metro area by metro area, in all the nation's elementary schools.

In Florida, for example, despite the longest economic expansion in our nation's history, the percentage of low-income pupils statewide increased from 41 percent in the early 1990s to 44 percent by the decade's end.   Using a common measure of relative segregation [3] in which 100 means total economic isolation of poor children, Florida's statewide index increased from 39 to 41 (see appendix A). 

In Florida's 20 metro areas, economic segregation only diminished in the Lakeland-Winter Haven (Polk County) schools.   The degree of economic segregation was stable in seven metro areas, including the Miami and Orlando regions.   Economic segregation increased in the remaining eleven metro areas. [4]    The increases ranged from slight in Ocala-Marion County (from 22 to 23) to very substantial in Fort Lauderdale-Broward County (from 35 to 49).

Jim Crow by Income - Jim Crow by Race

Why was economic school segregation increasing?   One factor in the South was that a much more conservative federal judiciary was steadily dismantling long-standing school desegregation plans.   For two decades Southern schools had been much less segregated than Southern neighborhoods.   Now, with the courts sending many African American students back to "neighborhood schools," they are sending them back to more racially segregated schools.   And racially segregated schools are usually economically segregated schools.

But a more pervasive factor is that most metropolitan housing markets are becoming more economically segregated.   Between 1970 and 1990, the index of economic segregation increased in 68 of the USA's 100 largest metro areas, including Tampa-St. Petersburg-Clearwater and Fort Lauderdale-Hollywood-Pompano Beach. [5]

In effect, in a majority of major metro areas, Jim Crow by income is replacing Jim Crow by race.  

And Florida's public school enrollments increasingly reflect neighborhood housing patterns.   Economically segregated neighborhoods mean economically segregated schools.   Mixed income neighborhoods mean mixed-income schools.

Florida's State Housing Initiatives Partnership (SHIP) has helped build 87,000 affordable housing units since 1992.   Florida's SHIP is unmatched by any other state and, as a housing production program, deserves the praise it receives.

But where has much of the SHIP housing been built?    Are SHIP homes usually integral parts of new, market-rate, middle-class subdivisions?   Or have most SHIP homes been built "in the affordable housing side of town" (in one conference panelist's telling phrase)?   Are too many SHIP homes located in low-income neighborhoods that already have too much affordable housing?   Is SHIP contributing to increased economic segregation in Florida's public schools?   In other words, is SHIP providing shelter but not opportunity?

Inclusionary Zoning

Inclusionary zoning is the only housing strategy that I have found that guarantees that low- and moderate-income children attend middle-class schools.

And no community has practiced inclusionary zoning longer and at a larger scale than Montgomery County, Maryland (see Appendix B) under whose mandatory, inclusionary zoning law, private, for-profit home builders have produced almost 11,000 units of affordable housing since 1975.

What if Montgomery County's mandatory inclusionary zoning ordinance had been in effect throughout Florida's 20 metropolitan areas for the last 25 years?   What if Florida laws had required private, for-profit homebuilders to incorporate 15 percent affordable homes in all major new subdivisions?   And what if the laws had required one-third of the affordable homes (or 5 percent of all major new subdivisions) to be sold to local public housing authorities to be rented to very low-income families?

Between 1970 and 1976, some 4.2 million new housing units were built in Florida's 20 metro areas (see Appendix C).   Assuming half of new construction took the form of individual spec homes or very small developments to which the inclusionary requirement wouldn't apply, inclusionary zoning would have yielded

· 212,000 affordable units for purchase or rent directly by low- and moderate-income families, like young teachers or new police recruits, supermarket cashiers, bank clerks, etc. (let's call these "workforce housing"); and

· 106,000 affordable units for purchase or rent by local public housing authorities for use by very low-income families (let's call these "welfare-to-workforce housing").

That's a production rate of over 12,000 new units per year compared to SHIP's production rate of over 9,000 units per year.   But the true significance is not that inclusionary zoning would produce more affordable units overall.   The significance is that affordable housing would be integral parts of new, low-poverty, middle-class subdivisions.

