Housing Linkage: Regulating Development Impact on Housing Costs

Abstract

(This article was originally published in 76 Iowa Law Review 1011 (1991)). States and localities are confronted by the pressing need for safe, sanitary, and affordable rental housing for their citizens. Increased demand for low-cost housing aggravated by a sharp decrease in federal incentives to produce affordable rental housing compounds the problem. In response, state and local governments have implemented a number of programs to stimulate production and rehabilitation of affordable rental housing. The concept of housing linkage evolved in the 1980s as a principled way to shift some of the burden of producing affordable rental housing away from government onto private developers.Housing linkage programs require or offer inducements to private developers to produce affordable housing or to pay a sum for development of affordable housing into housing trust funds. One rationale behind housing linkage is that private developers who stand to profit from nonresidential development should assume part of the housing burden that results when development attracts employees, a predictable percentage of whom will need low-cost housing that is not available. Another rationale is that land is an exhaustible resource, therefore nonresidential development necessarily reduces the supply of land available for affordable housing. Thus, private developers must work with government in order to assure that an appropriate amount of land is dedicated to meet community housing needs.Linkage programs derive from efforts to plan for local growth. In some areas, local governments impose “exactions,” requiring developers to dedicate land or pay a fee to provide public services such as water and sewer connections and roads, which were formerly paid for by local government. While exactions were initially developed to provide the physical infrastructure needed for development, their use has been extended in many places to provide “social infrastructure” such as schools and libraries needed by residents. Housing linkage is an extension of this concept. By contrast, localities often negotiate with developers for community benefits on an ad hoc basis during the zoning approval process. An improvement over the ad hoc approach, linkage programs specify the benefits developers are required to provide according to a formula that is uniformly applied to all developers. From a planning perspective, a uniform linkage program is preferable to individually negotiated trade-offs made on projects.This Article asserts that housing linkage is a principled mechanism for offsetting the housing burden imposed on communities by nonresidential development if local governments apply formulas that carefully calculate the impact nonresidential development projects will have on community housing requirements. A predominant theme of this analysis is the adoption of linkage programs as an appropriate means to advance local social values. These values may include the desire to make adequate housing available for citizens of low or modest income, promote economic and racial integration in housing, insure workers who are drawn to particular areas by expanded commercial development have access to affordable housing within a reasonable commuting distance of their workplaces, and impose fairly a greater percentage of the costs of growth on the developers who stand to profit from it. This Article asserts that in states authorizing local governments to regulate development through exactions, courts should defer to the judgment of local officials as long as the means they use to implement their housing programs are reasonable. This Article describes housing linkage, examines several selected programs, and contrasts linkage with other methods of promoting production of affordable housing. It examines trends in linkage and forecasts the ability of housing linkage programs to withstand legal challenges brought by developers on the grounds that the programs lack authorization, violate constitutional guarantees of equal protection or substantive due process, or constitute unconstitutional takings. In conclusion, this Article offers recommendations for localities considering linkage ordinances and for regional legislative approaches.