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Preroll: PolicyCast explores research-based policy solutions to the big problems we’re facing in our society and our world. This podcast is a production of the Kennedy School of Government at Harvard University.

Intro (Justin de Benedictis-Kessner): And this is really weird if you think about it in terms of democracy elsewhere in the United States or even in other countries. I’m a political scientist, so I think a lot about voting. We don't ever think about voting these days as a thing that only should be given to certain people who, say, have a stake in the community. We don’t think because you pay more taxes to the federal government, you should get more votes than someone who makes less money and therefore pays less taxes. That would be a pretty objectionable thing to say, I think, for federal voting rights. But for some reason, that’s a somewhat acceptable thing for a lot of people to say at the local level. At the local level, that's the last place we got rid of landowning as a requirement to vote in local politics. And so, we’re kind of replicating that process now in a more informal sense by empowering people who own homes and saying that their voice is valued more in this political process around housing.

Intro (Miro Weinberger): When I look back on my time in government and kind of count up the homes—more than 2,000 homes got built in Burlington during that time or were in construction when I left—some of that came about through these regulatory changes I’ve just been mentioning, but the bulk of them actually came as a result of agreements between the municipality and major landowners, developers, to redevelop a downtown failing mall or to take a 25-acre piece of church-owned land and build a bunch of new infrastructure and build a thousand new homes there. So, what I think the broader lesson in that is—many cities have never forgotten this, but I think a lot of places maybe have forgotten that—the municipal government itself needs to think of itself at some level as another one of these developers. And that the municipal government has a lot of tools, whether that’s as property owner or as infrastructure financer, builder, or as the owner of a housing trust fund, as a regulator, there are many ways in which the municipality itself can and needs to play an active role in housing development if they want more houses to get built. And I think a lot of places, once they start thinking in that mindset, they’ll be surprised how much positive impact they can have.

Intro (Ralph Ranalli): America is in the grip of a severe housing crisis. Tenants have seen rents rise 26% while home prices have soared by 47% since early 2020. Before the pandemic, there were 20 U.S. states considered affordable for housing. Now there are none. And 21 million households—including half of all renters—pay more than one-third of their income on housing. Harvard Kennedy School Associate Professor Justin de Benedictis-Kessner and former Burlington, Vermont, Mayor Miro Weinberger say that’s because homebuilding hasn’t kept up with demand. They say housing production is mired in a thicket of restrictive zoning regulations and local politics, a “veto-cracy” that allows established homeowners—sometimes even a single disgruntled neighbor—to block and stall new housing projects for years. Weinberger, a research fellow at the Taubman Center for State and Local Government, and de Benedictis-Kessner, whose research focuses on urban policy, say even well-intentioned ideas like so-called “inclusionary zoning” laws that encourage mixed-income housing development may also be contributing to the problem. They join me to discuss how housing became a affordability nightmare for millions of people and offer policy ideas on how streamline the inefficient and often subjective ways home building projects are regulated and how to level the democratic playing field between established homeowners and people who need the housing that has yet to be built.

Ralph Ranalli: Justin, Miro, welcome to PolicyCast.  

Justin de Benedictis-Kessner: Thanks.  

Miro Weinberger: Yeah, thanks. It’s great to be here with you. Excited for the conversation.  

Ralph Ranalli: I’m very glad to have both of you are here, because I know you come at this issue from different and interesting perspectives. So, could we start with both of you just giving a bit of background on how you came to be interested in this issue. How did you come to study housing? Justin, do you mind going first?  

Justin de Benedictis-Kessner: Yeah, sure. It’s a little bit of a roundabout way. So I do research more generally on urban policies. I got interested in that via transportation. But then I really got interested in housing because, I grew up in the Bay Area in California, and I think the Bay Area is famous for a lot of things, but one of them is the housing crisis. And I have a twin sister who cannot afford to buy a house, and she got forced out of her neighborhood because her landlord kept raising her rent. And she and her husband were stuck in a really small place for a long time. And so, I started thinking about: What are the political levers—because I’m a political scientist—by which these types of problems start happening. And the Bay Area is rife with political problems that have led to the housing crisis being particularly bad there. So that’s sort of how I got interested in it, but housing is one of those things that everyone sort of thinks about in the back of their mind just because you’ve got to live somewhere.

Miro Weinberger: Well, for me, my childhood involved thinking about housing and built structures to some degree. I was a son of an architect, and as long as I can remember we always were kind of talking about what was getting developed and what wasn’t. I had this very powerful experience just after I got out of college, as I worked as a volunteer for Habitat for Humanity in Americus, Georgia, rural Georgia, had this pretty transformative experience of working with a community to build a new home, for this deserving elderly couple that were in real need, over five consecutive Saturdays. I was part of this crew that got it ready so that hundreds of volunteers could come out and build this home. It culminated in this incredible day where the children of this couple came back from around the country and gave furniture to this couple and, you know, a, a housing career was launched on that day. I was taken by it. I had the bug.  

