Housing Policy Explainer
Discretionary Reviews
Discretionary reviews in housing have been central to the housing policy debate in cities and states across the county. Many of the planning and zoning policy reforms discussed touch on what type of housing and how much housing is allowed in a given location under certain conditions.
WHAT ARE DISCRETIONARY REVIEWS
Discretionary reviews occur when housing project approvals at the local level are reviewed on a case-by-case basis when the proposed project requires a variance. Types of discretionary reviews include conditional-use permits, planned unit developments, or any other variance request. While the process is dependent on the type of variance, a municipality’s process, and state laws, discretionary reviews often have more public hearings than by-right projects and result in more procedural steps and requirements for both project applicants and municipal staff.
The alternative for discretionary reviews is by-right (or as-of-right) development, where the municipality approves the proposed housing project through an administrative or ministerial process.
A discretionary review may be triggered on any of the following conditions:
Housing Typology: Is the type of new housing allowed as by-right without conditions in that zoning classification?
Density: Does the proposed housing project comply with the density requirements of the comprehensive plan or zoning classification?
Performance Standards: Does the proposed housing project comply with all performance standards for the specific type of housing in that particular location? Performance standards include:
- Aesthetic Mandates
- Building Dimension/Elevation Requirements
- Exactions, Dedications, and Fees
- Floor Area Ratio
- Landscaping Requirements
- Lot Coverage / Impervious Surface
- Lot Size and Dimension
- Park, Trails, and Open Space
- Parking Mandates
- Setbacks (Front, Rear, and Side)
- Square Footage Minimums
- Other State or Regional Planning Regulations
Failure to comply with any condition above will trigger a discretionary review.
Issues with Discretionary reviews
Critics of increased reliance on discretionary reviews have highlighted how these reviews can impact project costs and viability.
Discretionary approval gives municipalities the ability to a) kill or downsize projects that they find unfavorable, b) shape projects (beyond what measurable dimensional requirements mandate), c) determine builder-led mitigation strategies to address possible negative impacts of projects on the community, and d) sometimes even capture value from lucrative developments (beyond what is needed for mitigation) and directing it towards public ends. Value capture and mitigation can include infrastructure upgrades, donations to funds, inclusion of deed-restricted affordable homes, and other benefits.”
Dian, Amy. “Exclusionary by Design.” Boston Indicators. November 2023.
Discretionary Reviews: Production Roadblock
Because discretionary reviews require approval to work through a separate, more rigorous process, these reviews and approvals take longer than by-right approvals. Research by UCLA found that by-right approvals were granted 24-32% faster than discretionary reviews, depending on project type[1].
Discretionary reviews do not only prolong a project, but they can also result in a reduction in units or even prevent a project from being approved altogether. With any of these outcomes, housing production is negatively impacted.
Discretionary Reviews: Affordability Roadblock
Discretionary reviews in housing can add to the cost of housing in several ways. First, discretionary reviews can result in additional planning, engineering, and design work, both before entering the process and while working through the discretionary review as the project applicant seeks to prepare a project that will be able to obtain approval. The second is the cost of delays, such as the carrying cost of letters of credit.
Another important way discretionary reviews impact affordability is the terms and conditions imposed upon a project to obtain a discretionary approval. Getting diverted to a discretionary review opens the door to what is known as the “give-to-get” aspect of discretionary approvals. This is when a project applicant must give concessions or exactions to the municipality to get the approval, conditions which often increase the cost of housing.
As density plays a critical role in determining housing costs, the loss of density that results from the discretionary review can result in increased housing costs.
Discretionary Reviews and Exclusion
Many of the performance standards that trigger a discretionary review or are imposed upon a project as the result of a review are tied to policies that have their roots as exclusionary zoning tactics. These same tools are used today as a function of fiscal zoning, which uses zoning controls in increase housing costs to restrict housing access based upon socioeconomic status.
conclusion
From multiple critical measures – affordability, production, and access – housing discretionary reviews pose a significant barrier. Moving to true by-right requires municipalities or states to set housing requirements and standards that are not too rigid. It also requires a level of awareness and interplay between all regulations to ensure that what is allowed on paper is also allowed in practice.
[1] Manville, Michael; Monkkonen, Paavo, Gray, Nolan; Philips, Shane. “Does Discretion Delay Development?” Journal of the American Planning Association. November 2022.