Affordable Housing Toolkit Snapshot: Inclusionary Zoning

This blog is part of a series spotlighting the writings of first-year DCRP Master’s students in fulfillment of PLAN720: Planning Methods in Fall 2017. 

The dearth of affordable housing options available to residents of our nation is slowly seeping into the national discourse, where previously it had largely been confined to the purview of urban planners, lawyers, and policy advocates. Matthew Desmond’s groundbreaking 2016 book, Evicted: Poverty and Profit in the American City, and other timely pieces have helped shed light on the plight of those struggling to find adequate housing. The problem is not just limited to the poor or very poor: as wages have remained stagnant and housing prices have continually risen, even those with traditionally working class roles and moderate incomes, such as teachers, firefighters, and police officers, struggle to find affordable housing options.

As municipalities have grappled with how to combat this issue, they have turned to a number of innovative methods. One highly discussed method that many local governments have used is the practice of inclusionary zoning. At its core, inclusionary zoning (also known as inclusionary housing) involves creating zoning regulations that encourage private-market housing developers to set aside a certain percentage of units at a less than market rate price.

Though inclusionary zoning is often used as a term to denote one single policy, the term actually refers to a host of different policies, that, while sharing fundamental characteristics, vary widely from policy to policy and from location to location. Inclusionary zoning often applies to rental units, though there are inclusionary zoning policies in place for ownership as well. Additionally, the set aside percentages for each development (i.e. the portion of units which must be affordable) vary. Furthermore, the definition of “affordable” varies from policy to policy. Typically, the zoning regulation requires units be made available to those making a certain percentage (or below) of the Area Median Income (AMI). This AMI percentage is determined for each geographic location by the United States Department of Housing and Urban Development. Recognizing that producing on-site affordable housing is not always feasible, a number of inclusionary zoning policies offer alternative options for developers, which can include: 1) off-site construction of affordable housing; 2) land dedication; 3) credit transfer; 4) payment of in-lieu fees; and 5) conversion of existing units to affordable housing.1 The availability of these options vary by both location and policy. Finally, a common distinguishing feature of inclusionary zoning policies is whether the policy is mandatory or voluntary in nature.

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Housing development under construction in Washington, D.C. Photo Credit: Adam Fagen/Flickr CC BY-NC-SA 2.0

Though there is some debate on the scale of impact that inclusionary zoning has on producing affordable housing units, a number of studies have noted that it can be successful if tailored correctly. Researchers from New York University’s Furman Center conducted a study of inclusionary zoning policies in San Francisco, California; Washington, D.C.; and Boston, Massachusetts. The study concluded that the adaptability of inclusionary zoning is well suited to confront localized housing issues and functions as a “nuanced mechanism” for the creation of affordable housing, though it is not incapable of solving affordable housing problems on its own. The idea that inclusionary zoning is a useful tool, though not necessarily a panacea, for creating affordable housing is commonly echoed among researchers. While there is widespread support for inclusionary zoning, there are also critics who contend that it chills the production of private development of housing by raising prices and deterring developers, which in turn limits the production of affordable housing. While studies acknowledge that this does occur, the observable effects have often been minimal.3 

Increased attention has been paid to the role of alternatives offered to developers under inclusionary zoning policies. A study focusing on the effects of inclusionary zoning in California noted that the combination of two or more incentives greatly increased the likelihood that affordable housing would be produced on site (meaning that developers would choose to build affordable units rather than take an alternative choice under the law).4 Further, in a recent study, researchers from UC Berkeley advocate for mandatory, but flexible policies, noting that alternatives can be successful in furthering affordable housing.5 However, the study also noted that setting in-lieu fees too low, or failing to adequately revise them over time, reduces the effectiveness of inclusionary programs. Another study underscores the need for flexible inclusionary zoning programs, noting that policies in the San Francisco area that granted density bonuses and exempted smaller projects produced more affordable units overall than other policies.6 Most scholarship suggests that flexible mandatory programs are best at producing affordable units.

Finally, as inclusionary zoning is a function of local government’s zoning power, there are important legal considerations within this conversation. In Dillon’s Rule states, local governments can only exercise powers expressly delegated to them through enabling statutes, while in home rule states, local governments have inherent power to regulate. In North Carolina, a Dillon’s Rule state, the legality of inclusionary zoning is murky, as the state statute granting municipalities the power to zone does not seem to grant the type of power that inclusionary zoning requires. Thus, it is important to note the limits of each local government’s power in crafting inclusionary zoning ordinances.

While the effects of inclusionary zoning policies are difficult to assess, there does seem to be a consensus that it is a useful tool, though perhaps not a panacea for solving all affordable housing issues. Further, the literature indicates that certain characteristics of inclusionary zoning policies tend to create more affordable units: creating a mandatory rather than voluntary policy, offering flexibility for developers, and ensuring that the alternatives offered are not too low as to insufficiently contribute to off-site affordable housing. Local governments around the country are searching for ways to promote affordable housing within their jurisdictions. Inclusionary zoning can be useful tool in this endeavor, if utilized in the proper manner. Local governments vary from state to state and location to location; thus, it stands to reason that there is no one-size-fits-all inclusionary zoning policy. However, as there are a number of characteristics of inclusionary zoning policies that have worked to create affordable housing, planners, lawyers, and policy makers should take these successful characteristics into account when crafting their own inclusionary zoning policies.

Featured Image: Affordable Housing. Photo Credit: Dhgisme/Wikimedia Commons

Garde, A. (2016). Affordable by Design? Inclusionary Housing Insights from Southern California. Journal of Planning Education and Research, 36(1), 16–31. https://doi.org/10.1177/0739456X15600033

Schuetz, J., Meltzer, R., & Been, V. (2009). 31 flavors of inclusionary zoning: Comparing policies from San Francisco, Washington, DC, and suburban Boston. Journal of the American Planning Association, 75(4), 441–456. https://doi.org/10.1080/01944360903146806 

Ibid. 

Ibid. 

Mukhija, V., Regus, L., Slovin, S., & Das, A. (2010). Can Inclusionary Zoning Be an Effective and Efficient Housing Policy? Evidence from Los Angeles and Orange Counties. Journal of Urban Affairs, 32(2), 229–252. https://doi.org/10.1111/j.1467-9906.2010.00495.x

Armstrong, A., Been, V., Meltzer, R., & Schuetz, J. (2008). The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas. Retrieved from http://furmancenter.org/files/publications/IZPolicyBrief.pdf.

About the Author: Matthew Norchi is a third-year dual degree student pursuing a law degree and a Master’s degree in City and Regional Planning at the University of North Carolina at Chapel Hill. Matt is interested in equitable land use planning, affordable housing, and economic development. In his spare time, Matt enjoys listening to psychedelic music, watching UNC basketball, reading, and speculating about all things Star Wars.