HUD Publishes Report – Eliminating Zoning Barriers to Affordable Housing

Tags: Advocacy

Sunday, October 13, 2024 6:33:29 PM

HUD was commissioned and funded through a federal award to the National Association for Latino Community Asset Builders and working with Smart Growth America, to create a “guidebook” after looking at the various barriers to affordable housing.  The intended goal of the project was to allow for, “pathways for planners, decision makers, all stakeholders, and residents to advocate for and advance affordable housing for all.”

The 92-page report and guidebook utilizes mostly  specific case studies as examples, then extrapolates further conclusions and recommendations that could be implemented in other areas of the county. 

The main premise of the report is that historically zoning has, “prioritized single-family, detached, large lot, low-density housing development over other, more diverse, spatially efficient housing types. This prioritization has contributed to modern-day circumstances in which the nation has limited ability to produce enough housing to keep up with demand.”  The report details a history of zoning, including early efforts to zone explicitly on race, and then implicit efforts by using pretextual justifications to create exclusions such as housing type, size, cost, and building codes. 

The report stresses a local government approach with extensive local, public involvement and input, and explicitly states that the report, “does not support nor advocate for blanket state preemptions.”

We will leave the details and opinions on many of the conclusions of the report to those who want to read it in its entirety as well as to draw your own judgments as to the perceived efficacy, or not, as to some of the reports proffered solutions. 

However, specific to our industry’s interests here are a few that stood out to us:

  • Specific to manufactured housing (see page 37), the report calls for:
    • Ensuring local regulations do not impede delivery of modular or manufactured homes;
    • Allow manufactured homes by-right in all residential districts;
    • Streamline the inspection process; and
    • Eliminate the negative stigma of this housing type.
  • Report references a State of Oregon bill from 2022, HB 4064, that allowed manufactured homes, and the bill (now law) says:
    • “within an urban growth boundary, a local government shall allow the siting of manufactured homes and prefabricated structures on all land zoned to allow the development of single-family dwellings.”
    • The ability to place manufactured homes in all single-family zone areas can be conditioned on the following:
      • Only within an “urban growth boundary” area, which is defined as, “an urban growth boundary included or referenced in a comprehensive plan.”
      • A local government may not subject manufactured homes or prefabricated structures within an urban growth boundary, or the land upon which the homes or structures are sited, to any applicable standard that would not apply to a detached, site-built single-family dwelling on the same land, and must be in accordance with any statewide land use planning and the correct exterior thermal standards.
      • Manufactured homes can be subject to ORS 197.307, which says:
        • only multisectional homes at least 1,000 square feet;
        • placed on an excavated and back-filled foundation and enclosed at the perimeter not more than 12 inches above grade;
        • a 3 x12 or more pitched roof;
        • exterior siding and roofing which in color, material and appearance matches surrounding homes;
        • an exterior thermal envelope meeting performance standards which reduce levels equivalent to the performance standards required of single-family dwellings constructed under the Low-Rise Residential Dwelling Code;
        • must have a garage or carport constructed of like materials; and
        • a city or county may subject a manufactured home and the lot upon which it is sited to any development standard, architectural requirement and minimum size requirement to which a conventional single-family residential dwelling on the same lot would be subject.
      • The other specific call out for manufactured housing in the report suggests that there should be, “manufactured…housing showcases” to demonstrate the benefits and potential of these solutions to address the housing affordability crisis and to gather feedback from local community members to include, “robust community engagement and feedback.”