I went on to work in other nonprofit roles, came back here to Harvard, went to the Kennedy School of Government, I was in a housing, urban development, transportation concentration, and really learned something about planning and policy more generally. Went from that to have a 15- year career building housing as a developer working for and with nonprofits, eventually with my own company and I would say the overriding sense I had through the 15 years and I thought it was about me for a while, and then ultimately I came to think it was about the system. It just was unbelievably hard to get anything built. And I just came to think that it was way too hard. And I had a very direct experience in Burlington, the city that I then became mayor of, where it took me a decade to convert an underutilized warehouse that had been a nuisance property for decades. It took us five years to get the permits to turn that into 25 homes over a cafe. And then because of the delays in the permitting process, and then changes in the housing market, it took me 10 years before I actually got it built. And I was pretty committed to doing what I could to change the system by the time I became mayor.

Ralph Ranalli: So let’s get to the crisis, because it is a crisis. If you look at the reports coming out of the Joint Center for Housing Studies at Harvard, rent growth, even though it slowed a little bit in recent months, is still up, rent is still up 26% since early 2020. 21 million households, nearly half of all renters, spent more than a third of their income on rent. And Justin, I think you did a study in Boston with Linda Bilmes that found the same thing, and that renters of color pay an even larger share. Home prices have increased by 47% nationwide since 2020. Before the pandemic, there were 20 states that were considered affordable as a whole under the definition used by the National Association of Realtors. Now there are zero. And it’s not even an exclusively American problem. Home prices in the EU also rose 47%, albeit over a longer period of time, with the trend starting in 2010. Can we just talk a bit about how we got here? What are some of the reasons why the production of housing hasn’t kept up with demand?

Justin de Benedictis-Kessner: How far back do you want to go? What are some of the reasons? Well, there’s a lot of history behind it. You’re talking about the development process earlier and, and how slow it is. There’s a reason it’s slow.  

Miro Weinberger: Yeah.  

Justin de Benedictis-Kessner: And so a big contemporary reason that we see now is a sort of symptom of this crisis is how long it takes to get something built from the time a developer has an idea or a parcel of land goes for sale that either has a building that is not usable now or is empty to when actually housing is online for people to rent or buy. And that just takes a really long time now. And so that’s a big contemporary symptom of this problem. But a lot of the reason we get a lot of these delays is the political process. And so this is why, as a political scientist, I’m really interested in housing policies, because we’ve made political institutional choices for how we want to have this policy area operate. We want lots of community input around everything from the facade of a building to who the developer is, to how many units are in that building and how tall it is.

And we’ve made that choice as an institutional design feature of the housing policy process. In a way that’s really different from other policy areas. We’ve decided we want more input, we want things that slow this process down. A little bit of the justification for this comes from history of how housing was built in the mid 1900s, and before that. And so, a lot of that was taking the politics out of it and making this all choices made by politicians—often in the federal government or in state governments—and so we wanted to fight back against that, and so a lot of institutions were created that gave people more voice in hyper-local communities.

And what we’re seeing now is the end result of that, which is, there’s a lot of involvement, people often feel like they have voice, but it’s often a certain subset of people who already are empowered by the political process in other ways. And so a big reason I would say we got here is we over corrected in this other direction, from the urban renewal era to this era of huge amounts of political involvement in the policy process around housing.

Miro Weinberger: Just to, you know, expand on it, I think that’s a great review and totally agree with that basic description. I think just to point out how far it goes, I think essentially—this is not my term—but I think we have created this veto-cracy where literally one person often can defy the will of a whole community and stop or at least delay for a long time, which can have the same effect as stopping, any project. That project I was talking about that I had the personal experience of was one person that held it up for five years. He was a lawyer. It cost him almost nothing to hold it up, well, it cost us hundreds of thousands of dollars to keep it going. And I think we are not gonna solve this problem until we get rid of the, that veto-cracy. We need to somehow empower governments to deliver what I think communities and people are fundamentally demanding, which is a lot more homes than we have right now.  

Ralph Ranalli: Right. There seems to be a ton of factors, including transportation policy, but let’s start with exclusionary zoning, a term which occupies a lot of the conversation about housing and the lack thereof. Can you just define what exclusionary zoning is, and how it affects how you can build housing?  

Justin de Benedictis-Kessner: Yeah, exclusionary zoning is, at the end of the day, it’s a label we’ve put on zoning policy more generally. And zoning policy is just saying what can be built in what place in a city. So, can we build a tall tower that has residences or commercial businesses? Can you only build a single-family home? And this is called exclusionary often because of the origins of zoning as an institutional and policy choice that governments make, which was to keep people who had certain demographic traits out of certain areas. And so this differs across the country in what the actual demographic group is they were trying to keep from a certain area. Where I grew up in California—Piedmont, California—which is this sort of enclave right between Berkeley and Oakland, and they started having exclusionary zoning to keep people who were Black out. They wanted to keep people from different religions out. They wanted to keep people from different class backgrounds out. So that’s why we call it exclusionary zoning, is because the origins of this institution of zoning are very exclusionary, and that’s sort of undeniable, even though that played out in different places across the country in different ways. So that’s sort of definitionally what it is.  

