Mandatory Inclusionary Zoning In Atlanta: The Legal Environment

By Chris Thayer

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From Burke Law’s Public Law Update

In the increasingly complex legal environment featuring conflicts between state- and city-level policies — many of which are enacted specifically to circumvent the intended operation of one another — it is more important than ever to understand the circumstances in which any advocate of affordable housing interventions must operate. Affordable housing, also known as ‘workforce housing,’ is intended to cost no more than 30% of the net income of those making roughly 60% of the Area Median Income (AMI), and may be pursued through a number of policy mechanisms, each with their own legal implications. One of these approaches is mandatory inclusionary zoning.

Within the broad category of mandatory inclusionary zoning (IZ) approaches, there are three main types of instruments: unit set-asides, monetary-or-other compensation, and rent control. This post regards rent control as a mandatory inclusionary zoning policy instrument, although there is an ongoing debate on its inclusion in that category, most recently addressed in Palmer v City of Los Angeles in 2009, which held that mandatory inclusionary zoning was indeed a form of rent control. While rent control is often criticized as an affordable house method for its tendency to drive down housing quantity and quality over the long term, temporary rent control measures can be an extremely effective way to slightly cool the overheated markets of rapidly-gentrifying areas and give residents a chance to adjust while other affordable housing measures attempt to catch up. However, Georgia law OCGA § 44-7-19 makes rent control illegal statewide, making it ineligible for consideration in Atlanta.

There are three broad types of legal challenges to mainline mandatory inclusionary zoning measures: equal protection, due process, and takings. Of these, equal protection claims are the easiest to defeat. They assert that by forcing developers to undertake certain actions (paying money, building units, etc), they are not being treated equitably under the law. However, real estate developers are not a protected class, and therefore are subject to the highly deferential ‘reasonableness’ review, wherein courts accept that as long as the government’s need is reasonable, the unequal treatment is justified. Also relatively easy to refute are due process claims, which assert that a given law’s affordable housing requirements constitute unreasonable interference with a developer’s business activities. In the broadest sense, this argument was struck down by the original zoning case Euclid in 1926, wherein land-use regulation was decided to be an appropriate use of the police power. In the face of subsequent due process claims, cases such as 1988’s Pennell, in which “the United States Supreme Court held that protecting consumer welfare is a legitimate goal of price regulations, and that preventing unreasonable increases in housing prices is a legitimate governmental interest” have further supported the legitimacy of such regulations from a due process perspective. This is possible due to the deferential stance the courts take to legislatively-enacted requirements and the correspondingly low level of scrutiny employed, which accepts affordable housing as a public good the government is authorized to pursue. Indeed, it has been successfully argued that exclusionary zoning — zoning to discourage or prevent residence in an area by lower-income persons — is itself a violation of those citizens’ due process protections, as seen most famously in the Mt. Laurel cases.

By contrast, the most extensive — and contentious — strain of zoning challenges (and therefore inclusionary zoning challenges) is takings jurisprudence. Takings concerns are fundamentally different from those of due process or equal protection because they do not assert that the government has engaged in an inherently inappropriate action, but rather that it has failed to provide the Fifth-Amendment-mandated just compensation for an otherwise entirely legal action. For several decades, the test for takings claims in cases of government regulation of property was 1980’s Agins v. City of Tiburon “substantially advances” test — namely, that a regulation was not a taking if it substantially advances a legitimate government interest (similar to the two relatively-light standards used for equal-protection and due-process claims). This strain of thought was employed, or at least referenced, in a number of subsequent landmark takings cases — including Nollan (the “essential nexus” standard), Dolan ( “rough proportionality”), Penn Central (the “balancing” test), Lucas (the “total takings” test), and Loretto (the “permanent physical invasion” test) — to determine elements of a takings test in various circumstances. The “substantially advances” test was explicitly rejected for being suitable for due process concerns — not takings concerns — in 2005’s Lingle v Chevron, in which an entirely new schema is laid out. In it, the Court divides takings into per se takings (such as Lucas and Loretto), regulatory takings (handled using the Penn Central method), and the “special context” of land-use exactions (a condition placed on development to attempt to mitigate subsequent impacts of that development).

