How Lexington Can Expand Affordable Housing (Without Touching the UGB)

 

Lexington, Kentucky is a wonderful place, and that’s getting to be a problem. There’s nothing intrinsically wrong with the city: its urban amenities, thriving information economy, and unique local culture have brought in throngs of economic migrants from locales as exotic as Appalachia, Mexico, and the Rust Belt. The problem, rather, is that the city isn’t zoned to support this newfound attention.

Over the past five years, the city has grown by an estimated 18,000 residents, putting Lexington’s population at approximately 314,488. Lexington has nearly tripled in size since 1970 and the trend shows no signs of stopping, with an estimated 100,000 new residents arriving by 2030. Despite this growth, new development has largely lagged behind: despite the boom in new residents, the city has only permitted the construction of 6,021 new housing units over the past five years—not an awful ratio when compared to a San Francisco, but still putting us firmly on the path toward shortages. The lion’s share of this new development has taken the form of new single-family houses on the periphery of town.

 

At the risk of sounding like a broken record, there’s nothing intrinsically wrong with single-family housing on the periphery of town. Yet in the case of Lexington, it’s suspect as a sustainable source of affordable housing. Lexington was the first American city to adopt an urban growth boundary (UGB), a now popular land-use regulation that limits outward urban expansion. As originally conceived, the UGB program isn’t such a bad idea: the city would simultaneously preserve nearby farmland and natural areas (especially important for Lexington, given our idyllic surrounding countryside) while easing restrictions on infill development.

 

The trouble with Lexington is that the city has undertaken the former and ignored the latter. Much of the city is zoned exclusively for either agricultural residential—increasingly taking the form of affluent rural estates—or single-family residential. Even where higher densities are permitted, the tight restrictions on urban development that are a normal feature of Euclidian zoning are often present: unnecessary setbacks, surprisingly low maximum heights and lot coverage, and high minimum parking requirements. For all intents and purposes, Lexington’s zoning code criminalizes the kind of traditional urban development that is very much in vogue among young professionals buying home and condos.

The sad result of this booming demand and restrained supply has been to place enormous strain on Lexington’s existing urban neighborhoods. According to a recent investigation by the Lexington Herald-Leader, low-income residents in urban neighborhoods—most prominently, along North Limestone—are facing rising rents and property tax bills. It’s a trend that appears to be affecting many low- and middle-income urban and inner suburban neighborhoods around town; according to one report, the city has lost 28,000 affordable housing units since 2014 alone.

With the support of Councilman James Brown, the city is investigating ways to offer property tax relief to those most vulnerable to the squeeze, particularly low-income homeowners on fixed incomes. It’s an admirable effort to mitigate the damage done by decades of poor policy. Yet if policymakers continue to ignore the issues with the city’s zoning regime, this problem will only worsen. With this in mind, here are three policies that could help expand affordable housing in Lexington—without touching the UGB.

 

1. Permit Accessory Dwelling Units As Of Right in Residential Neighborhoods

In many of Lexington’s inner suburban neighborhoods, hidden among what look like single-family houses, one might find an underrated source of affordable housing: accessory dwelling units (ADUs), or additional small housing units tucked into the basements, garages, and attics of homes. A few have been added in recent years to Kenwick—a gentrifying neighborhood that is zoned for duplexes—and many remain as non-conforming uses in neighborhoods like Hollywood.

Accessory dwelling units were a common feature of American cities until the rise of Euclidian zoning and offer many benefits for renters, homeowners, and communities. For renters, they offer an affordable unit in a neighborhood that (for them) might otherwise be unaffordable. For homeowners, they offer an additional source of income. Alternatively, they are often used to house elderly relatives and support young adult children. For communities, they provide diversity without the unwanted unpredictability—homeowners, after all, have a vested interest in only permitting tenants who behave themselves.

Except in certain unusual circumstances—in duplex districts or on legally non-conforming lots—ADUs are not allowed in most of Lexington’s residential areas. This is a peculiar missed opportunity, as many similar uses—including servants’ quarters and guesthouses—are already allowed in residential districts. Permitting ADUs in residential districts offers an unobtrusive way to add new units of housing to Lexington’s existing desirable neighborhoods.

Lexington wouldn’t be alone in adopting to such a policy: Durango, Colorado—another college town with beautiful surroundings and a nasty housing crunch—recently launched a pilot program to explore how ADUs could be added to the city. Austin, Texas—another booming information economy hub—also recently eased restrictions on ADUs. While Durango and Austin are facing housing crunches even greater than Lexington’s, local policymakers should get out in front of the problem by exploring how other cities have reformed ADU regulation and start the process of reform today.

