Single-Family Zoning is a Tax on the Housing Trust Fund

Minneapolis City Council recently rocked the housing policy world by passing a new comprehensive plan that calls for eliminating single-family zoning (and minimum parking requirements!) everywhere within city limits. Under the plan, up to three dwellings would be allowed on any plot of land in the city. This decision has attracted lots of attention among people who follow housing politics nationwide because it's one of the most radical moves taken recently by any large U.S. city to begin dismantling the legacy of housing segregation, and to increase affordable housing choices in more areas of the city.

In Philadelphia, some observers and planning practitioners quickly began making the case for complacency about the harms of restrictive zoning, pointing out that Minneapolis's average lot size is close to three times as large as the average lot size here, and our median home price of $142,000 is much cheaper than in Minneapolis ($262,000.) Jake Blumgart's article comparing the baseline conditions in both cities features all the standard arguments for Philadelphia's special snowflake status.

But while it's true that rowhouse land use patterns are already denser than what would be permitted in Minneapolis under this change, the fact is that the median home price in many rowhouse neighborhoods close to Center City is much more expensive than the median home price in Minneapolis, and maintaining affordability in those places requires at least as much urgency as Minneapolis's City Council saw in addressing the problem.

Here are the median home values from Zillow for some of the rowhouse neighborhoods that are a close walk or subway ride from Center City jobs. If a $262,000 median home value is sufficiently concerning in Minneapolis, these even higher values in neighborhoods that were recently much more affordable should be worthy of equal concern here. Why the complacency about the idea that neighborhoods like Passyunk Square or Logan Square are on track to become places where the typical home costs over half a million dollars?

Bella Vista: $447,100
Callowhill: $310,200
Graduate Hospital: $502,800
Logan Square: $498,400
Passyunk Square: $355,300
Point Breeze: $267,300
Queen Village: $520,900
Society Hill: $488,400
Spring Garden: $337,000

Councilmember Maria Quinones-Sanchez is quoted in Blumgart's article saying "one size does not fit all" with regard to the idea of lifting apartment bans citywide, and this is a fair point. We do need to treat higher-cost rowhouse neighborhoods with higher housing demand differently and lower-cost rowhouse neighborhoods with no demand very differently, since the tax of single-family zoning takes a much bigger bite in areas where land is already expensive and growing more so than it does in places that aren't seeing much housing demand.

We also need to treat rowhouse neighborhoods differently from places like Northwest and Northeast Philly which do have more of the large-lot development patterns that are more relatable to the situation in Minneapolis. Denizens of @everylotphilly Twitter know that there are many large-lot suburban-style properties situated a short walk from many regional rail stations in expensive areas of the Northwest that are ripe for Minneapolization and denser transit-oriented development.

In the neighborhoods where land prices are high and growing, Blumgart quotes housing expert Vincent Reina, who worked on the City's Housing Action Plan, recommending that elected officials upzone to allow greater densities, specifically naming Point Breeze—where 2nd District Councilmember Kenyatta Johnson happens to be pursuing a large downzoning that will reduce local housing availability.

Experts say that policymakers don't have to necessarily export the Minneapolis plan but should instead analyze where market demand is hottest and where it is likely to move next, and zone accordingly.

“[Upzoning] is not a panacea, it's just one of many things we need to be doing,” said Vincent Reina, assistant professor in the Department of City and Regional Planning at the University of Pennsylvania. “But it can ensure a lot of middle-income housing in neighborhoods that are becoming more costly even for middle-income households. This approach could be very useful in neighborhoods like Point Breeze and neighborhoods that are the future Point Breezes.”

The Kenney administration releaseda housing action plan earlier this year calling for exactly that.

At-Large Councilmember Helen Gym makes the practical point in that article that multi-family zoning is now carrying a lot of the weight of funding the Housing Trust Fund under Council's new affordable housing package, and Council's strategy will be more effective if multifamily zoning is expanded to more places:

“In Philadelphia, we’ve recently started taking on desegregation through the groundbreaking fair housing plan. Inclusionary zoning, which has been championed by my colleague Councilwoman María Quiñones-Sánchez, is a major step, and to the extent, we expand multifamily zoning it will have even greater reach," she said. "But, like in Minneapolis, we will need all Philadelphians who prioritize equitable development to organize for what they believe in."

We had previously looked at which City Council districts have the most land eligible for Council's new Mixed-Income Housing bonus, which allows developers to build denser projects (which yield more revenue) in exchange for including affordable units on-site, or paying into the Housing Trust Fund.

The program only applies in places that are already zoned to allow multi-family housing though—a small minority of the city's land—meaning most of the land in Philadelphia is off the hook contributing any additional money or units to the affordable housing shortage.

In that way, single-family zoning acts like a tax on the Housing Trust Fund because, when applied to hot close-in real estate markets, it bleeds the City of money and affordable housing units that would almost certainly be generated if the Mixed-Income Housing bonus program were allowed to be used there. 

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