Spotlight on Zoning Practice
A Fresh Look at Incentive Zoning
Incentive zoning has come a long way since the late 1950s. What was once a relatively simple exchange of bonus floor area for downtown public plazas has since morphed into a zoning Swiss Army knife. While developers are still looking for ways to build more or faster, planners and local officials leverage these privileges to meet a broad range of community objectives. Perhaps most significantly, incentive zoning has become a core tool for expanding the supply of affordable housing.
According to Jackie Berg, AICP, in the May issue of Zoning Practice, "Harvesting Benefits from Incentive Zoning," a state-of-the-art approach to incentive zoning encompasses administrative adjustments, specific-benefit-focused incentives, and planned unit developments. The hope is that increased flexibility will better match the diversity of development scenarios and community needs.
Is Incentive Zoning Still Necessary?
Critiques of incentive zoning are not new. The most common argument is that incentive zoning is a giveaway to developers. But, given fiscal constraints, many planners and public officials view incentive zoning as the only realistic option for financing specific public amenities. Furthermore, for some communities in states that preempt mandatory inclusionary zoning, there may be few politically palatable alternatives to using zoning incentives to increase the supply of affordable housing.
Berg is bullish on incentive zoning, emphasizing that we've learned much about what works and what doesn't over the past 66 years. She sees a multifaceted approach as the key to success. According to Berg, for many communities, the most logical starting point is to authorize administrative adjustments — minor deviations from zoning standards — without requiring variances. While modest incentives, like minor deviations from setbacks or parking requirements, generally aren't sufficient to finance significant new community amenities, they can help marginal projects pencil out, spurring reinvestment.
Does Incentive Zoning Actually Work?
For local officials, incentive zoning often seems like a great deal. You make a few short code edits, and developers incur the costs of providing public benefits. But having incentives in your code doesn't mean developers will claim them. And if they do, it doesn't mean that the public amenities they contribute will necessarily be well aligned with community needs. For these reasons, Berg stresses the importance of establishing policy support for zoning incentives in local plans and grounding incentives in an analysis of market conditions.
At a minimum, there needs to be sufficient demand for development that exceeds the base zoning allowances. Beyond this, the "exchange rate" between zoning incentives and public benefits must be carefully balanced to ensure that incentivized projects remain adequately profitable for developers. Finally, Berg notes that planners can use modern visualization tools, like Esri's ArcGIS Urban, to test and help the community vet potential incentives and corollary community benefits.
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