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States Debate Housing Set-Aside Proposals

Two state legislatures are considering radically different inclusionary zoning bills that will impact the development of new housing. In Montana, the House of Representatives recently approved a bill that would preempt inclusionary zoning policies in local jurisdictions. In Colorado, legislators are seeking to reverse the state’s ban on local inclusionary zoning policies. Both states are moving at breakneck speed to consider these pieces of legislation.

Montana’s HB 259 will prohibit jurisdictions from requiring a “dedication of real property for the purpose of providing housing for specified income levels or at specified sales prices,” rendering inclusionary zoning policies already in effect null and void. According to the City of Bozeman’s annual housing affordability report, only three homes had been constructed per the city’s inclusionary zoning policy, while more than $400,000 were collected from developers in lieu of affordable homes built.

In Colorado, the State Senate is reviewing HB 1117 which will strike down a 2000 Colorado Supreme Court decision equating inclusionary zoning to rent control and, therefore, preempting the policy under statutory law. This is the fourth time in five years that lawmakers have introduced this legislation. According to those familiar with the bill’s history, House lawmakers have rejected amendments that would place income restrictions and nix the inclusion of subsidy obligations from local governments.

Mandatory inclusionary zoning policies may be advertised as one tool in the housing affordability toolbox, but their implementation and impact carry far greater weight. If inclusionary zoning renders a project economically infeasible and new housing fails to materialize, that jurisdiction not only loses out on much needed affordable units, but it also loses out on housing supply in general that could help take the pressure off rents and increase housing access for the renter community. Jurisdictions lose out on the economic benefits that come with new development, housing costs continue to rise and naturally occurring affordable housing gradually fades out of existence.

For more information on inclusionary zoning, please contact Sam Gilboard, NAA Manager of Public Policy.