In my former role as Planning Director of Montgomery County, Maryland for over 20 years, I was responsible for administering the Moderately Priced Dwelling Unit (MPDU) law. This law was adopted in 1973 and has produced 10,000 MPDUs in 20 years, making it the largest inclusionary zoning program in the nation and arguably the most successful.

The term inclusionary zoning is best understood by considering its opposite—exclusionary zoning. To do this, let us go back to first principles— what is zoning really? Prior to 1926, the concept of government regulating the use of private property was considered beyond the scope of government s proper exercise of the police power of the state. But beginning about 1850 there evolved a social and moral reaction to the negative impact of the industrial revolution on life in industrial cities. This fueled a quest for a solution that found focus in the City Beautiful movement of 1900, giving birth around 1920 to a new profession called city planning. Zoning was adapted from precedents in Germany and was believed to be the major new tool that could implement bold city plans to remake the ugly and unjust industrial city into a beautiful, utopian place. In 1926, the U.S. Supreme Court ruled that the concept of regulating land uses by separating them into districts was within the constitutional power of state government, and a new era began. But it was an era of debate over the use of this new power of government. It is a debate that continues to this day.

From its inception, zoning has been an exclusionary device. Its essence is the protection of residential uses from the negative impacts of commercial and industrial uses—and the imposition of density and bulk limits on building forms to prevent overcrowding, congestion, lack of light and air, etc. Under the zoning concept the single family residential use is (historically) the highest value to be protected.

Over time, especially as the suburbs developed after World War II, residential zoning not only produced large areas of low-density, single family detached housing with absolutely no commercial or work places anywhere near them. It also separated houses from each other on ever larger lot sizes (1/2 acre plus) and reinforced the stereotype that denser housing (such as townhouses or garden apartments) would have a negative impact on the quality of life in single family residential neighborhoods.

The reaction to this excessive degree of separation of uses began in the 1960s and continues to this day. We may call this reaction (in a very broad conceptual way) the birth of the notion of "inclusionary zoning." Initially, it involved just a movement to allow clustering of single family detached houses—the so-called Planned Unit Development (PUD) movement. Then it began to allow attached houses (townhouses) in the clusters—often based on the argument that this allowed saving open space and natural features. Then it began to allow a mixture of residential and commercial uses—the so-called mixed-use zones.

By the early 1970s, the idea had progressed to include not just the density of the housing and the mix of it—but also the price of the housing. Thus the term "inclusionary housing" today often can have two meanings:

1. Any zoning action that works to increase housing quantity or density (with the inference that a market by-product of this action will be a reduction in the price of the units—the key goal of all concerned for social justice,) and

2. Any zoning action that requires a reduction in the market price of housing units.

Let us consider these separately. But first let us remind ourselves of the even more fundamental nature of both the police power and the purse power of government.

In our constitutional democracy with its protection of private property rights and reliance on the market as the preferred instrument of socioeconomic regulation, government is not supposed to intervene in the operation of the market—except to provide public goods (for which it is authorized to collect taxes) and ameliorate the so-called negative externalities of the economic market model. The latter includes side effects such as inadequate affordable housing for the poor.

The Supreme Court ultimately decides whether government has overstepped its constitutional limits. But it is important to note that, government, in my opinion is given greater latitude by the courts to raise taxes than to regulate land use. Hence the topic of this panel (how to use affordable housing tools beyond those associated with taxes)—and my topic, inclusionary zoning— requires a thorough understanding of the legal principles and court decisions regarding land use regulation.

Let us return to the two aspects of the use of inclusionary zoning to improve affordable housing: 1) to increase housing quantity/density, and 2) to reduce market price. Sometimes these are separate, sometimes combined. Keep these two ideas in mind as we survey the national scene through a selected set of examples.

