Pic Source: The Architects Newspaper
Inclusionary Zoning (IZ) has been a useful policy tool for requiring developers to set aside a percentage of housing units in new residential developments and make them available to low- and moderate-income households in exchange for tax breaks and other compensations including density bonuses, zoning variances, and/or expedited permits that reduce construction costs. This integration of affordable housing options into market-rate projects creates opportunities for households with diverse socioeconomic backgrounds to live in the same developments. Approximately 500 municipalities in 27 states have adopted IZ policies and as many as 150,000 affordable IZ units have been made available since 1974. Most IZ laws cover developments that exceed a minimum number of units but are always triggered by the award of a public benefit, such as the granting of a zoning change, city land or a public subsidy. Some cities require affordability in all developments, regardless of size. Others apply to developments that exceed a certain square footage, and at least one city requires affordability only when higher-end units are built. By linking the production of affordable housing to private market development, IZ aims to expand and leverage the supply of affordable housing and promote social and economic integration by helping to de-concentrate poverty and broaden opportunity.
Mandatory IZ laws require developers to build affordable units in exchange for zoning and land use approval. Approximately 83% of IZ policies throughout the country are mandatory. A review of IZ policies found that mandatory programs are more effective at producing affordable units. They provide developers with greater predictability. Some programs also include developer opt-outs, such as requiring developers to pay fees or donate land in lieu of building affordable units or providing the units offsite. This degree of flexibility is essential to ensuring the success of IZ programs.
Incentive-Driven or Voluntary
Voluntary IZ policies provide incentives for developers to produce affordable units. Incentives typically involve regulatory flexibility providing some financial benefit to a developer, such as increased building height/density, relaxed parking requirements, fee waivers, etc. However, while voluntary programs pose less opposition from developers, they only produce affordable units if they offer substantial subsidies to the developer, or function as a mandatory policy by making it difficult for developers to obtain discretionary building permits without including affordable units in their projects.
U.S. Department of Housing and Urban Development | Inclusionary Zoning and Mixed-Income Communities
Furman Center For Real Estate and Urban Policy | The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas
City Lab | Inclusionary Zoning Does Not Drive Up Housing Costs
The Municipal Research and Services Center (MRSC) | Inclusionary Zoning: One Approach to Create Affordable Housing
Business and Professional People for the Public Interest | Opening the Door to Inclusionary Zoning
National Association of Home Builders | Inclusionary Zoning Primer
The Brookings Institution Center on Urban and Metropolitan Policy | Expanding Affordable Housing through Inclusionary Zoning: Lessons From The Washington Metropolitan Area
Urban Land Institute | The Economics of Inclusionary Development