Zoning and Affordable Housing Presentation | Oklahoma House of Representatives Interim Study | Oct. 2, 2024

OK Policy’s Research Director Anthony Flores and Senior Policy Analyst Sabine Brown shared how zoning reform is a key step to increasing housing in Oklahoma, especially as the need for more affordable housing continues to grow. Their comments were made during an Oct. 2, 2024, interim study in the Oklahoma House of Representatives about zoning issues in the state. The following is a transcript of their comments. The full interim study — IS24-024, Impact of Zoning Laws on the Development of Housing (Rep. Bennett and Rep. Pae) — can be viewed at the Oklahoma House of Representatives website.

Comments from Anthony Flores, Research Director for the Oklahoma Policy Institute:

Good morning. Thank you for the opportunity to speak today. My name is Anthony Flores and I’m the Research Director for Oklahoma Policy Institute. I’m joined by my colleague Sabine Brown, who is our Senior Housing Policy Analyst. We are here to discuss the impact of zoning on housing affordability, and how the state and cities can collaborate to address this growing challenge together.

It might seem like zoning is a matter for cities alone, but state governments have always had a role in shaping land-use regulations. In fact, it was a 1926 Supreme Court case — Euclid v. Ambler Realty — that established the authority of states to enable municipalities to regulate zoning. And it is a 1923 Oklahoma state law that outlined the parameters by which cities exercise that power.

Today, we want to make three points:

1. More housing of any kind helps housing affordability.
2. Zoning reform is a key step to unlocking this potential.
3. And the state should collaborate with cities to modernize these zoning codes for the 21st century.

To do that:

• First, I’ll explain what zoning is and how better zoning policies lead to more affordable housing.
• Next, I’ll discuss how this fits within Oklahoma’s current context.
• Then, Sabine will share examples of successful collaboration between states and cities on zoning reforms.

Zoning dictates what types of buildings can be constructed on a given piece of land-whether it’s for a single-family home, a multi-family building, a school, a park, or a commercial space.

Zoning laws also include bulk regulations shaping how these buildings look and interact with each other. For example:

• The building height.
• Setbacks – Which are the required distance between a building and the street or other buildings. They define how much “breathing room” a property must have.
  • Yard requirements work similarly.
• Minimum Lot Size – Which dictates whether a property can be split into smaller lots or must remain large and exclusive.
• Then there are also regulations on parking requirements, minimum lot width, density, floor area ratio, lot coverage ratio, height-to-setback ratio, etc.

Beyond that, zoning also regulates what activities can take place on the land. Can it house a small retail shop? Or is it limited to a quiet residential street? Zoning codes shape the very feel and functionality of neighborhoods, often in ways that are invisible until you want to build something different.

In its simplest form, zoning determines who can live where and how many homes can be built. It decides if land will be reserved for a single house with a large yard or if it can support a small duplex or triplex that could house several families.

Originally, zoning was a response to the industrial revolution, separating factories from residential areas to protect public health.

Zoning laws, originally meant to separate dangerous uses, now unnecessarily separate us from everyday life: being unable to reach coffee shops, barbershops, or small grocery stores without getting in a car first-pushing services out of reach and driving up costs. This disconnection between people and amenities contributes directly to higher cost of living.

Zoning was originally developed when our problem was too much construction. Today, our problem is too little. And that is a direct cause for our housing affordability crisis.

The principle is straightforward: when you restrict where and how much housing can be built, you choke off supply. With fewer options, demand drives prices up. Conversely, when you allow more housing, prices stabilize or fall.

Think of housing as a game of musical chairs. When there aren’t enough chairs, someone ends up without a place to sit. The person left standing is always the one with the least resources. That’s how housing shortages work too: it’s always the lowest-income households that bear the brunt of the crisis.

That is why despite record-low unemployment, preliminary HUD numbers show homelessness in Oklahoma is up nearly 40% since 2022.

Minneapolis also faced a homeless and housing affordability crisis and made a bold change. In 2019, they eliminated exclusionary zoning and legalized multi-family housing to be built in any residential area. The result? The city added thousands of new units, and rents didn’t just stabilize, they decreased by 20% of what they were in 2017.

This chart I made shows the correlation across cities, adjusted for population size: as the housing supply increased, rents declined. This didn’t just benefit new residents. Existing tenants felt the effects too, because as higher-income residents moved into new units, vacancies opened up in older units, allowing rents to adjust downward.

And importantly, property values didn’t plummet-if anything, they became more stable.