This final “special context” of exactions functionally covers all mandatory inclusionary zoning, thanks to the 2013 expansion of what constitutes an exaction by Koontz v. St. John’s River Water Management. Previously, exactions were either real property or the rights thereto (such as to refuse access), which mandatory set-asides — but not fees-in-lieu or other monetary mandatory inclusionary zoning methods — would fall under. The Koontz decision expanded the definition of exactions to include money as well as real property, and in doing so put fees-in-lieu, housing linkage fees, and similar mechanisms under sharply increased Constitutional scrutiny. The exact implications of the Koontz decision are still a matter of active debate — there are some readings that indicate it could be used to threaten the very legitimacy of property taxes — but it clearly raises the importance of administrative versus legislative takings.

This ambiguity — if legislative exactions (including mandatory IZ) are takings and are subject to the same strict scrutiny as administrative exactions are — is shaping up to be the next sea change in exactions law. At present, the matter is still under active consideration with the U.S. Supreme Court, most lately in the form of California Building Industry Association v. City of San Jose, which was rescheduled three times before finally receiving a denial of certiorari by Justice Thomas in late February 2016. In it, he expressed concern that “property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively.” There is a strong Constitutional argument that legislative exactions are inherently more defensible for being equally applied and put into place by the duly elected agents of the citizens’ collective will, in contrast to ‘ad-hoc’ administrative exactions which deserve greater scrutiny for their potential to single individual property owners out for abuse. This point was recently argued in San Remo Hotel v San Francisco, in which the Supreme Court of California asserted that any “city council that charged extortionate fees for all property development, unjustifiable by mitigation needs, would likely face widespread and well-financed opposition in the next election. Ad hoc individual monetary exactions deserve special judicial scrutiny mainly because, affecting fewer citizens and evading systematic assessment, they are more likely to escape such political controls.”

Currently, state-level case law is split. Until a Supreme Court decision is made, it seems that mandatory IZ policies, even if legislatively enacted, would not be practical to pursue in the Atlanta context. The San Jose case affirms for California that mandatory inclusionary zoning is a) not a taking, b) not rent control, and even adds that c) legislatively-enacted exactions are explicitly not subject to the Nollan/Dolan test. However, traditional mandatory zoning policies in Atlanta or Georgia will likely be challenged in the same way as the San Jose case, with a much less sympathetic State Supreme Court and a US Supreme Court that appears to be extremely open to a sufficiently ripe case on this issue. Even housing linkage fees, which have been both effective and politically palatable elsewhere, and which could potentially be supported as a legitimate use of the police power to offset the negative effects of development (discussed in Parking Assn. of Georgia v City of Atlanta), are likely to be successfully challenged as an illegal expression of impact fees. Given the presence of Georgia’s Development Impact Fees Act, which requires that all such fees be used for capital improvements to a specified range of public facilities and moreover must be used to maintain the current level of service, not increase it (OCGA. § 36-71), impact-fee mechanisms would likely be overturned as unconstitutional for attempting to improve on the current state of affordable housing provision, as both an unacceptable type of and level of service improvement. Furthermore, as Georgia’s State Constitution requires a “literal balancing test” for all land-use regulations to weigh the public benefit against private loss, any mandatory IZ effort would have to offer “substantial cost offsets” (making it functionally a voluntary ordinance) and would essentially rule out the possibility of mandatory set-asides. Therefore, given the current state of the law, it seems prudent to pursue other paths to affordability for Atlantans than any of these mandatory inclusionary zoning approaches.

Cities and Regions: Managing Growth and Change — Regional Studies Association North America Conference, Atlanta, USA

 

By Jennifer Clark

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At Georgia Tech’s Center for Urban Innovation, we are thrilled to host the Regional Studies Association’s North American conference on June 15-17, 2016 on the theme Cities and Regions:  Managing Growth and Change.  The deadline for submitting abstracts to the conference is April 21, 2016. Click here to submit an abstract and register. Click here for additional information.

