Housing Policy

Florida Bill Would Ban Cities From Requiring Developers to Build Affordable Housing

"When you start having mandates and [the] state setting price controls, you create all kinds of distortions in the market."

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In many state capitols and city halls, politicians debate how much affordable housing developers should be required to build. Not so in the Florida legislature, where a rapidly advancing bill would prohibit cities from mandating that new private housing projects include any percentage of rent-restricted units at all.

This past Thursday, Florida's Republican-controlled House passed HB 7103 by a commanding, mostly party-line vote. The bill is now working its way through the state Senate's committee process.

The bill would ban cities from adopting "inclusionary zoning" ordinances. These laws require that developers rent out a certain percentage of new housing units at affordable rates to tenants earning less than a city's median income. ("Affordable" in this context usually means that the monthly rent is no more than 30 percent of a tenant's income.)

These mandates are often used by cities and states trying to grapple with increasingly high housing costs. Proponents argue that they ensure that lower-income residents see the benefits of new construction without having to ask taxpayers to fund fully public housing projects. Critics counter that shifting the costs of providing affordable housing onto developers will make some housing projects uneconomical, reducing the overall supply of new housing and driving up prices in the long run.

"When you start having mandates and [the] state setting price controls, you create all kinds of distortions in the market," the bill's sponsor, state Rep. Jason Fischer (R–Jacksonville), explains to radio station WJCT.

The literature on inclusionary zoning ordinances is mixed. A 2004 study from the Reason Foundation (which publishes this website) looked at the effects of inclusionary zoning ordinances adopted in California's Bay Area, finding that they produced few new affordable units while driving up costs for builders and homeowners alike.

"By restricting the supply of new homes and driving up the price of both newly constructed market-rate homes and the existing stock of homes, inclusionary zoning makes housing less affordable," the report concludes.

Some subsequent research has been less critical of these zoning policies, concluding that they produce affordable units without deterring the overall construction of new housing. All of these studies, both pro and con, have been limited by how much variation exists between different localities' individual affordability mandates. One city might require 20 percent of units be reserved for tenants making 80 percent of the area's median income, while another mandates that 10 percent be rented at affordable rates to residents making less than 50 percent. One city might require developers to build affordable units on-site, while another allow those units to be build elsewhere, or let developers pay a fee that funds public housing projects.

Making things even more complicated, the zoning requirements on the books are often not the requirements developers are held to, as local governments can either reduce or increase the amount of mandated affordable units on a project-by-project basis.

Big-picture debates aside, it's not hard to find individual examples of projects stalling after being slapped with impossibly high affordability requirements.

In addition to the ban on these mandates, Fischer's bill limits local governments' ability to impose impact fees on new development. It also sets strict timelines for localities to review and approve construction permits. The bill would still allow density bonus programs, whereby developers voluntarily offer to include affordable units in exchange for waivers on local height and density limits.

All said, these come across as sensible measures that will reduce local governments' power to pile additional costs or delays onto new housing construction.

The bill does not target underlying zoning codes that dictate what kind of housing can be built where. That makes it the polar opposite of a major housing bill in California, SB 50, which hacks away at some local zoning controls on building apartment buildings while also imposing new inclusionary zoning requirements.

Both approaches leave a lot of development restrictions untouched. If both pass, they'll serve as interesting experiments in how states experiencing staggeringly high housing costs can kickstart new construction.

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17 responses to “Florida Bill Would Ban Cities From Requiring Developers to Build Affordable Housing

  1. So – state mandates on local government.
    How do Libertarians stand on this one?
    Is prohibiting stuff we don’t like (rent control and the like) allowed?
    Or is this just as bad as requiring ‘low income’ housing percentages?
    Or do we hide behind ‘any level of control on private property is bad’?

    1. It’s a good question.

      I would say that at this point that states are too far out of the loop to be representative of local communities.
      Some of our cities have larger populations and economies that some of our states and several other countries.

    2. Mandates that restrict incursions on our freedom to use our property as we want are no vice.

    3. How do Libertarians stand on Constitutional limitations on federal and/or state powers? Philosophically, this is no different. The First Amendment is pretty universally acknowledged as a good thing even though it imposes mandates on local government.

      From a utilitarian perspective, prohibiting stuff that just doesn’t work (whether or not we like it) should definitely be allowed.

    4. Is prohibiting stuff we don’t like (rent control and the like) allowed?

      I’m not opposed to the federal government putting restrictions on states to try to make sure they don’t violate people’s rights. For example, I prefer the Bill of Rights apply to the states too.

      So, if a state wants to restrict local governments from putting certain rights-violating restrictions on people, then fine with me.

    5. “Is prohibiting stuff we don’t like (rent control and the like) allowed?”

      You prohibiting stuff like ‘takings’?
      Yeah, that should be allowed.

    6. This legal conflict between state and local goes way back – Dillon Rule v Cooley Doctrine (home rule). It’s become irrelevant only because we now find it easier to bypass both and make everything national and then impose that from the top down.

      Unfortunately, libertarians don’t have much to offer in that debate

  2. “When you start having mandates and [the] state setting price controls, you create all kinds of distortions in the market,”

    Yes, Captain Obvious, creating distortions in the market is the whole point of government.

    1. Yeah, but usually not the distortions they intend. Obviously.

  3. Apparently, there are a fair number of people who think it’s necessary to offer affordable housing. There’s nothing stopping them from getting together, building new housing (or buying existing housing) with their own money and then renting it out at whatever affordable rate they choose, is there?

    I mean, aside from their preference that other people pay the cost of their desire to appear compassionate, right?

    1. Not to mention that as you build new housing, supply & demand comes into play, lowering the cost of older homes.

      And you’re right, it’s never about their money.

    2. “I mean, aside from their preference that other people pay the cost of their desire to appear compassionate, right?”
      ++++
      You want affordable housing? Pay for it.

    3. Come on. Who would admire Giving-his-own-money-away-hood as much as Robin(g)hood.

  4. All developers build affordable housing. Such is the beauty of capitalism and free markets. If builders created housing priced out of reach to the market segment to which their product would appeal, then they would promptly go out of business.

    Whatever the asking price of a dwelling, other than free, there will always be someone financially just on the other side of being able to afford that property. If you want low rent housing (so much less appealing to say than to call it ‘affordable’) then dispatch with oppressive zoning regulations that drive up the cost to deliver inexpensive housing. Also, recognize that inexpensive housing is going to be located well away from areas where people with money want to live, because gentrification will happen (followed perhaps by aristocratization.) So the best way for cities to build low cost housing is to build a transit system that would allow people without immediate access to cars to travel.

    1. I live in San Francisco, where housing is always characterized as ‘too expensive’, ‘outrageously-priced’, ‘un-affordable’, and other pejoratives. But every house that is offered for sale ends up being sold.
      None of those making those claims have yet to admit that they are, simply, full of shit.

    2. All developers also benefit from massive govt distortions of the housing market that are intended to drive prices up and keep them up. This comes directly at the expense of those who don’t own a housing asset.

      Lets not pretend that housing is anything near a ‘free market’. And it ain’t just the fucking zoning either.

  5. […] rapidly advancing bill, as Reason reports, would prohibit cities from mandating that new private housing projects include any […]

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