2. Convert Downtown Commercial Zones to Mixed-Use Zones 

Cities are complex systems—they defy simple cause and effect explanations. Yet one contributing factor to the booming demand in communities in Northern Lexington may be that they are among the only neighborhoods offering traditional mixed-use urban form. As many have pointed out, Americans increasingly prefer dense, mixed-use urban neighborhoods to low-density, use-segregated suburbs. Under a liberal planning regime—consider Houston or much of Japan—uses and densities might change to accommodate this new demand. Yet under Lexington’s Euclidian zoning regime, potentially dynamic neighborhoods like Woodland, South Hill, and South Broadway are kept largely locked in time.

 

Consider the traditional neighborhood center: apartments and offices above street-level retail. Under the standard B-1 zone—and many of the city’s other business zones—such an arrangement is prohibited. Upzoning and permitting mixed uses in these districts could help expand the housing supply and provide new residents with options beyond the handful of existing urban neighborhoods. Take South Limestone, arguably one of Lexington’s most exciting streets (pictured above). To the right, at the intersection of S. Limestone and Avenue of Champions, sits a seven-story dormitory with street level commercial. It reflects booming demand for student housing for the area and could only be constructed thanks to the University of Kentucky’s peculiar zoning status. Now look to the left: squat two and three story buildings, all exclusively commercial, with many of the lots hosting surface parking. This bizarre contrast in use mixture and intensity illustrates the restrictiveness of the block’s current B-1 zoning. What might be dense blocks with hundreds of residential units for young professionals and students are instead preserved as they were built in the 1960s.

All across downtown and the inner suburbs of Lexington, one finds business districts that could be thriving mixed-use hubs—if only they were allowed (a few that come to mind: Southland Drive, the commercial district near Euclid Avenue and High Street, the various low-density developments between Virginia and Waller along Broadway, etc.). Lexington planners and policymakers have been forward thinking in permitting mixed-use developments in around town from time to time. Yet the level of discretionary review the current process requires raises compliance costs for developers and undermines the affordability of new developments—when they happen at all. By switching downtown business zones over to mixed-use zones and easing restrictions related to height, lot coverage, and setbacks, policymakers could expand options for downtown housing and reduce pressure on existing urban neighborhoods.

3. Eliminate Parking Requirements

Perhaps the lowest of the low-hanging fruit, Lexington policymakers should scrap parking requirements altogether. Lexington’s zoning ordinance is positively packed with them—you must build three parking spaces for every two apartments, two spaces for every duplex, one spaces for every two hundred feet of offices and restaurants, etc.—and they ultimately undermine Lexington’s efforts to flower into a leading American city. As has been documented by many studies, minimum parking requirements reduce affordability by raising the cost of development and undermine urban living by reducing densities and requiring auto-oriented development.

If our aim is to create more urban mixed-use neighborhoods in Lexington, it is absolutely essential that minimum parking requirements go. Under current requirements, a lovely fourplex in an R-3 would require at least six parking spots. Under current requirements, a 6,000 square foot café in a B-1 district nestled in a residential community would require at least 10 parking spots. These requirements may not seem like much, but in the world of small urban development—a world of modest lot sizes and tight budgets—these requirements can and do kill projects. For the purposes of affordable housing, the former case is most pernicious, as fewer small apartments and duplex means fewer affordable housing opportunities.

 

Aside from harming housing affordability, the damage that parking requirements cause to urban design can’t be overstated. Under current zoning, wonderful urban streets like South Mill Street (pictured above) are prohibited while monstrosities like the South Limestone McDonalds (pictured below) are effectively required. The impact on urban design may be greatest on Downtown, where any new large multifamily development would require a costly parking garage. This may be one reason why relatively few people live downtown—Lexington’s population center actually lies to the south, around the University of Kentucky. A lack of residents means fewer downtown restaurants and shops and less sidewalk activity, making it less attractive to prospective businesses. Removing these out-of-date restrictions would go a long way toward supporting downtown Lexington’s renaissance and expanding the housing supply.

 

Flipping through the city’s zoning ordinance, one might suspect that Lexington’s planners already know all this. They have, after all, spent the past few decades adding various exceptions: tradeoffs for bicycle parking, special exception districts, etc. While each individual exception to mandatory parking minimums may be wise, in the aggregate they form an incoherent mess that forces dependence on a land-use lawyer. Why not eliminate the mandated parking altogether?

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In many ways, Lexington has the best kind of problem. Thousands of people want to live here, whether brought in by economic desperation in nearby Appalachia, a flourishing research university, and our growing 21^st century economy. Yet as rising housing costs and rapid gentrification reveal, we desperately need more housing to support all the new Lexingtonians. If we don’t change zoning to reflect this, sprawl will merely leapfrog the UGB and residents who can’t afford rising rents will be forced out. Thus far, the debate over this challenge has been limited to whether or not we should expand the UGB. While the UGB is an important part of the discussion, this is a false dilemma. Three simple policies—permitting accessory dwelling units, expanding liberal mixed-use zoning, and eliminating parking requirements—could expand the supply of urban housing and ease the crunch on low-income residents.