This conference is a great opportunity to bring together the international membership of the Regional Studies Association in the City of Atlanta at the Georgia Institute of Technology to discuss how, in the wake of the global financial crisis, cities all over the world are searching for new policies and practices capable of addressing major shifts in socio-economic relations at the urban and regional scale.  

Regional policies, particularly in the North American context, have responded to economic challenges by adopting new technologies and new institutional and organizational forms to manage growth and change at the city scale.  The result is a complex and uneven landscape of public and private actors delivering financial services, scaling-up supply chains, coordinating firm networks, diffusing process and material innovations, and organizing new forms of civic representation and participation.  

The inter-related processes of industrialization, urbanization, and regional and local development are complex.  These processes pose a major challenge for regional policy, firstly, for our conceptualizations of regional and urban development and, secondly, for specifying appropriate policy fixes to provide the conditions for sustainable, smart, and equitable economic growth.  

This conference provides a platform for researchers to address the effects of these policy, organizational, and institutional innovations and their impact on work, identity, governance, production networks, infrastructure investments, technology diffusion, and ultimately place. The conference will focus on the policy implications of emerging forms of governance and policy delivery relative to uneven development and inequality in a post-crisis era of ongoing market liberalization, financialization, and global competition.

The conference program highlights important leaders in the field of regional studies to discuss sustainability, equity, energy, innovation, manufacturing,

 

 

 

 

 

 

The 2016 RSA North America Conference, in the 51st Year of the Regional Studies Association, is an opportunity to discuss these issues, to chart future research imperatives, and to address concerns and challenges confronting policymakers and practitioners.  The conference organizers are keen to attract papers and sessions addressing a broad research and policy agenda, including contributions from disciplines that offer relevant insights associated with recasting our cities and regions. 

Conference Tracks and Themes:
A. Smart Cities, Smart Regions: connecting and connected regions, intersections of ICT and urban infrastructure, diffusion networks, partnership approaches, internet of things, financing city and regional development

B. Regional Innovation: Theory, Methods, Practice: urban and regional theories, methodology, value change (including big & open data), visualization, spatial economic analysis, metrics

C. Territory, Politics, Governance: metropolitan politics, institutions, regionalism, data-driven governance, policy evaluation, urban policy mobilities, intermediaries

D. Sustainable Cities and Regions: urban and regional sustainability at the city scale, risk, resilience, energy systems and sources, transportation networks

E. Emerging Community, Urban, and Regional Identities: culture, identity, citizenship, lived differences, racial and income inequalities, social capital, aging and succession planning, social entrepreneurship, open government, civic hacking

F. Labor Markets in Cities and Regions: geographies of jobs, changing skills and patterns of work, re-skilling regions and cities, local labor markets, immigration and skill, talent,  contract workers and precarious labor

G: Regional Economies: SMEs, Scale-Up, and the Future of Production Networks: smart specialization, evolutionary economic geography, competitiveness, reshoring and manufacturing, firm networks, sectoral policies and clusters, working regions, financialization and geographies of venture capital and private equity

Abstract Submission Guidance
The following guidelines set out the acceptable format for abstract submission. Please note that the abstract submission closing date — 21st April 2016.

Abstract guidelines:

Up to 400 words in length;
Titled
Text only; no diagrams, graphs, pictures, citations or maps
All contributing authors must be named, with their country and institution
Indicate which conference theme the paper is being submitted under

A Reaction to “Technology and the Future of Cities”: Uneven Development and Expertise in the ‘Smart City’

By Taylor Shelton and Jennifer Clark

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Smart City parking in Montreal, from the author’s files

 

On February 23rd, the President’s Council of Advisors on Science and Technology (PCAST) released the report “Technology and the Future of Cities.” The report outlines a federal strategy to guide investment and engagement in ‘Smart Cities’ initiatives. Although the definition of a ‘Smart City’ remains nebulous in “Technology and the Future of Cities,” what matters more than any formal definition of the term are the ways that PCAST’s analysis and recommendations influence the production of the Smart City as it is. That is, the PCAST report is likely to have significant ramifications for many Smart Cities initiatives currently planned and deployed across the country.

