Inclusionary Zoning: Using the

Market to Create Affordable Housing

Alan Mallach, Senior Fellow

National Housing Institute

inclusionary zoning

A Brief DefinitionAn ordinance or program that requires or provides incentives for developers to provide affordable housing as a part of their market-rate developments, either by including the affordable housing in the development, building it off-site, or contributing land or money to a housing trust fund in lieu of construction.

Inclusionary zoning

What can inclusionary zoning achieve? Create a pool of permanently affordable

housing Generate resources for an affordable

housing trust fund Foster mixed-income housing and greater

economic integration

inclusionary zoning

Historical background IH began in 1970’s as strategy for suburban

integration Pioneering states were CA, MA and NJ In 1990’s IH began to move into urban areas In past decade IH has become a nationwide

strategy

inclusionary zoning

Critical elements in inclusionary zoning Legal authority Economic feasibility/market demand Clearly defined rules Political will

inclusionary zoning

Legal authority Land use or exaction? Statutory authority Court decisions Police power

inclusionary zoning

Economic feasibility Strong housing demand Market prices make development profitable Development ground rules permit reasonably

efficient development Availability of cost offsets (density bonuses, fee

waivers, tax abatements, etc.) where needed.

inclusionary zoning

Clearly defined rules and standards Number (or %) and affordability level of

affordable housing What alternatives are available under what

conditions Controls to ensure long-term affordability Effective enforcement of rules

Inclusionary zoning

OPTIONS On-site development

Off-site development

Future development

Construction Build on-site Build off-site NA

Land contribution NA Contribute land to CDC for specific development

Contribute land to land bank

Cash contribution

NA Contribute funds to CDC for specific development

Contribute funds to housing trust fund

inclusionary zoning

Key elements in managing inclusionary zoning Set ground rules with developers up front Recruit and qualifying buyers and tenants Ensure long-term affordability Manage the trust fund (if buyout funds are

collected)

inclusionary zoning

Political will Commitment to creating affordable housing Willingness to confront development industry Support from housing advocacy community Readiness to commit energy and resources to

making it work

inclusionary zoning

What can inclusionary zoning accomplish? Create affordable housing in strong market

environments Harness private sector energy to create affordable

housing Leverage public resources Foster mixed-income, economically integrated

communities