Miro Weinberger: I think importantly—I like your definition for it—I think sometimes people use the term to really just mean the part that was explicitly about excluding folks, but effectively, even things that don’t on their face seem like they are about keeping classes of people out. So just the ability, like I was saying before, to appeal a project through several layers of appeal, can have a very exclusionary effect as well.  

Justin de Benedictis-Kessner: Yeah, and so the problem, of course, that you’re identifying is that if you want to deviate from zoning, you have to go through this appeals process. And so zoning has, at its actual core, the whole goal of it is to slow down anything that doesn’t conform to a certain built, environment look or a type of use. And so it’s still possible to deviate from that zoning, but it just takes a lot longer and you have to go through this process.

Miro Weinberger: Yeah. I mean, in the case—I’ll try not to go back to this one project too many times on this podcast—but we were trying to build something that the zoning appeared to very much want. And that seems clearly on its face allowable by the zoning. But there was enough subjectivity in the zoning that was grounds for appeals as to whether we were meeting the parking requirements properly as to whether or not we met the character of the existing neighborhood. Good lawyers or even not so good lawyers can argue for years over whether or not a particular project meets the character of the neighborhood. So, those kinds of processes that are built into our current system can have the effect of keeping people out even if they, on their face, don’t seem like they’re about exclusion.

Justin de Benedictis-Kessner: One of the reasons for that, that I just want to really narrow in on, which is crazy to me once I started getting into housing policy, is that zoning dictates maybe the number of units or the height of the building or the setback from the street or whether it can have commercial versus residential use. But if you want a slight variance on one tiny thing, so say you want to go slightly above the height restrictions because you want to have extra room for some solar panels on the roof, you then have to go through the appeals process about everything. And so it then brings in a lot of subjectivity about other stuff. And so people might say, I don’t like these bricks on the front. When in reality, the only thing you’re actually deviating from zoning on is the height restriction. So it offers a lot more veto points than just the one that is not allowed by zoning. So that’s part of the problem, it adds veto points.

Ralph Ranalli: And I think a lot of it is antiquated too. I mean, zoning has a tendency not to change with the times. In Burlington, when you were mayor, didn’t you find that some of the most desirable places to live were sort of in these districts that had been built before zoning and were quote unquote non-conforming. They didn’t conform to the current zoning code, but yet they were the places where the people most wanted to live.  

Miro Weinberger: Absolutely. And so one of the things that we did and that I’m proud of, after being mayor for 12 years, this got done in the final meeting of those 12 years with the city council is we passed something we called the neighborhood code, which was an attempt to re-legalize largely older forms of housing that got built sort of organically in the pre zoning era. These duplexes, triplexes, even small apartment buildings that had, from the 70s onwards, been made essentially illegal. We have gone through and made it possible to build those types of projects citywide. We, we also went through, we’ve been talking a lot about the subjectivity. We had another process really focused on the downtown where we, we really tried to take all the subjectivity out that we could, having seen the damaging nature of these appeal processes, we took out a subjective parking waiver that had been a source of a lot of appeals. We took out this character of the neighborhood test.  

And I would say between those things and a few more, which maybe we’ll get to, I want your listeners to understand right up front, I think you can change this. Over the 12 years I was in office, we essentially quadrupled the rate of housing production in the city of Burlington. I think now have the city on a trajectory where a lot more homes are going to be built in the future. We don’t need to think we’re like locked into the current situation permanently. This is something policy change can have a big impact on quickly.  

Ralph Ranalli: Justin, you mentioned politics, and there are a lot of political impediments to changing zoning, to helping create more housing, one of which I thought was very interesting is the study you’ve done of the relationship between home ownership and political power and there was a survey showed that members of the public preferred to hear from homeowners and that homeowners were overrepresented in the political process. And it’s almost like we’ve done this democratic backsliding to the days of the landed gentry. And we have these unfortunate renters who don’t have that kind of political clout. Let’s talk a little bit about the politics. What are the alternatives? How do you get, more equity in the political process where people who aren’t necessarily wealthy homeowners have more political say.

Justin de Benedictis-Kessner: So to back up for a little bit, one of the reasons we started working on that project about democratic inclusion and who people think deserves a voice in local politics around especially housing. The current state of affairs is these community input meetings largely empower whiter, wealthier, older homeowners in these communities. And so there’s some great researchers at BU, Katie Einstein, David Glick, and Max Palmer, who’ve been doing a lot of great stuff on the Massachusetts area and who actually shows up to meetings, who comments at them, who’s getting their sort of way in the decisions that these, zoning boards but also city councils make.

They show that these people are getting what they want. And the people who don’t show up, which are, say, the people of color, these are younger residents, residents who want to move to a city, are not getting what they want, which might often be to allow housing to be built, have bigger housing. And so we were really curious about why this is happening, why are these people showing up at such higher rates, and why are they listened to more, and can you change that? And so we wanted to see, when you give people a hypothetical scenario of who should talk at a public meeting around these things, who actually, who do they pick to talk?