Although the topic covered in “Technology and the Future of Cities” is understood as critical to US economic competitiveness, the future of cities report itself has been met with mixed reviews. One prominent player in the Smart Cities space has called the report “a rambling, sloppy embarrassment that fails to capture even the basics of a smart city.” On the other hand, Richard Florida’s assessment at CityLab is much more positive about the potential for this exercise to place cities at the center of federal technology and innovation policy.  This later view is consistent with the recent efforts of advocates of federal investment in technology to link cities to innovation policy more explicitly.

Rather than focus on the definitional or public management issues in the report, we highlight here two key elements worthy of closer attention.

The first issue of interest in “Technology and the Future of Cities” is also the most explicitly geographic: a focus on the creation of ‘urban development districts’ as test-beds for the implementation of smart city ideas and technologies. It is important to highlight the report recommends that the development of Smart Cities happens not at the scale of the city, but rather in ‘discrete regions within cities,’ where “[a] district does not necessarily have a predefined scale, nor must it fall within the political boundaries of a single city” (p. 2).

The report focuses on these ‘urban development districts,’ arguing that “[d]istricts offer larger cities the chance to take on these challenges in bite-sized stages” (p. 8).  It is true that smaller scale, test-bed or ‘living lab’-style implementations are useful for assessing the utility and interoperability of certain technologies or approaches. However, it is important to recognize what an urban development strategy built entirely around these spaces means for cities as a whole: continued uneven development.

In short, these test-beds aren’t problematic only because of issues related to combining and interlinking incommensurable systems that are, and will continue to be, developed in isolation from one another. The focus on specific intra-urban territories risks reinforcing and deepening the social and spatial inequalities within cities. Even though American cities have long since given up on what Stephen Graham and Simon Marvin called the ‘modern infrastructural ideal’ of pervasive and integrating infrastructural connections, the targeting of smaller districts within cities is likely only to create new forms of ‘secessionary network spaces.’ These kinds of ‘smart enclaves’ will be highly connected both within their boundaries and to quite distant places through networks of fiber optic cables, but will likely be functionally distinct from the surrounding neighborhoods and urban area that lack such advanced infrastructure and technology.

Although the report recommends some of these targeted districts should be located within low-income communities, a vision of the Smart City promoted by a district-centric implementation remains one of significant socio-spatial fragmentation and differentiation. Some places are inevitably privileged over others in the provision of new technology services, and it is unclear whether places neglected in the first rounds of these programs will ever see similar levels of investment.

It is also worth noting the broader context of these district-level implementation strategies in the history of urban economic development. Recall the evolution of various ‘zones’ -– ‘free trade zones,’ ‘enterprise zones,’ ‘empowerment zones,’ ‘promise zones’ -– designated for special services or tax advantages intended to drive development into such territories (and, necessarily, away from or out of others). Literature on this matter records mixed results and significant debate (indeed, this was one of the “great debates” in urban policy between Peter Hall and Bill Goldsmith, among others). In any case, provision of special technology services in some neighborhoods, but not others, raises serious concerns about fairness and justice in our cities. Unfortunately, the PCAST report places minimal emphasis on such matters, meaning that the significant planned investments into new infrastructures and technologies are more likely to deepen these longstanding inequalities.

The second issue of interest relates to the type of expertise that is (or isn’t) present in its construction and the formation of its conclusions. This involves recognizing and understanding the history of inequality and cities. A small number of the 100+ listed contributors to the PCAST report represent the perspective or expertise of the social sciences focused on cities and the urban scale. The technoscientific orientation of the report instead privileges experts in the sciences and engineering from both academia and from industry. Indeed, the burgeoning field of ‘urban science’ — founded on the principle that the conventional urban social sciences have been insufficiently scientific — occupies a prominent place in the content, as well as construction, of the report. This prominence of ‘urban science’ contrasts with a conspicuous absence of established disciplines such as urban geography, urban sociology, urban history, urban economics, urban anthropology, and urban planning.