1. New Jersey gave birth to one of the major tools of inclusionary zoning, not because of pressure from concerned citizens or legislators as much as from the courts. The so-called Mt. Laurel I and II state court decisions were a judicial reaction to what an earlier judge called "zoning the poor into the Atlantic Ocean." This judge was referring to the widespread practice by which the many small municipalities into which the state is divided were zoning all their remaining open space for 1 and 2 (or more) acre minimum residential lots. The outcome was a mechanism we may call the "Housing Fair Share Zoning Override" method of inclusionary zoning. 
   Under this method, a state level commission analyzes the affordable housing needs of the state, then assigns a portion of this need to every municipality in the state (its "fair share"). After assigning need, the commission then adopts a legal presumption that, if the municipality does not demonstrate in its plans and actions how it will meet its fair share obligation, the legal burden of proof in a rezoning request for higher density housing will shift from the local government to the developer. As you can see, this is a method that forces the local government to initiate action under the threat of losing control over the location of land uses in its jurisdiction. Obviously, this has been litigated. But, it has produced 15,000 housing units (plus or minus) over the last 15 years.

2. A variation of this is the so-called "Anti Snob Zoning Override" that has its origin in Massachusetts and spread through New England in the 1980s. There have been no lawsuits brought against this method, which consists of a state Jaw requiring a)) )oca) jurisdictions to maintain JO percent of the housing units in their jurisdiction as affordable (generally defined as below 80 percent of median income). 
   Unlike the New Jersey situation, there is no calculation of need and no allocation of a "fair share" to separate municipalities—it is just a simple tool that seeks to keep a minimum proportion of total housing affordable.

3. The Cape Cod Commission (a relatively new regional entity: 1990) goes beyond this to require all new residential projects to provide 10 percent of the units at prices affordable by those earning below 80 percent of median income. It is flexible—the developer can provide land or money equivalent to the difference between market value and the affordable price—or buy a unit elsewhere. But all this flexibility requires intensive staff work to evaluate all the alternatives.

4. Linkage Programs. A number of central cities have adopted this—---a zoning requirement that links new commercial uses to affordable housing. For example, in Boston to get a special permit or variance to develop commercial uses in the city, a developer must build housing equivalent to a fee of $5.00 per square foot of new space for projects over 50,000 square feet of building mass. No lawsuits so far.

5. Price-Based Programs. In California, many municipalities have adopted affordable housing ordinances—primarily in San Francisco and Southern California areas facing high growth and prices.

• Most of these programs are mandatory-—not voluntary.

• Majority require 10-15 percent of new residential units to be affordable.

• Minimum project size typically is 10 units.

• Most do not require MPDU and market units to be identical—just similar in outward appearance.

• Most require that the MPDUs be spread throughout the development.

• Most permit the developer to pay a fee in lieu of construction (from $600 per unit to $36,000).

• Nearly all programs provide for both low income (50-80 percent of median income) moderate income (80-120 percent of median income) and about 50 percent require very low income (50 percent of median income).

• Most require restrictions on price to remain for 30 years.

Collectively, these programs have produced 24,000 low income units over 20 years (I do not have the figure on moderate-income units). These programs were developed in the context of two important state laws.

The first requires local plans to have a housing component (i.e., each municipality must prepare a plan to meet its "fair share needs" as set by the regions Council of Governments), and the second requires zoning to be consistent with the plan. However, the difficulty of getting the community to plan areas for affordable housing/low-income housing has resulted in many municipalities deciding that the easiest way out is to set a mandatory percent for affordable housing of all new projects. This removes the NIMBY obstacle. This is a variation of the New Jersey system, but is legislatively driven, and produces its result by local governments rather than by a state allocation system.

The Montgomery County model has most all the features of the California models but an important extra feature specially permits the right of purchase of up to one-third of the affordable housing units (15 percent of the total) by the Housing Authority. This Montgomery County ordinance and the one like it in neighboring Fairfax County, VA, adopted in 1991, are the only ones in the nation to do this.

This is why David Rusk, in his new book "Inside Game/Outside Game," concludes that this is the best model for the nation to use as the primary tool for avoiding further concentration of the poor in central ghettos, because it gives protection to the Housing Commission to use public funding to subsidize units in scattered sites without the "not-in-my-backyard" location battle.

To conclude, the entire concept of zoning as an essentially exclusionary device is undergoing philosophical revision today as we move out of the industrial era into the information era. Where it will end up I am not sure. However, one of the harbingers of change is the set of concepts in New Urbanism, which shifts the focus from land use to land form.

In the meantime, the Montgomery County model seems to be one that has worked well for 25 plus years, is legally defensible and can be transferred to anyplace with the political will to enact it. It works best in the context of a planning program that allows flexible zoning—Montgomery County had this. It avoids concentrations of poverty that people want to move away from (crime, schools and lower property values).