And one of the things that people did do that we saw, in our main control group is that people pick long time homeowners to participate in these meetings. And this mirrors what you would see if you talked to, say, residents of Cambridge often. Who would say, hey, you know, you should have people who are invested in the community who are taking part in this policy process. People who are going to stay here for a long time, who maybe have a stake by owning a home in this community. They deserve a say in this process.  

And this is really weird if you think about it in terms of democracy elsewhere in the United States or even in other countries. I’m a political scientist, so I think a lot about voting. We don’t ever think about voting these days as a thing that only should be given to certain people who, say, have a stake in the community. We don’t think because you pay more taxes to the federal government, you should get more votes than someone who makes less money and therefore pays less taxes. That would be a pretty objectionable thing to say, I think, for federal voting rights.

But for some reason, that’s a somewhat acceptable thing for a lot of people to say at the local level. And I think that’s mirrored by the history of ... at the local level, that’s the last place where we got rid of landowning as a requirement to vote in local politics. It was not that long ago that in some cities and towns, you could only vote if you owned land. And so, we’re kind of replicating that process now in a more informal sense by empowering people who own homes and saying that their voice is valued more in this political process around housing.

Miro Weinberger: So, having been on the kind of receiving side of the public input, if you will, having been an elected official, generally speaking, there is some exception to this, but generally speaking, the politicians are not choosing who shows up and gives the input. Sort of structurally, I think it has historically tended to be what you described there, these older, residents, property owners, often people who are retired, are the people who have the time and the sustained interest to come up and be part of these processes. And that can have a very distorting, perverse impact on these decisions. One of the most positive things, I think, that is happening in America shows the fact that that is what we have seen in the past doesn’t have to be our future. I think the YIMBY movement has really been proving that we can choose to go in a different direction. And I saw that play out in Burlington in a really dramatic way in the last few years of my 12 years as mayor. A grassroots organic YIMBY movement organized and became an active sustained player in these land use decisions. And it had a transformative, really almost overnight, impact on, what was possible to get done.

To just give one example, we had a certain part of town. I think a very problematic policy had been in place for decades that basically prohibited any form of housing in a big swath of the developable part of the city. It was good intentions and there had been some minor successes that had flowed from this. It was a job creation concept that having this kind of light manufacturing area was going to allow for jobs that if you allowed housing there might not be possible. We got a lot of breweries as a result of that. We’ve got some cideries even, but we also got a lot of parking lots.  

I made one attempt early in my time as mayor to just start talking about maybe we want to change this policy. And it resulted in an enormous backlash, led by artists who were concerned about, losing some low cost, studio space and whatnot, and it just built on itself. And we ended up having to just abandon even talking about it. We came back in the last couple of years, but much more targeted, more strategic, a better proposal to just take this parking lot area, essentially, and legalize housing there. And I saw something that happened with that process. I’d never seen before. We went in with a modest proposal for legalizing housing, I think at four or five stories. The community input actually resulted in what ultimately passed unanimously without a single negative vote and without even a single negative public comment, I think because people were afraid to come out against it because they realized these were moral issues at stake that, we’re really talking about whether people weren’t at homes or not. What ended up passed was actually housing at eight stories in height adjacent to essentially single-family neighborhoods. It was really quite a remarkable outcome and one that was only possible because of the YIMBYism. It was very exciting, and it’s something that I think we’re seeing now start to impact even our... it seems to me that even the National Democratic Party is becoming a YIMBY party all of a sudden, which, I think is a very positive, hopeful thing for the future.

Ralph Ranalli: So for the acronym challenged, YIMBY stands for “yes in my backyard,” and it is the opposite of the NIMBYs, who say “not in my backyard” and who are sort of the stereotypical people who say no and pull whatever levers they can politically to stop development.  

Justin de Benedictis-Kessner: So you made this comment about you don’t control who shows up to these meetings, but I imagine as a mayor who shows up to a lot of these public meetings, you knew who these sort of repeat players are and the types of people who are showing up and could you do anything about that when you, knew that say, the right policy choice is to allow more housing in this certain neighborhood or something? What would you think about, say, taking that public comment and saying, OK, we actually have to ignore it. Was that something that was politically feasible for you?  

Miro Weinberger: I think it’s important to acknowledge that there’s some, back and forth, there’s some iteration here. Certainly when we knew a big vote that we cared about was coming up, we would let our allies know. We would let the interest groups that we knew would support a certain policy. We would reach out to them, make sure they were paying attention and thought about sending people. So, I know people who are working against our policies, city councilors, would do the same thing. I think the politicians do you have an impact on trying to organize around meetings, but it’s certainly not, entirely driven by what the elected officials are doing.

