Legal scholars have stated that inherent in the police power, is the power to exclude or condition development along with the power to mandate inclusion of development with particular characteristics that further the general welfare of the community. This is problematic because just about any zoning ordinance can be validated under the police power. Current zoning regulations have long been cited as the cause of increases in housing and land costs, because most current zoning ordinances seek to exclude affordable housing by driving up property values in more affluent neighborhoods. Current zoning ordinances are used as the primary means that governments use to control the physical development of land and the kinds of uses to which each individual property may be put. Zoning laws typically specify the areas in which residential, industrial, recreational or commercial activities may take place. Besides restricting the uses that can be made of land and buildings, current zoning laws also may regulate the dimensional requirements for lots and for buildings on property located within the town, the density of development, and animals allowed to be raised on the property. Some current zoning ordinances also regulate the extraction of natural resources from land within the zoned area, others provide space for hospitals, parks, schools, and open space and still others protect places of historical significance within the community.

While the above uses of zoning are positive, there are also negative aspects of zoning power as related to affordable housing. The current zoning practices that lead the exclusion of affordable housing are based on legal uses of police power. For example, it is lawful for the government to regulate housing in order to protect property values and overcrowding, however, the availability of affordable housing suffers, as most land owners, governments and municipalities would rather maintain an affluent suburb than offer affordable housing. In addition to the use of zoning to promote conflict avoidance, prospectivity and predictability and to protect aesthetics and property values, jurisdictions have exercised the police power to engage in fiscal zoning. Fiscal zoning is land use regulation which seeks to exclude development that may create a financial burden on the community and to encourage development which may create financial gain. Thus, fiscal zoning excludes affordable housing while supporting exclusionary zoning as a result of the increased property values.

Exclusionary Housing

Exclusionary housing has long been described as a method of zoning where the interests of the public are advanced, through the prevention of conflicting land uses, protecting property values, and minimizing problems associated with over crowding. This kind of zoning is legal because the power to zone is a valid exercise of the police power when used to serve the public welfare. Traditional zoning and land use regulations, by restricting the supply of land available for housing development and increasing the costs of construction, has driven housing costs to very high levels. As a result, these zoning ordinances diminish the amount of affordable housing in that area, and housing in that location becomes very expensive. Exclusionary housing can be described as an effect of zoning that has operated to prevent the availability of affordable housing. Furthermore, exclusionary housing separates the poor from the non-poor, leading to problems such as under funded public institutions, economically depressed communities, and increased racial segregation.

Exclusionary housing has caused a shortage of affordable housing near low-income resident's work and non-work destinations. This is a result of exclusionary zoning practices of municipalities that favor suburban single-family housing, which is the basis for policy reform to foster more compact development and increased density. Some economic planners have suggested a reform of real estate development laws and applicable zoning ordinances to educate local citizens and decision-makers to the importance of accommodating a broader range of housing neighborhood types. These economists argue not on the basis of proven benefits of compact development forms, but because they provide amenable environments for a broad range of housing types, foster safe neighborhoods, and promote vibrant downtowns. In addition, incentive-based policies can help municipalities toward reduced regulatory exclusion, in the form of transit service improvements and incentives to build housing near transit stops. Stronger than incentives, are systems in which land use authority is shared between local governments and regional or state government to overcome local resistance to compact development. Another example of shared powers is mandating that local zoning conform to a comprehensive plan that is consistent with statewide planning goals.

Inclusionary Housing

As a result of the issues regarding exclusionary housing, a movement towards inclusionary housing began in the 1960s and 1970s. This movement began as a combination of housing advocates...

Inclusionary housing has often been described as a solution to the lack of affordable housing, by requiring that a land developer designate a specified percentage of new housing units as very low to moderate income housing. Scholars have indicated that inclusionary housing operates to counter-act the negative aspects of exclusionary housing, such as it provides the poor with higher quality educational opportunities and the ability to live in a middle class community with lower crime rates, and that it promotes socioeconomic integration. Some states, such as California, New Hampshire and New York, have enacted inclusionary zoning ordinances in an effort to combat the lack of affordable housing.
California has taken the lead as an example of one state that has enacted several inclusionary housing laws. However, while the enactment of these laws is very proactive in nature, there are no penalties for failure to adhere to these laws, and there is no control mechanism in place to make sure that a city or county is providing affordable housing. The state of California requires that each local government must establish a housing plan that includes the following: 1) an assessment of housing needs and an inventory of resources and constraints relevant to the meeting of these needs; 2) a statement of goals, quantified objectives and policies relative to the maintenance, preservation, improvement and development of housing; and 3) a program that sets forth a five-year schedule of actions that the local government plans to undertake the implement the goals, objectives and policies.

Land developers that offer affordable housing are rewarded with certain benefits such as density bonuses. Density bonuses are bonuses for the developer in which he is allowed to exceed density limits in exchange for the provision of affordable housing to low-income residents. Other incentives include the fact that these types are units are usually smaller and offer less amenities than regular priced housing would, such as standard sized parking spaces in covered garages. In California, the majority of inclusionary housing programs contain resale or rental restrictions. An example of a resale restriction is a restriction the property that requires that upon sale, the property must be sold to another low-income resident. There are other restrictions used to keep the property in the hands of a low-income resident, such as contracts that do not allow the seller to transfer title to the buyer until the buyer has owned the residence and lived there for ten years. California has taken the lead as the state to offer the most amounts of inclusionary housing, the success of which depends on whether the production of affordable housing can be balanced with proper incentives for developers.

A policy reason for California supporting inclusionary housing is that it produces low-income housing that is badly needed. Another reason is that most new development is in the suburbs, which gives low-income residents access to housing areas located in better neighborhoods that formerly were not available. Research indicates that the suburbs also provide residents with better opportunities than they had as compared to living in the inner city. For example, in the suburbs, unemployed residents have an increased chance of finding employment, the public schools located in the suburbs are better than schools in the inner city, and the suburbs are areas of much less crime, removing some of the stigmatizism surrounded by living in an inner city public housing complex. However, these policy reasons are not always enough to support interest by real estate developers and government municipalities.

While there appear to be many benefits presented by inclusionary housing, there are also negative aspects. One of the strongest arguments against inclusionary housing is that it functions to redistribute wealth. This is because while low-income residents benefit from affordable housing, developers are given incentives, and the costs are passed backwards to landowners by paying less for this land. Another argument cited against inclusionary housing is that only a small segment of people pay for it, such as the developers. It has been speculated by opponents that a fairer strategy would be to have affordable housing paid through the administration of a general tax throughout the entire population. Scholars have noted…