There are things we should do to increase housing affordability that cost money to the state, but this first piece doesn’t have to cost anything. We can instead focus state resources on the types of housing the market wouldn’t build because it doesn’t pencil out.

You can even see that correlation within Oklahoma. The city with the smallest increase in rents was Oklahoma City, which was building at over twice the rate of Tulsa and thirteen times the rate of Lawton. Again, adjusted for population size. Both of those cities experienced an over 10% increase in rents. This suggests this problem is especially acute for rural cities.

The reason for declining rents overall is actually very simple: when you build more housing, it doesn’t just benefit those who move in first. It creates a chain reaction. It’s the musical chair game in reverse. When someone with a high income moves into a new home, they leave behind their previous home, which lowers demand in that market segment and allows rents to decrease-one that might be a perfect fit for a middle-income family. Then, that middle-income family’s move opens up a home for a lower-income household.

This means building new housing of any kind, improves the quality and affordability of housing for all.

Research shows that this process works faster with rental apartments than with single-family homes. So by allowing more multi-family housing, we can help these moving chains reach lower-income households quickly, easing pressure for everyone.

Unfortunately, much of Oklahoma’s land is locked into exclusionary zoning policies-rules that prohibit building anything other than single-family homes on large lots. This means many people who want to live here can’t find a place that suits their needs or budget.

I created this map to show the zoning districts in OKC that are zoned for single-family in pink, that’s 96% of residential land. If you squint, you can see those for multi-family in blue, and mixed-use in yellow.

The areas in pink show residential zones where building anything more than a single house on a lot smaller than 6,000 square feet is not permitted by right. In other words, if you want to build more diverse housing types-like a duplex or a small apartment building-you’ll need special approval, which often means a lengthy and contentious public hearing process.

The irony is that city governments know this is a problem. Many city’s (including OKC’s) own comprehensive plans frequently recommend denser housing, and surveys show that residents often support more housing choices in their communities. But it’s state laws-not cities-that require a public hearing for every deviation from traditional zoning, making it hard to turn these recommendations into reality.

Those areas in gray are called PUDS and SPUDS. Those are areas where the city recognized the zoning code was too restrictive and made exceptions. As you can see, the city recognizes it is too restrictive, quite a lot.

This rigidity forces cities to expand outward, eating up agricultural land and driving up costs for everyone. People who work in city planning know that the cost of a city is measured in linear feet:

• The linear feet of electrical lines, water, and sewage pipes. Ever wonder why we don’t have more underground electrical lines? The main reason is that our homes aren’t close enough together for it to be cost-effective.
• The linear feet between homes and essential services-like fire stations, schools, police stations, and hospitals.

As a result, the costs of this sprawl are spread across all residents in the form of higher city taxes.

If we keep running out of room in the city center, we’ll sprawl outward, consuming valuable agricultural land and creating “California-style” urban sprawl. This is unsustainable and expensive.

To put it bluntly: we’re going to run out of room. The most valuable land is often locked up in rigid, exclusionary zoning. The only reason OKC has managed to build more housing than cities like Tulsa or Lawton is it’s very large and has land, but it will run out too, and eat up the remaining agricultural land in the process.

If we want to fix this, it starts by rethinking what should be allowed by right-meaning without the need to ask for permission every time we want to build something a little different.

“89% of homes built in last 10 years were single-family and outside the city core.” – OKC City Planner, Marilyn Lamensdorf Allen

That’s why we see an overwhelming dominance of large single-family homes across the city. In fact, between 2013 and 2023, 89% of all new homes built in Oklahoma City were single-family homes-and most of them were built outside the city core.

Today, starter homes-the entry-level homes that young families, new workers, and seniors need-are becoming nearly impossible to build. Why? One major culprit is minimum lot size requirements. These rules force every new house to sit on a large piece of land, making it more expensive to build and pushing families out of reach of affordable options.

But it’s not just about what cities allow. Cities are often quite reasonable and do permit different housing types-but only if builders go through a maze of approvals which they often hire a lawyer for. Every deviation from standard zoning requires costly public hearings, permits, and legal reviews. The result? A single project-like building a smaller home or a “granny flat” for an elderly parent-can rack up thousands of dollars in costs before a single shovel hits the ground.

Think of the man-hours involved: city staff, lawyers, planning commissions, city councilors-all paid to debate whether or not someone can add a small home on their property. That time and money are passed directly to homebuyers and renters, pushing up the cost of housing for everyone.

