Zoning for Affordability: Using the Case of New York to Explore Whether Zoning can be Used to Achieve Income-Diverse Neighborhoods

Inclusionary zoning policies induce or require private developers to create or fund affordable residential units when they construct new market -rate residential buildings. This premise presents an alluring but controversial strategy in cities with robust real estate markets. Whether inclusionary zoning can survive legal challenge is a complex and novel question in many jurisdictions. This article considers this question using New York City’s recently adopted Mandatory Inclusionary Housing Program, the most ambitious policy of its kind in the country. Ultimately, it conclude sthat the city’s policy is crafted well to withstand legal challenge, but there are unsettled legal questions that render a definitive determination impossible.

In Housing New York, Mayor Bill de Blasio’s 2014 comprehensive ten-year housing plan, the City of New York identified a mandatory inclusionary zoning program as one of its key policies to address the city’s growing affordable housing shortage. In March 2016, the city adopted Mandatory Inclusionary Housing (MIH), an amendment to its Zoning Resolution that allows the city to require the creation of affordable units on site or nearby any time a developer is building new market -rate units in specified areas of the city. New York City, like many cities, has broad powers to zone for the public welfare. Courts generally follow principles of granting deference and presuming constitutionality when reviewing local government regulations, including zoning laws. However, local government authority to impose land use regulations on private property is checked by a body of state and federal law. When zoning laws look less like they are regulating the use of land and more like they are taking the land for a public purpose, or in some cases regulating rents, they can be vulnerable to challenge based on a range of theories, including constitutional (due process and takings) violations, ultra vires regulation, ultra vires taxation, and regulation of rents in violation of state law.

Assuming that development subject to inclusionary zoning requirements will often be less profitable and convenient than straight market-rate development, developers will often be rationally motivated to check any perceived or potential transgressions of state and federal law committed by local governments. Thus, New York City must build an MIH program that is doubly tasked with meaningfully addressing the city’s need for affordable housing in a variety of neighborhoods and deftly man euvering in unsettled legal terrain.

Though numerous policy studies have evaluated existing inclusionary zoning programs and produced recommendations, both for local governments in general and for New York City specifically, only a handful of comprehensive legal analyses of inclusionary zoning have been published. No paper has explored the modern legal framework governing the imposition of inclusionary zoning in New York, as this article does. Section I describes the city’s voluntary inclusionary housing program, and the purpose and parameters of its MIH program. Section II, considers how the constitutional protections of property rights found in the Due Process Clause and the Takings Clause apply to the city’s MIH policy. Section III explores the state law limits on the city’s regulatory power, and considers whether the city can justify its actions within those limits, given its MIH design.