This report is yet another signifier that the production of urban knowledge, especially that which is deemed useful for governance and administration, is increasingly disconnected from the last century of in-depth urban scholarship. Today, instead, urban knowledge is increasingly focused on the ability to gather, process and analyze massive datasets about any number of urban (or not-so-urban) phenomena. The role of the urban social sciences in the development of the federal government’s smart cities initiatives is given scant mention in the report, except to mention that “[g]iven earlier discussions regarding the interplay between technology and norms of behavior, it will also be essential to integrate social, behavioral, and economic sciences with these more traditional infrastructure sciences” (p. 41).  

Ultimately, the likely substantial financial investments in smart cities that will be made by the federal government represent an exciting opportunity for anyone interested in US cities. It remains to be seen, However whether the preoccupation with new technologies obfuscates the critical issue of whether provisioning fundamental services is dictated by efficiency or equality. Given the general absence of perspectives from the urban social sciences in the current conversation, it is difficult to see how investments will be equitably targeted. Instead, failures to attend to the ways urban spatial inequalities are produced means contemporary smart cities initiatives, like those advocated for in “Technology and the Future of Cities,” will simply fall into the trap of exacerbating uneven development.  Or, as has often been the case, the report and its recommendations — like US cities themselves — will be ignored.

 

Smart Cities as an Enabling Industry: Bringing Firm Strategies Back to the City

By Jennifer Clark

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A Sample Smart City from IDC Government Insights (2013), courtesy Smart Cities Council

Economic geographers have long studied industries as part of the broader disciplinary project of mapping and analyzing the spatial distribution of economic activities within and across cities, regions, and nation states. In recent years, technology and innovation gained positions of prominence in these industry analyses. Researchers are particularly focused on processes of technology diffusion and how regional ecosystems absorb these new technologies and incorporate them into existing complexes of firms, industries, and industrial specializations.

One such example is the evolution of the medical devices industry into biotechnology. Another is the evolution of photographic and optical equipment into photonics. These patterns of technology diffusion and industry change are often responses to emerging new markets as well as the introduction of new materials, processes, or products that enable better, faster, or greener alternatives. In other words, new technologies enable optimization — efficiency, sustainability, or increased quality.

The shift here is considering Smart Cities as an industry and not simply a discourse or movement. It is therefore important to break down its constituent elements. Industries generally have products. Those products emerging in the smart cities scene are largely service-embedded goods with infrastructure and public service applications. These require: 1) connectivity, 2) back end analytical services, 3) storage and management services (including security and privacy), and 4) user/citizen interfaces (potentially open source).

To walk through some examples: the “smart city object” — the trash can, the trolley, the streetcar, the light pole, the traffic light — requires embedded sensors (leaving aside the question of what is being sensed for now). Those sensors require connectivity (fiber, wireless, etc…). A service contract is required to maintain and manage that connectivity. Data analytics are required to mange the resulting data and perform analysis. Interfaces and visualization tools are required to make the data accessible to the public or citizen users.

It other words, Smart Cities are a market-making enterprise — developed: 1) for people and companies to gather information about the (market) conditions around the individual and aggregated lived urban experience, and 2) for cities to collect data that could lead to the optimization of public services and the provisioning of infrastructure.

Returning to economic geography for methodological guidance, the observed process here is a form of technology diffusion familiar in the private sector context. This is technology diffusion into the public sector focused on “upgrading,” efficiency, and broadening access and opportunity.

In sum, the Smart Cities industry is focused on the design, development, and deployment of an emerging class of cross-platform, service-integrated, technology products to enhance service performance — particularly for citizens, workers, cities, or, for those with the ability to pay for that increased service performance. And here lies the particular challenge: who pays? The next step for Smart Cities may not be enhanced quality and coverage of public services but instead further public service privatization.

In observing who is promoting Smart Cities, it becomes clear that the stakeholders involved underscore the complexity of the private market vs. public sector challenge. As these private, public, and third sector networks evolve, sets of privileged places have also emerged. These places are the recipients of the demonstration project grants and resources coming through philanthropic investments, private sector partnership, and federal government competitions and challenges.

Third Sector Networks (including philanthropies and non-profits)

As we see in other industries focused on technology diffusion, the firms are in the business of carving out new markets and new market spaces. This is especially the case in fields where civic participation or social entrepreneurship is part of the user model. With Smart Cities, there is a turn towards third sector intermediaries to design, develop, and deploy smart cities technologies and infrastructure using an incremental, scale-up approach.

