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."


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.