Miami has always been friendly to real estate developers. But in the last decade, even as the likely consequences of sea-level rise become clearer by the day, the city has really rolled out the welcome mat, says Miami City Commissioner Ken Russell.
“In the crash after 2008 and 2009, the city was trying to get back on its feet and it really opened the floodgates for development to generate tax base,” says Russell, who represents District 2 on Miami City Council. “Because we don’t have a personal income tax and we don’t have a state income tax, the city’s tax base is built on real estate.”
New construction in Miami skews toward the luxury condo end of the market. And the city’s existing housing stock has become a favorite investment vehicle for foreign investors, including some people looking to use property transactions to launder money, as Next City has reported. So real estate values have risen, and working people have been pushed further and further away from the downtown areas where most of the service-industry jobs are.
Giving those residents a place to live downtown would be “a huge change,” Russell says. Which is why he’s pushing the city to adopt its first inclusionary zoning policy, requiring developers to build affordable units alongside market-rate developments in a certain part of downtown Miami in exchange for more generous zoning standards. The policy, which will go up for final approval by the City Commissioners later this month, would apply to an unbuilt area of downtown Miami that’s adjacent to luxury real estate, Russell says. He’s hoping the policy will get ahead of demand and create the right mix of incentives — primarily in the form of additional floor area — for developers to want to build there even with affordability requirements in place.
“Affordability has been so complicated that very few players have gotten involved in the affordable housing market, because it involves HUD dollars and tax incentives and everything,” Russell says. “So we’re trying to find a way to bring market-rate developers into this world — and not kicking and screaming.”
It’s the first time Miami has come this close to passing a mandatory inclusionary zoning ordinance in the city, but policies like it have spread across the country over the last several years. Last fall, as Next City reported, the Lincoln Institute of Land Policy and the Grounded Solutions Network released a report looking at more than 1,300 inclusionary housing programs across the U.S. Of those policies, the most popular incentives were additional density in exchange for affordable units, the report said. Inclusionary zoning has continued to spread since the report was released; as a recent example, New Orleans has been trying to work out the kinks of its own inclusionary policy.
“I’m not sure there’s a huge change in the trends of how the policies are crafted,” says Stephanie Reyes, state and local policy manager for Grounded Solutions. “More places are starting to look at tailoring their policies based on market strengths, having varied requirements or multiple options.”
Miami’s proposed policy does just that. The affordability requirements in the ordinance are tiered: The lower the rent on the affordable units that developers choose to build, the fewer affordable units they’ll be required to include.
“Most of the initial [developments] are going to target the higher end of affordability, which is the workforce level,” Russell predicts.
And the city isn’t alone in targeting a policy to a specific part of town, says Reyes.
“It’s not uncommon for cities to start a program in only their strongest area or areas and later it expand it to other areas of the city,” she says.
One common criticism of inclusionary zoning policies is that they don’t work at a great enough scale to meaningfully address most cities’ affordable housing shortage. The same would likely be true in Miami. Squeezing a small number units out of otherwise market-rate developments won’t solve the city’s housing problems. (Read a good primer on Miami’s housing needs here, including a discussion on the ineffectiveness of a voluntary county-wide policy.) But then, no single policy will do that, says Reyes.
“[Inclusionary zoning] is a super-useful tool in the toolbox,” she says, “and when you get a couple hundred units a year adding up over years, that can really add up.”
Another common argument is that mandatory inclusionary zoning policies can depress the housing market overall if developers decide it isn’t worth it to build because of the affordability requirements. In Portland, for example, arguments are still playing out over what impact a recent inclusionary law has had on development in the city, as Next City has covered. Russell says the level of need for affordable housing in Miami convinced him that the policy had to be mandatory rather than voluntary. But he believes the policy is balanced enough that it can convert some demand for downtown development into affordable units for working Miamians.
“You have to incentivize the behavior you want,” Russell says. “You can’t expect a developer to be socially responsible out of the goodness of their heart.”
Jared Brey is Next City's housing correspondent, based in Philadelphia. He is a former staff writer at Philadelphia magazine and PlanPhilly, and his work has appeared in Columbia Journalism Review, Landscape Architecture Magazine, U.S. News & World Report, Philadelphia Weekly, and other publications.