These third sector intermediaries set priorities in terms of use cases (such as bicycle crowdsourcing or urban agriculture).  There is an observed rise of “partnerships,” “networks,” and “convenings” arranged and organized for diffusion of best practices and the brokering of project partnerships. And there is a necessary unevenness that emerges in the deployment. Public services and Internet of Things (IoT) infrastructure investments are landing on an uneven landscape.

Public Sector Networks

The MetroLab Network is an initiative of the White House’s Office of Science and Technology Policy. MetroLab coordinates city-university partnerships in the hopes that these partnerships design, develop and deploy “Smart Cities” solutions focusing on “urban infrastructure systems, city services, democratic governance, and public policy & management.” The agencies (NIST, DOT, NSF) providing resources for these efforts emphasize open innovation and open data and the development of interoperable standards.

Private Sector Networks

An example of private sector networks is the AT&T Smart Cities Initiative that is being piloted in three locations: Atlanta, Chicago, and Dallas. AT&T Smart Cities Initiative is a consortium including Cisco Systems, Qualcomm, IBM, Intel, and General Electric. The Initiative offers cities the capacity to address infrastructure including “remote monitoring of roads, bridges, and buildings; citizen needs, such as real-time notifications of street lights and parking meters; transportation needs, such as real-time updates of train and bus arrival times; and public safety needs, such as gunfire detection technology for police officers.”

A Use Case Study: Autonomous Vehicles

A key example of a use case is the “upgrade’ to fleets of autonomous vehicles highlighted in the recent USDOT Smart Cities Challenge.  As is typical with this sort of transition — an underlying manufactured good gets an upgrade using new technologies. In this case, the individual auto remains the fundamental platform but it becomes extensively interconnected through the addition of information and communication technologies (ICT) that take driving out of the hands of individual drivers.

This use case has gained prominence not because it can demonstrably save commuting time or improve safety (although it may). It does, however, create an important new market: a customer base captured in a location with embedded connectivity — people riding in their cars on a commute or errand and now with reliable connectivity and without the distraction of driving.  This is a whole new, undistracted audience to view adds, use software, and consume media content during a part of the day largely lost to the ICT industry (precursor products include the radio, XM radio, and even way-finding applications, but all limit the interactivity of the user with the technology).

Autonomous cars may also have an effect on urban form — there may be less need for convenient parking places and more places for cars to wait on curbs rather than parking garages.  But it is likely this new array of captive consumers that presents a strategic opportunity for ICT firms.

The creation of a core and periphery of places through the pattern of uneven investments in urban innovation has deep implications for the future spatial distribution of economic activities. The core and periphery investment strategy adopted by the testbed and competition framework creates uneven capacities across cities to design and absorb new technologies relevant to both performance management and optimization.  It means that not only (some) citizens will select places based on Smart City endowments; so too will firms.

Also, the uneven distribution of technologically embedded infrastructure affects the economic competitiveness of cities both inside and outside the core. And finally, peripheral cities are obligated to adopt the designs and models developed and tailored for core cities — causing a convergence towards core cities’ needs, priorities, and circumstances as reflected in the design of “Smart City solutions.”

In is worth noting that there are some observable absences in the discussion about manufacturing and deploying Smart City technologies. First, there is almost no talk of regionalism or regional governance — the city is the actor of interest in this discourse. This is atypical in the US and leaves open a longstanding question about equity and inter-jurisdictional competition. Second, there is no explicit discussion of economic development although clearly the differential investment in these technologies changes the calculus for locational choices.

Firms often use privacy debates to justify proprietary platforms. This leads us to a discussion about the covert construction of barriers to entry to limit the participants in the Smart Cities market space.  Open innovation platforms ensure interoperability and continuous innovation and competition. Proprietary platforms create barriers to entry into this new market that has potentially broad social and economic benefits. This is why there is a rhetorical emphasis on open data, open innovation, and open access among the public sector actors in the Smart Cities debate (cities and national governments) but the model itself remains under development.