In the age of megacities and sprawling suburban regions, the model advanced by the smart growth trend promotes the building of master-planned communities that bring people together around access to basic needs, such as education, safety, and municipal services. These communities are built on the philosophy of conserving resources in a manner that is sustainable both for current populations as well as for generations to come. But in the drive to achieve smarter growth and bring life to this emerging community model, one critical challenge remains: how to mix communities that have long remained separate when economies and/or attitudes do not allow them to coexist.
Successfully mixing affordable and market-rate housing begins with the effective development of the four necessary pillars of a community:
- education facilities;
- obtainable and accessible municipal services;
- a range of housing products; and
- a viable economy for retail services.
Most people with children tend to make proximity to good schools their first priority in finding new housing, followed closely by the need to feel safe in their new neighborhood. Achieving an integrated mix first requires focusing on providing good educational facilities and municipal services, which in turn calls for housing within the community for those who perform basic community services (i.e., police, firefighters, teachers, health care providers, landscapers, housekeepers, janitors and manual laborers). As a result, master-planned community design needs to incorporate affordable housing from the start, either through housing incentives or housing product types. Once housing for these service providers is assured, the next step is to plan for a population dense enough to sustain economically these basic services, which, as a rule of thumb, necessitates a population of 15,000 inhabitants. With this many people, it is important to consider the entitlements needed to support a community of this size.
The entitlements needed to lay the groundwork for mixed-income communities should be structured initially around accommodating each of the four basic community pillars. In addition, the entitlements should ensure the creation of both a pedestrian-friendly environment and a transportation infrastructure. The transit system needs to include not only easy access for cars but also, of more importance, a mass transit component to provide internal circulation and a connection to the full range of external resources that lie beyond the community, such as workplaces, other communities, and regional shopping facilities.
One example of a smart growth development grappling with entitlement is the Las Lomas project in Los Angeles County (page 70). Las Lomas began with a land use plan that is adaptable to the market; the entitlements as planned are flexible, allowing each area of land use–whether it be office, retail, or a variety of housing types–to be altered accordingly as the community develops. In attempting to be annexed "whole-cloth" from the county of Los Angeles into the city of Los Angeles, Las Lomas has sparked a struggle between urban and suburban ideologies. On one side is a business megacity (Los Angeles) that understands the need for smart growth and is willing to embrace it. On the other side are the surrounding, smaller suburban cities (e.g. the city of Santa Clarita) that are trying to block both the annexation and ultimate approval of the project. The suburban side seeks to preserve its standard way of life, either through greenbelt designation or its own annexation of Las Lomas and preservation of low density.
Once issues of entitlement are settled, a decision needs to be made on whether the affordable housing components should be integrated into the community or be stand-alone projects within the overall community. There are many examples of smart growth developments that have successfully integrated each of these housing alternatives. Stapleton, a former aviation facility, will offer 10 percent of its new homes and 20 percent of its rental units at affordable prices (page 66).
Nevertheless, the question of the right mix remains. Some suggest that separating affordable housing from market-value housing merely sows the seeds for the ultimate ruin of the larger community because crime or lack of upkeep will begin in the affordable housing complex and later overrun the rest of the community. Proponents of separate housing products believe the overall marketplace cannot survive unless different product types coexist. They argue that the more important goal is to build a complete community and assure the four basic needs, as these are the stopgaps that prevent urban decay. From this perspective, the inclusion of affordable housing units as separate housing projects is part of the community's overall fabric.
Governmental regulations currently are shaping the way in which smart growth projects mix housing products. Today's standard regulatory provisions on "inclusionary" housing–the inclusion of affordable housing in market-rate communities–tend to favor the building of integrated housing developments. Regulators generally regard smart growth developments as urban infill projects, which are handled on project-by-project basis rather than as master-planned communities. This results in urban infill projects that, by virtue of density bonuses, integrate affordable housing into the project itself without necessarily considering the context in which the project is being developed. On the other hand, when development is on the scale of a master-planned community, it is more likely that context will be considered, with densities allocated across a larger area in order to accommodate the general community flavor and to support its overall economic condition.
However, due to the urban infill designation of smart growth, use of the separate housing model generally excludes the project from government classification as an inclusionary development, thereby excluding it from the government's financial support. Nevertheless, there seems to be growing recognition that developments that use the separate model while still mixing product types within the larger community also should be considered for public support as long as the market-rate and affordable housing units are in the same neighborhood. But this is as yet an emerging trend; the traditional trend over the last five years has favored the integrated model.
Examples of both approaches have been tried in a variety of communities. More often than not, the integrated model has worked with greater success. But, this may be because success generally has been judged on the basis of an individual urban infill project addressing an individual need rather than on the basis of a master-planned community with the focus on community building.
The separate housing model, nevertheless, still achieves results. In fact, it may even achieve better results because it maintains higher pricing for the market-rate units, which may ultimately assure the economic and social viability of the municipal and retail services, thereby stabilizing and preserving for the future those vital elements of the community that tenants or owners of affordable units also share. In an integrated facility, a question of economies often arises because the affordable unit, whether owned or rented, tends to diminish the value of the other units. However, measures of affordability are geographically driven–in some areas so-called affordable units cost as much as $300,000 or more.
The answer to the mix questions seems to lie somewhere in between the two models. In a truly enlightened development, a mix of opportunities would be provided: some that are integrated, and others that are created for each market that the community is attempting to serve. This, a variety of services and needs are supported, whether it be the low- or medium-income market that serves the service-providers, or the higher-end market that ensures a greater dollar flow in the local economy, and in the end, produces a more highly valued community.
Reprinted from Urban Land, Volume 62, Number 5, May 2003.
Jerry Neuman, a partner in the Los Angeles office of Allen Matkins Leck Gamble & Mallory LLP, a business and real estate law firm.
Allen Matkins Leck Gamble & Mallory, LLP, founded in 1977, is a full service California law firm with more than 200 attorneys practicing out of five strategically located offices in Century City, San Francisco, Los Angeles, Orange County and San Diego. The firm's broad-based areas of specialization include real estate, corporate, business litigation, taxation, land use, environmental, bankruptcy and creditors' rights, and employment and labor law.