Montgomery County-style, inclusionary zoning would have a dramatic impact on reducing the concentration of poverty in Florida's metro areas (see Appendix D).   Let's take the Fort Lauderdale-Hollywood-Pompano Beach metro area - where economic school segregation jumped upward 14 points in the 1990s - as an example.

Some 480,000 housing units were built during the quarter century period.   Assuming that half were in developments below the threshold size at which the inclusionary zoning requirements would apply, the policy would have yielded about 24,000 "workforce housing" units and about 12,000 "welfare-to-workforce housing" units countywide.   Over 80 percent would be located in low-poverty sub-divisions outside of the three central cities.

Table 2 illustrates the potential impact.   It assumes that welfare-to-workforce units built within the three central cities were primarily in lower-poverty city neighborhoods, allowing a certain internal deconcentration of poverty.   Thus, within Fort Lauderdale, there would have been 729 "welfare-to-workforce" housing units that would have allowed about 1,800 poor persons to relocate from high poverty to low poverty city neighborhoods.

More important is the assumption that there is a net outflow of low-income households from higher-poverty city neighborhoods into "welfare-to-workforce"

housing in new suburban neighborhoods.   That net transfer continues until a city's poverty rate is brought down to the countywide average (10.2 percent in 1990).   For Fort Lauderdale, some 10,400 poor persons could have relocated into scattered site, housing authority-owned houses and apartments in lower poverty suburbs.

In fact, only about two-thirds of the new 9,918 "welfare-to-workforce" units would have been needed for city-to-suburb relocations.   The other 3,000 units could have been used to provide the suburban poor with more housing choices.  

In summary, even with Montgomery County's modest formula (i.e. 85 percent market rate, 10 percent "workforce," and 5 percent "welfare-to-workforce" housing), the poverty level could have been equalized throughout Broward County through a sustained commitment to inclusionary zoning.   Over time, it is probable that Broward County's overall poverty rate (10.2 percent) would fall from the very fact of the deconcentration of poverty.   (Inner city, high poverty neighborhoods are typically located far from where new jobs are being created.   Inclusionary zoning moves lower-skilled residents into suburban areas where the need is growing for lower-wage retail and service workers.)  

In school terms, no Broward County elementary school would have a majority of low-income children.   All would be solidly middle-class schools.

Of course, the real world doesn't work with the precision of this mathematical example.   However, Appendix C offers a reasonable approximation of the potential impact of inclusionary zoning.  

It may not be within America's ability to eliminate poverty completely, but it is within Florida's ability to eliminate the concentration of poverty through inclusionary zoning.

Checklist for Inclusionary Zoning Law

At a conference workshop, Jaimie Ross, Affordable Housing Director for 1,000 Friends of Florida, laid out a checklist of issues for local inclusionary zoning ordinances to address.   Let me provide my suggestions for Jaimie's list.

Goals: Assure that three goals are met: increasing the supply of affordable housing, including for very low-income families; integrating affordable housing into middle-class developments; and promoting Smart Growth through more compact development.

Building Public Support : Address two primary public concerns first:

1) What will the affordable housing look like?   Use pictures of actual inclusionary developments elsewhere to illustrate that architectural compatibility can be achieved in mixed-income developments; and

2) Will having affordable housing nearby affect my home's market value?  Use the report issued by the Innovative Housing Institute, "The House Next Door," to show that, at the proportions of mixed-income housing used by Montgomery County, Maryland, and Fairfax County, Virginia, the presence of affordable housing has no adverse impact on resale values of market-rate homes. 

Geographic Coverage : Adopt countywide ordinances (with parallel ordinances within municipalities).   In multi-county metro areas, state law should create multi-county arrangements.

Threshold Size: Adopt a minimum project size that assures that, in the context of the local housing market, the inclusionary requirement will apply to at least 50 percent of all new residential construction.   For Montgomery County and Fairfax County, that was 50 or more units; for Cambridge, Massachusetts, 10 or more units; for Arlington, Massachusetts, 7 or more units; for Santa Fe, New Mexico, 4 or more units.