Meanwhile, young construction workers miss out on potential job opportunities because fewer small, affordable homes are being built. Young families stay stuck in their parents’ homes longer because they can’t find an affordable place to start their own households. Seniors, who might want to downsize to a smaller, single-story home near their children or essential services, are left with few options.

It’s not just a problem of if cities allow these homes-it’s about the hidden costs that make it nearly impossible to build them affordably in the first place.

Tulsa, where 81% is zoned for single-family, is making strides with infill development, but the process is slow and fragmented. It’s happening neighborhood by neighborhood, which means progress is uneven and hard to scale. This isn’t because Tulsa’s leaders lack vision-it’s because the public hearing process, mandated by the state’s zoning laws, forces every change to go through a tedious approval cycle. So, instead of a city-wide approach to expanding housing options, you end up with a patchwork of isolated projects.

But even without that, there is a coordination problem. Think of the housing market like a boiling pot with a tight lid. When you “lift the lid” by upzoning only one neighborhood or one city, the pent-up demand explodes into a flurry of construction-causing rapid changes in just that one area, rather than steady growth that benefits the whole region. Imagine lifting just one corner of a boiling pot: the steam escapes violently, instead of being released gradually and evenly.

That’s why, when zoning reforms are too isolated, you see sudden, dramatic developments-which is why we may soon see a 1,900-foot tower outside our window here shooting up next to low-rise buildings. These “hot spots” can spark backlash and lead to fears of overcrowding or disruption. Meanwhile, neighboring cities-especially rural communities-are left behind, missing out on new housing and job opportunities.

But by working with the state, cities can spread construction more evenly. That way, no single neighborhood experiences drastic change, and everyone has access to more affordable homes. It’s a way to ensure that growth is gradual, coordinated, and more sustainable.

Norman’s zoning problem is even more extreme than in other cities: 98% of its residential land is zoned exclusively for single-family homes. Some of the pink areas are what Norman calls “residential estate” zoning districts, which are even more restrictive. This regulation mandates that you can only build one dwelling unit per two acres of land-essentially requiring homeowners to own what amounts to an “estate.”

To put this in perspective, imagine if we regulated the car market the same way. It would be like saying, “If you live in this neighborhood, the only car you’re allowed to buy is a luxury Cadillac.”

We grow up with this idea that owning a plot of land means freedom-to build, to expand, to shape it as we need. And that’s true… as long your front-yard setback is at least 25 feet, your lot width is at least 50ft, and if you want to add a small home for grandma in your backyard, you better ask the council for permission-often after paying for lawyers, permits, and countless public hearings.

Too many of our housing laws treat housing like a luxury good-something only attainable in big, expensive packages. But housing shouldn’t be one-size-fits-all. We should let people build what they need-whether it’s a small starter home, an accessible unit for a senior, or a modest duplex to rent to a student.

In all three cities, the underlying issue is the same: outdated zoning laws are choking off housing supply and creating artificial scarcity.

Zoning reform alone won’t solve our housing crisis, but it’s a crucial first step. By modernizing our zoning codes, we can increase housing supply, make homes more affordable, and create vibrant, inclusive communities where people want to live, work, and raise their families.

Thank you. And I will hand off to Sabine to talk more about how states and cities can work together to accomplish that.

—

Comments from Sabine Brown, Senior Policy Analyst for the Oklahoma Policy Institute:

For about the last 100 years, zoning has been predominantly in the purview of municipalities, but given the increasing affordable housing crisis and the barrier that zoning creates to building affordable housing stock, states are beginning to look into zoning reform and find ways that state legislatures can increase the variety of housing being built.

In the next section, I’m going to highlight legislation that some states have passed. This is not an exhaustive list. I have chosen three to focus on – Washington, Montana, and Utah – because their plans had broad bipartisan and stakeholder support which includes the support of their city or municipal leagues.

I’ll start with Washington. In 2023, Washington passed HB 1110 which allows for greater density in cities of at least 25,000. Cities with a population of at least 25,000 now must allow two units per lot, four units on lots that are within a quarter mile of a major transit stop, or 4 units if one unit is affordable housing.

What is considered affordable is defined for rental and owner-occupied units? 

For rental housing, it means affordable for 60 percent of the median household income adjusted for household size, for the county where the household is located. For owner-occupied housing, it means affordable for 80 percent of the median household income adjusted for household size, for the county where the household is located. For cities with a population of 75,000 or more, they must allow four units per lot, six units for lots within walking distance of a major transit stop, and six units if one unit is affordable. And as I mentioned, this plan was supported by the Association of Washington Cities.