I think you’re asking a bigger question: How do you see, as an elected official, your role in a democracy? Are you simply there to try to poll your residents and do what you think the majority of them want to happen or do you see the role of elected officials having certain more agency than that? I found where most people think it’s a combination of the two. Certainly you’re not doing your job if you’re, ignoring your constituents. You need to be listening for the wisdom in it. At the same time, other information factored into my decision making as well: academic studies, research data. I certainly thought there were times that it was right to act... Leadership in some ways involves making a decision, even if you don't have clear support at that moment. Oftentimes public opinion can shift and evolve over time.  

Certainly when talking about this issue, I did feel like, it is so important to create more homes. So much is at stake and more homes had such a positive impact on so many of the other challenges that it was something I was committed to working with even if in one particular public hearing we might have heard a lot of opposition.

Justin de Benedictis-Kessner: Yeah, that’s great. I love this idea of: What is your ethical duty as a leader in politics? 

Miro Weinberger: Yeah.  

Justin de Benedictis-Kessner: Do you solicit support or do you just listen? And I love this idea of something in between as sort of being your responsibility. That’s great.

Ralph Ranalli: Justin, I know you’ve done some studying of what kind of messaging can perhaps move the needle a little bit in that of NIMBY demographic. What have you found there in terms of what messages have limitations and what messages might be more effective in terms of getting people to change their attitudes about growing the housing supply?

Justin de Benedictis-Kessner: So one thing that was particularly interesting about this study I was talking about where we look at who people want to participate in public meetings is you just inform people about the baseline inequities and who’s participating at the start, they become more supportive of having people participate who maybe don't have as much of a voice. So it’s just taking data from other studies of the public input process, showing that to people in an attractive and easy to understand format can actually change the way that they behave when they’re making these choices. That said, of course, not many city councilors are doing this picking of who gets to talk in a more conscious way like that. But, like you were saying, they might actually go solicit input from other people who they see as not being well represented. And so, this is a thing that could happen for residents so that they see this type of input as more valid, but also among politicians who might be able to change that. And, not to put people in boxes here, this could be true for people across the political spectrum in their housing policy views. I think a lot of people don’t realize the scale of the inequities and participatory processes around housing.

Miro Weinberger: I think it’s particularly important to do that in this housing conversation I used to think of this as like an almost insurmountable structural problem where the people who, for whatever reason, might not be happy about a certain development, they knew who they were. The people who were going to have more shadow on their property, the people who at least perceived that they were going to have to deal with a lot more traffic, the people were worried about noise from new neighbors. They knew who they were, and they could organize amongst themselves very effectively to bring out and make sure that voice was heard.

The people who are going to primarily benefit from a new project, don’t know who they are yet. They’re people who have not yet signed leases for a project that’s coming online years down the road, people who may not even be living yet in the municipality where this decision is being made. It always struck me as this really severe structural imbalance that: How are you ever going to get the supporters there given that? I think that's what the YIMBY movement has done is it has identified that problem and people who are motivated in this area show up and make sure that those positive attributes are being considered in these discretionary legislative or permitting processes.

Justin de Benedictis-Kessner: Yeah, that’s a really great point because, when I teach students, policy students at ����vlog���� about who are the stakeholders you might need to bring in for various policy processes, we don’t ever talk about who maybe isn’t part of the stakeholder group yet, but would be once this, say, infrastructure is built. And so that’s exactly this group that I think the YIMBY movement is trying to activate, is say, like, you’re a future stakeholder. If there's more housing built, you will benefit from it.  

There’s actually this really cool study in LA from this researcher named Trevor Incerti and the Abundant Housing Group out in LA, and where they try to encourage people to show up to public meetings, whether it’s in person or online, and they have huge effects of being able to get people who are renters, who maybe don’t own a home yet, but want to or want to move to a certain neighborhood, to show up to these meetings about housing. Because it turns out they just don’t think of this as a thing they should show up to, whereas homeowners do. It’s exactly the sort of thing you’re talking about. It’s like the status quo is people will show up who have a stake already.

Miro Weinberger: And when you get that level of engagement, suddenly what becomes apparent is that the reasons for opposing a housing project tend to be... The complaints are at the level of nuisance. It is about a little bit more traffic a little bit more noise. Whereas the benefits are these really fundamental opportunities for people to make a home, make a life in this community that they want to be a part of. And once you start talking about the tradeoffs in that way- you know, that’s what happened in this zoning example I gave you before. That’s what I meant before when no one came up to oppose it at all at the end, because this Vermonters for People-Oriented Places, this group of 20 and 30 somethings, they had made clear to the community what the stakes really were, and it was just so powerful.

Ralph Ranalli: So moving away from the politics for a second. I wanted to talk about the nuts-and-bolts ways that are being used right now to create more housing. And one that’s very popular is what they call inclusionary zoning—people sometimes use the shorthand “IZ”—which requires developers to set aside a certain percentage of rental units for low- and moderate-income housing. On one hand it makes sense because exclusionary zoning had a role in creating the problem, so you think intuitively inclusionary zoning should help fix it. But it seems to have certain limitations. Can you talk about those for a little bit?  