Aside from some of the specific manufactured housing mentions in the report, we also took note to the following recommendations:

  • Allow infill development by-right on vacant, underutilized, or formerly industrial land (e.g. former railyards, military bases, surface parking lots), as well as the construction of additional units on existing residential or commercial lots, such as Missing Middle housing or accessory dwelling units (ADUs).
  • Allow for a wider variety of housing typologies other than only limiting single-family homes (namely duplexes, triplexes, or quadruplexes) and increased densities by-right
  • Allow by-right ADUs in all residential districts, with limited or no parking requirements or owner-occupancy requirements.
    • “ADUs offer strong potential to increase affordability if developed at scale, if regulatory barriers are eliminated.”
    • The report highlighted two examples:
      • 60,000 households in California have permitted ADUs since reform in 2017 eliminated regulatory barriers.
      • Since adopting legislation in 2019 to remove several regulatory barriers limiting accessory dwelling unit development, the City of Seattle has seen more than a three-fold increase annually in the number of ADU permits issued and units completed (285 ADU permits issued in 2019 versus 984 permits issued in 2023)
    • Allow housing types (with a variety of housing types that are previously mentioned above in addition to traditional detached single-family site built homes) that are granted non-discretionary by-right zoning/approval and expedite the fee, permit, and approval process with pre-approved housing plans
      • Pre-approved plans mean that if a developer or builder builds to those preapproved specifications then they have expedited review, less fees, less delays, and more automatic (i.e. less discretionary review) approvals.

While the report does mention manufactured housing, the other home types it mentions are ADUs, tiny homes, “3D-printed houses… interlocking concrete structural building systems (commonly referred to as Lego-block houses), or even strawbale construction,” and “shipping container housing.”

While the report stresses time and again the, “need for comprehensive and meaningful community engagement,” at the local levels it presupposes that the result of this type of protracted and immersive local community engagement will arrive at the solutions offered that have shown to increase housing supply and decrease unaffordability.  These eventual changes must be then imposed, with little to no discretion at the individual, project, or even local city staff level once implemented. 

So, while the report says it is not advocating for preemption, some of the solutions calling for standards imposed without much, if any, local discretion, can have a preemptive tone at the very least.  And the slate of solutions offered in this regard by the report are relatively simple:

  • Allow smaller housing units to be built in more places – with reducing minimum lots sizes, allowing ADUs, and/or allowing other housing types that are not detached single family homes like duplex, triplex and fourplexes, allow more multi-family density, and to go as high up as needed without height restrictions, and eliminate other layered on requirements that have the same effect of limiting greater density like parking requirements or owner occupancy requirements, and
  • Impose standards that once dictated are allowed by-right and without discretion at the local level, meaning they do not have to go through the local bureaucracy or political process of getting approval of a single house or project with either public input, city staff discretion, or both

The report continually expresses local comprehensive involvement, input, and decision making.  And it highlights some cities which have taken on or adopted some of the offered solutions. And this one-city-at-a-time approach that HUD advocates could be the most realistic path forward for zoning reforms and removing zoning barriers.

The last third of the report details three case studies that highlight efforts to improve housing affordability. 

Interestingly, and despite the reports insistence of a local/city-up process rather than a statewide preemptive approach, the first case they highlight from the State of Washington created the housing reforms the reports touts as successful only after preemptive state law mandates.  Specifically, a series of state laws imposed in 2021 and 2023 that:

  • Mandates local governments plan and accommodate housing that is affordable for all income levels and cities must then report on what they have done to adhere to this requirement;
  • Mandates that cities must allow greater density on lots with up to four housing units per lot and allow for additional housing types other than traditional single family that must, at a minimum allow “duplexes, triplexes, fourplexes, fiveplexes, sixplexes, cottage housing, courtyard apartments, stacked flats, and townhouses; and
  • Mandates cities allow at least two ADUs of any kind by-right.

And while these state-level laws-imposed requirements and timelines on Washington cities to align their local ordinances and comprehensive plans to these parameters, if a city failed to do so, then there was an automatic trigger in the law that, “Supersede, preempt, and invalidate local development regulations…until such time the city takes all actions necessary to implement [the state preemptive law mandates].” 

Further included in the “recommended actions” based on this case study (see page 64) is to, “allow for manufactured housing and alternative housing typologies at scale in single-family neighborhoods to deploy Missing Middle housing units in a cost-effective manner.”