The next state I wanted to highlight is Montana. Montana Governor Greg Gianforte was one of the biggest drivers of their state zoning reform plan. He started by launching a housing task force in 2022, which identified zoning as a top priority. This task force is still in existence today. One of the pieces of legislation to come out of this task force was SB 382: The Montana Land Use Planning Act.

The Montana Land Use Planning Act requires cities with a population of at least 5,000 in counties with populations over 70,000 to update their zoning, land use, and subdivision regulations by 2026 and they have to incorporate 5 housing strategies set forth by this act. There is a long list of strategies that cities can use and include strategies like allowing duplexes, ADUs, mixed use developments, or eliminating red tape like reducing or eliminating lot size minimums and parking requirements that make it easier to build starter homes or smaller homes for seniors and other more affordable housing options. And they may not treat manufactured housing – that’s housing that is prefabricated off-site and then transferred onto the property – differently.

Montana also passed SB 323 which requires cities with a population of at least 5,000 to allow duplex housing on any lot. And they also passed SB 528 which requires cities to allow accessory dwelling units which are secondary living units that can be attached or detached from the primary home and includes granny flats, garage or basement apartments, or backyard cottages.

The last state I want to highlight is Utah.

Again, Utah has passed numerous land use reforms will broad stakeholder support. One reason they have had such good support is they started by forming a Commission on Housing Affordability in 2018. The commission is made up of a broad range of stakeholders, including representatives from the housing industry, municipal and county government, chambers of commerce, and nonprofit organizations. Much of Utah’s land use reforms were born out of this commission. The commission is still in existence today recommending new reforms.

One of Utah’s first reforms was requiring Moderate Income Housing Reports. This has been required since 2005, but they’ve worked recently to make sure they are being implemented. All jurisdictions must submit an annual moderate income plan describing housing strategy and how it is being implemented. There are minimum requirements that jurisdictions must meet, many of which are increased housing density or land use reform requirements.

Jurisdictions that:

• surpass minimum requirements are given priority for transportation funds
• meet the minimum requirements are eligible for transportation funds
• fail to meet minimum requirements must pay a penalty that increases after one year

The penalty fee was a new addition but the League of Cities was in support

One of Utah’s biggest reforms was Housing Transit Reinvestment Zones. This is a structure that allow cities to fund mixed-use, multi-family and affordable housing projects near transit centers. This enables cities to capture a portion of the incremental tax growth to support the costs of development.

Following legislation was based on this model and scaled to meet the needs of other areas, such as those without a transit center. Examples are the First Home Investment Zone and Home Ownership Promotion Zone, which both use this same model to promote the development of affordable homes in less dense areas.

Much like in these states, zoning reform has been flagged as a need in Oklahoma for a while now. The Rural Housing Task Force in 2001 under Gov. Keating flagged encouraging municipalities to modernize zoning codes as one of the recommendations.

And the Department of Commerce Consolidated Plan has listed zoning reform in the last two five-year plans.

HB 1559 by Rep. Echols was a proposal voted on last year that did not get a final vote before deadline. A lot of opposition to zoning reform comes in public hearings mandated by state law and is opposition not based in fact — things like concern that building affordable housing will bring down property values — and that creates a big barrier when trying to build the housing our communities need. HB 1559 was a wider ranging zoning bill that sought to clarify that zoning must be related to public welfare and based in fact. It would have established that public protest cannot be the sole reason for a zoning decision.

HB 2724 by Rep. Blancett and Sen. Kirt was not strictly a zoning reform bill, but I wanted to bring it up because the states that have enacted land use reforms with broad support did so by bringing a wide range of stakeholders to the table first. HB 2724 would have created a similar structure by forming an affordable housing commission that would be made up of a broad range of stakeholders including representatives from development, finance, commerce, housing authorities, and nonprofits

In conclusion, zoning isn’t everything, but it is a start. Zoning reform won’t solely fix the housing crisis, but it is difficult to build the housing we need without it. We have good evidence from cities that have opened up more land for more diverse types of housing that it does bring housing costs down. The natural question you might be asking is did these statewide reforms work and the answer is it’s too early to tell. Most of these were enacted in the last few years and most experts agree that zoning reform takes up to 10 years to see results. We also know that Oklahomans are struggling to keep up with housing costs and we have a severe shortage of affordable homes so the sooner we can enact solutions the better.