Justin de Benedictis-Kessner: So Inclusionary zoning is, as you said, a total response to this idea of exclusionary zoning. And one of the things exclusionary zoning did is it forced affordable or lower cost housing into certain neighborhoods of the city or into something you might call housing projects, big apartment towers that looked a certain way and people stereotype about what that means about the residents of them. And it concentrated poverty in certain areas of cities and allowed more affluent neighborhoods to exist without lower income people in them. And so, inclusionary zoning is trying to get integration across income levels of housing within the same building. Which is a great goal. It’s saying, okay, we’re not just gonna have rich people buildings and poor people buildings. We’re gonna have buildings that have both lower income and median income and higher income people all in the same place. So it’s a really laudable goal.  

The thing that it does, nuts and bolts, is it just requires a certain percentage of units to be set aside to be either sold or rented at lower income levels to people who make lower incomes, but also at prices that are below market. And then the rest of the units in the building can be sold or rented at whatever price you want, whatever the market can bear. And so what happens is, when this policy is instituted in cities, developers who want to build a building, if they’re above the unit threshold to trigger this IZ policy, they have to price into the cost of developing a building, building some units that will sell below market rates. So they’re going to be sold at a loss essentially, whereas some units in the building they can sell for whatever people will buy them at. At the end of the day, what this means is they have to make higher end units and sell them at higher prices to subsidize, internally within the same building, these lower cost units. And the problem with that is that you’re then building for a more expensive group of people, as well as some limited numbers of units for lower income people. And at the end of the day, there may not actually be a huge market for higher end housing. There’s actually much more market for middle income housing; totally just market rate stuff that would be possible if you weren’t cross subsidizing these lower income units.

And what ends up happening for a lot of developers is that it’s just not financially feasible to build a building at all. And so you don’t see this outcome most of the time. But what you’re not seeing is more proposals to develop a parcel of land or more, parcels being proposed at all where someone could develop something because they do their balance sheet and they say, “Hey, a bank is not going to give me a loan to build something here because I won't make any profit on it” or the profit will not be above what developers would call a hurdle rate. And so as a result, you get the production of housing overall across a city just way lower levels because there’s this policy while on its face is a really laudable goal of inclusionary development. At the end of the day, you get less development overall of both lower income and market rate units. And so that’s sort of the problem that this happens.  

And this happens especially in places where the housing market is not just like raging hot. It’s easy to subsidize these lower income units with market rate units when housing is really hard to come by. But in, say, cities that are around the Boston area, like gateway cities or in some smaller cities where it’s easier for people to move slightly outside of the urban core. It’s really easy for people to say, oh, I don’t want to rent or buy that really high-priced unit in that building just to cross-subsidize these lower income units. So it what it results in is just this underproduction of housing overall.  

Miro Weinberger: That is real. And to go back one more time to that project that I tried to get built in Burlington, it had a 20% inclusionary zoning requirement at a very low level of affordability, 65% of median income, which is unusually low in the industry for trying to reach with IZ policy. And delays six through 10 that I described before were entirely about the fact we couldn't make the numbers work, until we finally were able actually to get hundreds of thousands of dollars of subsidy that helped pay for the inclusionary units. And once we got that, then the project got built. I think it is really problematic if we have a system where projects can only get built if they are deeply subsidized. The system is not set up currently to accommodate that and it is a factor in why we’re in the place we are. But I really do want to say. Like Justin said, the goal is an entirely worthy one. And I think the shift we need to make as a community, if we want to stay true to that principle, which I think we should, is we should move from a system where subsidization is basically under the system entirely going to be borne by that project and essentially those other households in that particular building, to one where if this is a value that is important to us as I think it should be for a certain community, we’re going to socialize those costs, that burden, much more.

And I took steps towards doing that in Burlington. We dramatically increased by about fivefold the size of our local housing trust fund, with the idea that one of the things this big influx of resources could do is to help socialize those costs. We didn’t get as far with that, in my 12 years as I would like, but I do know that other communities are starting to do that, including Portland, Oregon, which has long been one of the, like the leaders and how you think about housing. I think that’s the way to square this circle is that we should hold on to this idea that when new construction is being built that a broad array of income levels are going to be served by that. But we have to find a way to spread out the burdens of that, or it’s just going to mean housing doesn’t get built.

Justin de Benedictis-Kessner: Not to get back to the politics, but the reason inclusionary zoning is so popular among elected officials is it puts the entire burden of producing these affordable units on a private developer. And it makes it sound like, oh, the government is not subsidizing this. At the end of the day, everyone is subsidizing this, and everyone is paying the cost of less housing production. So housing costs go up and up for everyone. But, If you want to do the politically bold choice, you say, hey, we’re actually consciously investing money in affordable housing, whether that's through a trust fund or through actual government produced housing some other way. And so I, I really applaud that, that sort of goal. It’s being more realistic about someone's going to pay the cost for this. And so if we really want it to happen, we need to dedicate the funds for that.  