The second highlighted case study is from New Bedford Massachusetts.  This study focuses on more densely urban areas with a focus on housing near transportation, in this case rail stations. The result from the city was to, “reducing minimum lot sizes, reducing parking requirements, revising the city’s current approach to ADUs, and encouraging infill development, especially on parcels that were formally identified as surface parking lots.”  However, similar to the case study from Washington, these local changes where the result of a state law that passed in 2021, the MBTA Communities Act, that mandates all communities “upzone” areas within a half-mile radius of rail stations to allow by-right development of multifamily housing.

Then the report goes on to point to a newly passed state law in Massachusetts (effect February 2025, see page 66) that 1) provides billions of dollars of funding for incentives to build more housing, 2) imposes that cities can pass, “inclusionary zoning rules for new developments with a simple majority vote,” rather than a higher vote threshold, like a super-majority, and 3) allows by-right ADUs to be built in any single-family zoned neighborhood in the entire state of Massachusetts.

The third case study the report focuses on a more rural city in Austin, Indiana (not Austin, Texas).  This small rural city has a population of approximately 4,600 with a median household income of $36,260.  The median home value is $74,200.  But the existing housing stock is older and getting older (67.1 percent of renter occupied units are over 40 years old) and the housing costs in relation to the income demographics have nearly 30 percent of homeowners struggling as housing “cost-burdened.” For renters the strain is even more common with almost 55 percent of renters being housing cost burdened.

Looking at these facts, this small, rural, modest income mid-America city needs more housing, newer housing, and housing that can be supported by the income levels of the population making (median) $36,000/year.

However, the city has existing zoning restrictions that, “remain an inflexible barrier to…growth.”  The city’s current zoning, “advances single-family detached housing patterns on larger lots,” and the local political leadership wants growth, but there is, “a stigma surrounding alternative housing types such as manufactured homes and smaller homes, as well as some resistance to and concerns regarding the feasibility of multifamily and mixed-use development, presents additional challenges for deploying cost-effective housing units.”

The HUD report then goes on to make several recommendations for the city to remove these barriers which include 1) adding additional city staff to support growth, 2) adopt mixed used and upzoned higher density zoning, and 3) higher density (on smaller lots) that allow up to five dwellings per acre.  The conclusion from the case study says, “[y]ounger residents, graduating seniors, and senior citizens need more housing options to remain part of the community. However, if the city could change its zoning to allow for infill development, higher building heights, more multifamily units, and the development of more units on one lot, progress can be made to keep up with demand.”

The HUD report uses Austin, Indiana as its case study example of the housing crisis extending well beyond the densely populated urban cities, which it certainly is prominent there as well, but that this challenge exists in the nation’s rural communities.  And that these challenges can transcend cities’ size, impacting both large and small communities.

As an anecdotal aside, one conclusion based on the facts presented in these three case studies is that in the first two action was taken and ostensibly housing affordability was improved.  In that last case, local rhetoric claimed to want more affordable housing but their local zoning entrenchment to existing large lot detached single family zoning imposes an intractable barrier.  It is the lack of local political to make actual local changes.  The first two cities were forced to make changes based on state laws mandates.  The last rural city, presumably, is not facing a preemption mandate, and to date has not instituted meaningful change, despite their rhetoric desiring more affordable housing.

For those not as familiar with zoning terminology “by-right” zoning simply means a development proposal strictly conforms to the current zoning and so that construction can occur without any discretionary approval.  For example, if an R1 district allows detached single-family homes, and the property owner intends to build a detached single-family home, then they are automatically allowed to do so.  The approval is “ministerial” that basically means if the application is made to use the property as it is zoned it is granted without the need for further discussion, input, or approvals.

Compared to some other use that is not explicitly permitted in an area that then requires some possible special approval, concession, conditional use, or variance and with it some level of discretionary decision making that might not be granted or allowed.