Can Inclusionary Zoning Be an Effective and Efficient Housing Policy? Evidence from Los Angeles and Orange Counties

Abstract

Inclusionary zoning-requiring and encouraging developers to build some affordable housing in market-rate projects-is a growing but deeply contested practice. We evaluate the experience of inclusionary zoning programs in Los Angeles and Orange Counties, including their structure and elements, effectiveness in delivering affordable housing, and effect on housing markets and supply, to address the debate. We find that the programs vary but are not heavily demanding and include cost offsets. Low in-lieu fees, however, can be the weak link. Many of the mandatory programs are effective, if effectiveness is measured by comparing the affordable housing productivity of inclusionary zoning with other affordable housing programs. We found no statistically significant evidence of inclusionary zoning's adverse effect on housing supply in cities with inclusionary mandates. We conclude that critics underestimate the affordable housing productivity of inclusionary zoning, and overestimate its adverse effects on housing supply. Nonetheless, inclusionary zoning is no panacea and needs to be part of a comprehensive housing strategy. Improving access to affordable housing is always a key challenge for local governments. With regular cutbacks in both federal and state support for housing programs, the task keeps becoming more difficult. One local government-based response to the persistent affordable housing shortage in the context of declining funds is the policy of inclusionary zoning. Inclusionary zoning requires and encourages private housing developers to build a specified proportion-often ranging from 10% to 15% -of affordable housing units in market-rate projects. Although some scholars and Direct correcpondence to: Vinit Mukhija,

Indicators for Measuring Spatial Justice and Land Tenure Security for Poor and Low Income Urban Dwellers

“…The promotion of access to low-cost housing involves the inclusion of some land lots into residential sites that can be allocated at low prices or through general land redistribution processes to poor people. The proportion of those lots ranges from 15% to 20% of zoned land for residential housing [188]. 10.…”

State Mandates, Housing Elements, and Low-income Housing Production

“…However, low-income housing production requires three factors: clear rules that are easily interpreted by developers, housing advocates, and planners (Bratt 2012;Knaap et al 2007;Mitchell 2004;Talen and Knaap 2003;Veazey 2008); strong political will to place lowincome housing on the local/regional agenda (Basolo 1999b;Landis and McClure 2010;Mallach 2009;Mueller and Schwartz 2008;Mukhija et al 2010;Scally 2013); and consistent subsidies that allow low-income households to live without financial hardship (Defilippis and Wyly 2008;Goetz 2002;McClure 2004). Under Section 701, Congress fiscally supported the creation of municipal planning (clear rules).…”

“…States would set a regional in-lieu fee (i.e., impact fee or growth share) and program implementation would move with the market (Burge and Ihlanfeldt 2006;Mitchell 2004). In-lieu fees, collected as onetime funds, would subsidize new and/or rehabilitate low-income housing (Mukhija et al 2010;Schuetz, Meltzer, and Been 2009). Any housing unit touched by such funds should be affordable for thirty to forty-five years; if sold or refinanced, then the state should reset the program clock.…”

Do inclusionary zoning policies equitably disperse affordable housing? A comparative spatial analysis

“…Estimates for the total production of IZ units built between 1980 and 2000 range from 30,000 to 50,000 units (based on author's estimates from data collected for this paper and from the review unit counts in Mukhija et al 2010;Porter 2004;Schuetz et al 2011). Many of these units, however, are no longer subject to price controls, so the current stock of affordable units built through IZ programs is considerably less.…”

“…Following the adoption of an IZ program, its effectiveness in implementation is dependent on a range of factors, including program structure (e.g., project threshold, proportion of units required to be low-income, and in-lieu-of fee options); the political will to enforce the policy and the extent of supporting land use policies, the strength of the local housing market, and the outcome of localized conflicts between housing advocates and community opposition to new development (Dear 1992;Gaber 1996, Mukhija et al 2010Pendall 2009;Schively 2007;Schuetz et al 2011). These factors, in turn, affect project-level decisions to provide affordable units as part of a mixed-income development, which can influence the amount and location of affordable housing produced through an IZ program.…”