Ralph Ranalli: Yeah, I was going to ask about the over reliance on private developers and what the alternatives are. Because the other flip side to that is like, a political setup in a way where you’re over relying on private developers because then you get the NIMBY folks who can cast dispersions on the YIMBY folks saying, oh, you’re just in league with the greedy developers and you’re not really as public spirited as you say you are. What are the alternatives to just relying on private developers? How do we get other methods of building affordable housing into the mix. And Miro I wanted to start with you because you were on the ground trying to do that.  

Miro Weinberger: Well, certainly one answer to that in Vermont has been, and I think it’s been a successful experiment, is we rely heavily in Vermont on these nonprofit housing developers that do the bulk of the publicly financed housing production and do a great job of it, and have really, over the last few decades, institutionalized, become very strong, really powerful entities that have a lot of responsibility and deliver on that in many ways. And I think that’s been, a healthy thing, and it’s sort of hard for me... I guess I will say, after the pandemic brought some disruption and challenge to the system and that suddenly in Vermont, we found ourselves with an exploding homeless population and a need to build a type of housing that the system had really not been geared towards solving in Vermont, which was the kind of emergency shelter. Through a confluence of events; Vermont doing so well in terms of virus fighting, becoming a very appealing place. There was a lot of in migration, we found our housing challenges greater than ever. The limitations I would say of that, is these independent housing nonprofits, they have their own fiduciary responsibilities, their own boards, they have to look out for what is right for that institution, maybe not the community need of the moment. And we found ourselves in a situation where we desperately needed more emergency beds and the city had to do it itself, in the last few years.  

And that was sort of exercising muscles the city hadn’t used in a long time, and it was challenging, but that is the other option is to get back into actually the government providing housing- not something we’ve had a great history of here. I’m not sure I’m really advocating for it; I tend to think the system that we have that does rely on the private market has a lot going for it if we shift the mindset and stop demonizing developers, and if we can kind of continue with this shift in thinking that I think really is taking place, this sea change and understanding that we need a lot more housing and developers, nonprofit or for profit, are the way we get that. I hope and sense there’s some more mature understanding of that evolving.  

Justin de Benedictis-Kessner: Yeah, I was kind of wondering if you were going to get a little defensive of developers, but I’ll get a defensive of developers for you. Everyone lives in a house that was built by a developer. And you can villainize greedy developers, but at the end of the day, someone has to build the house, unless you built your own house, in which case you’re a developer as well, just of one house. And so, to demonize developers as some, private market entity that wants to make money is like, well, everyone wants to earn a living. Developers just happen to create something that we see as so crucial that we demonize them for making any kind of profit. And so nonprofit housing developers, I’d say, are maybe less villainous. But they still need to meet profit rates to make their business keep going. As you said, they have a fiduciary duty to a board.  

Miro Weinberger: Have you ever noticed, if you have an urban drama, whether it’s The Wire or something like that, the villains are always the developers or the mayors.

Justin de Benedictis-Kessner: Yeah.

Miro Weinberger: We need to shift that mindset at some level and still continue to regulate, and there’s certainly all sorts of opportunity for abuse and corruption and greed and we should continue to be against that. But we need to make the shift that you just described. Developers are the way we get more housing.

Justin de Benedictis-Kessner: There’s a reason that like in The Wire or other TV shows that are about say urban dramas, that developers are often the site of corruption with local politicians and it's because of this discretionary process around housing.

Miro Weinberger: Yeah.  

Justin de Benedictis-Kessner: Because there’s so much opportunity for politicians to make the process actually faster, it’s a site where they can get payoffs from, say, a developer who’s earning money at the end of the day, because it’s worth it for a corrupt developer to say: “Hey, let me give you money on the side or buy you some gift if that’ll make this process go one month faster, because you’re losing so much money all the time.” So, I see this as a hallmark of what’s wrong with urban political processes around housing, is that corruption can even happen here. Corruption wouldn’t happen if there weren’t these delays already happening.  

Ralph Ranalli: Well, that’s a great segue because this is, after all, PolicyCast, and policy is what we do. So, now is the point in the show where I’m going to ask you to prioritize two or three policy recommendations that you think would make things better, what would they be?

Miro Weinberger: I’ll dive in first. I’ll give you three, Ralph, and they pick up on the themes that we’ve been talking about over the course of this hour. One is: Any place you can remove subjectivity from the system, you should try to do that. Again, we did that in Burlington by getting rid of the parking waivers, by getting rid of the character of the neighborhood test. But state governments need to do that as well. It’s the state governments that could change the kind of architecture around how appeals and whatnot work. That principle, I think, of removing subjectivity, moving towards clear standards and norms that are empirical, I think, is very important.  

Secondly, this thing that got done in that last meeting I think has great potential of taking these beloved existing neighborhoods but loosening the regulations so that more people can live in those great neighborhoods. I think there’s great potential to do that without fundamentally undermining them. And again, we did that through... we called it the neighborhood code. This is a trend that’s happening in many parts of the country. And I think to your point, in many ways, this is just making legal again these kinds of beloved types of urban environments that we used to have, but that we've regulated away.  