Income eligibility : Establish 80 percent (or, preferably, 65 percent) of median household income as the upper limit.   Assure assistance for very low-income families (below 50 percent of median household income) by directing the public housing authority to acquire one-third of the affordable units.

Inclusionary requirement: Require at least 15 percent of total development to be affordable (i.e. units can be bought or rented for no more than 30 percent of the maximum eligible income).   A 20 percent standard is also common, including in Low-Income Housing Tax Credit developments.   Require that public housing authority have right-of-first purchase (or lease) for one-third of affordable units.

Housing type : Apply inclusionary requirement to both for-sale and rental housing.

"Incentives:" Make inclusionary requirement mandatory for all developments above minimum threshold size.   (Voluntary, incentive-based policies don't work.)   However, include "incentives" to improve the economics of compliance for for-profit homebuilders.   Density bonuses (up to 22 percent in Montgomery County) are most effective in strong-demand housing markets.   Other incentives include waiver of various fees, expedited processing of plan review and building permits, or even direct cash subsidies.   (SHIP funds could be used in conjunction with inclusionary zoning policies.)

Cash payments in lieu of building inclusionary housing : Don't do so, or only under the rarest of circumstances .   Given an easy out, most homebuilders will take it every time.  (Montgomery County has allowed in-lieu-of cash contributions to its affordable housing fund only two or three times in 26 years.)

Price control period: Recognize that a balance must be struck between keeping affordable units affordable in the long run and allowing purchasers to accumulate equity from their homes.   Montgomery County controls re-sale prices for 10 years and rent levels for 20 years.   The resale price is set at the original price plus inflation plus the value of improvements; only income-eligible households can purchase units during the control period.   After the control period expires, homes can be sold at market rates but half of the equity windfall is recaptured for the county's affordable housing fund.   However, more and more affordable homes have reached the end of the control period and are being re-sold at market rates, reducing the county's inventory of affordable housing.

As an alternative, Cambridge controls re-sale prices for 50 years and rents in perpetuity.   However, the city council established a Housing Equity Trust Fund, capitalized with an initial city appropriation.    Purchasers of affordable homes automatically become trust fund beneficiaries.   Upon re-sale (at the controlled price), the sellers receive a lump sum distribution from the trust fund that approximates what might have been their share of a market-rate sale windfall.

Administration: In Montgomery County the inclusionary zoning requirements are administered by staff within the county Department Planning and Community Development.   Acquisition and management of "welfare-to-workforce" units are administered by the county's Housing Opportunities Commission (HOC).   HOC is both the public housing agency and housing finance agency; it manages over 25,000 affordable units in mixed-income communities.

Concluding Thoughts

   I address many Smart Growth conferences and many affordable housing conferences around the country.   I rarely see the same community groups and agencies participating in both.  

Yet Smart Growth and affordable housing are two sides of the same coin.   Substantively, the growth of high-poverty neighborhoods drives middle-class families away, increasing pressures for new growth on the urban periphery.

And politically, both groups need each other.   We have seen how industry opponents of Smart Growth, arguing that growth management is an elitist movement that is anti-affordable housing, defeated Smart Growth initiatives in Arizona and Colorado in November 2000.

United, we can win.   Divided, we lose.

The fundamental question about creating livable communities is: Are we going to live - and learn - together?

[1] David Rusk is a former mayor of Albuquerque and New Mexico legislator.   He is an author, speaker, and consultant on urban policy.   This article is based on his keynote address to the statewide conference of the Florida Housing Coalition on October 23, 2001 in Jacksonville, Florida. 

[2] A definitive summary of the results of economic integration of public schools can be found in Richard Kahlenberg. All Together Now . Brookings Institution Press: Washington, D.C. (2001). 

[3] The statistical measure used is a dissimilarity index that measures the relative evenness (integration) or unevenness (segregation) of a target population.

[4] No data was reported for the Naples (Collier County) schools. 

[5] Economic segregation was stable in the West Palm Beach-Boca Raton-Delray Beach metro area, and declined slightly in the Jacksonville, Orlando, and Miami-Hialeah metro areas.

Congregational  development

Congregational  development