A third thing; When I look back on my time in government and kind of count up the homes—more than 2000 homes got built in Burlington during that time or were in construction when I left—some of that came about through these regulatory changes I’ve just been mentioning, but the bulk of them actually came as a result of agreements between the municipality and major landowners, developers, to redevelop a downtown failing mall or to take a 25-acre piece of church-owned land and build a bunch of new infrastructure and build a thousand new homes there. So, what I think the broader lesson in that is—many cities have never forgotten this, but I think a lot of places maybe have forgotten that the municipal government itself needs to think of itself at some level as another one of these developers. And that the municipal government has a lot of tools, whether that’s as property owner or as infrastructure financer, builder, or as the owner of a housing trust fund, as a regulator, there are many ways in which the municipality itself can and needs to play an active role in housing development if they want more houses to get built. And I think a lot of places, once they start thinking in that mindset, they’ll be surprised how much positive impact they can have.

Ralph Ranalli: Justin, the last word on policy recommendations is yours.  

Justin de Benedictis-Kessner: So I’m a big fan of Everett, Massachusetts—shout out to the fantastic planning department there. I’ve worked with their mayor and their planning department with some student teams over the last few years on various policies. But one of the things I love that they’ve done is said: “What if we think about housing as not just housing itself, but also related to transportation, related to economic development? How can we create housing in a way that’s, expanding the pie for lots of other policy areas and people who might care about those.” And so they’ve done some really cool stuff with transit demand planning. They’re massively growing their housing stock in a city that’s just across the harbor from Downtown Boston. And the way they're doing this is by saying: “OK, we’re reliant on the private market, but let’s add in other things to make the zoning code not the only thing that they have to pay attention to, and excuse them from a lot of the zoning code if they can meet these other targets.” So saying what’s the holistic picture of what we want our city to look like? So instead of revising the zoning code, which is often politically infeasible, they’re doing some great things around saying what do we want transit and housing infrastructure to look like in our city? So starting from that point is something I’d love to see more local policymakers do. Instead of just saying like, oh, we can’t build more housing in this neighborhood because there’s not transit infrastructure here, saying, how do we create both of those things at the same time? And so thinking of different urban policy, arenas as related from the get-go is a thing I'd love city officials to think about a bit more.  

And the second sort of policy and actionable policy I would love to see is just enabling city staff to do more. So in California, under SB423, the state of California took away some of the powers of local governments, and most recently at the end of June, early July, San Francisco no longer has to go through the political process for a lot of its discretionary housing approvals. It just goes through what's called ministerial approval instead. So city staff, in a planning or housing department, are just approving or denying proposals to build housing, at both low-income level and market rate level. And that’s a huge change from the current process in most places. And what that does is it enables them to apply standards that are, like you said, less subjective, but more based on what's actually written down as okay for a neighborhood, or okay for the city overall to build.

Miro Weinberger: Yeah, I was gonna say, that goes hand in hand, I think, with this removal of... When it’s a subjective decision, you feel like it’s a board that needs to do it, as opposed to staff. So, that was the effect of our removal, as well...

Justin de Benedictis-Kessner: And city staff are qualified to do this. This is why cities hire highly qualified staff. I’m a big booster of local government employees. They have expertise, they’ve done this for a living for a while in most cases, and they get really frustrated by the fact that they can’t actually apply that expertise. And so if we actually are enabling them to do their jobs well, I think they can do a really good job at preserving the goals of the city in terms of what types of housing they want built and where and making it look good. And we would then do a bit better job at maybe not putting the onus on, say, getting certain renters who don’t live in a neighborhood yet to show up to a public meeting. That work should not be on these renters. It should be on the city to approve or deny something. So I would love for more states to take seriously this idea of, hey, we can tell local governments how their housing policy process should work, and, at the end of the day, there can be some teeth to that if they don’t do what is an equitable process that is actually producing housing to meet demand, you can take those land use powers away from them because, at the end of the day, local governments are just creatures of the state government. I love local government, but if they’re not doing that job well, then state governments need to step in sometimes.

Ralph Ranalli: Well, I want to thank both of you for being here. This was a very interesting conversation, and I know a lot of people care about this issue, so thank you very much.  

Miro Weinberger: Hey, thanks so much for having us in, Ralph.  

Justin de Benedictis-Kessner: Thank you.

Outro (Ralph Ranalli): Thanks for listening. If you liked this episode, please check out some of the other great policy podcasts produced at the Kennedy School, like the Data-Smart Cities Pod, from the Data-Smart City Solutions program at the Bloomberg Center for Cities at ����vlog����. Just search for Data-Smart Cities on Apple Podcasts or your favorite podcasting app. And while you’re there, don’t forget to subscribe to PolicyCast so you don’t miss any of our important upcoming episode. And please leave us a review. Join us for our next episode when we’ll talk about a new Kennedy School program working on ways to stem the rising tide of anti-LGBTQI+ violence around the globe. And until next time, remember to speak bravely, and listen generously.