The Tradeoffs of Inclusionary Zoning: What Do We Know and What Do We Need to Know?

Abstract

Inclusionary zoning (IZ), a controversial planning tool for supplying affordable housing, grew significantly during the 2000s' housing boom in the USA. We review the resultant scholarly literature on IZ. Our key reading is that IZ can include both tradeoffs and practical efforts to address them. There is also a need for additional research. More specifically, we find that IZ programs (i) have many components and vary considerably; (ii) can increase affordable housing production and social integration, but there can be a tradeoff between these goals; and (iii) can have slight adverse market effects, but cost-offsets can help mitigate the outcomes. Finally, we discuss the need for more research, particularly in-depth case studies and make suggestions.

Inclusionary housing in the United States: dynamics of local policy and outcomes in diverse markets

“…The categorization of IH program features in the U.S. is generally consistent across studies, regardless of whether the study is nationwide or focused on certain states. Most studies categorize IH programs to be either mandatory programs, which require developers to provide affordable housing, or voluntary programs, which incentivize the contribution of affordable housing (Calavita & Grimes, 1998;Dain, 2005;Jacobus, 2015;Mukhija et al, 2015;Thaden & Wang, 2017), although strength of requirement can be more granular (Porter, 2004). Household income requirements, which vary widely from a single maximum income threshold to multiple income group targeting, help identify program beneficiaries (Calavita & Grimes, 1998;Dain, 2005;Jacobus, 2015;Mukhija et al, 2015;Porter, 2004;Thaden & Wang, 2017).…”

“…Most studies categorize IH programs to be either mandatory programs, which require developers to provide affordable housing, or voluntary programs, which incentivize the contribution of affordable housing (Calavita & Grimes, 1998;Dain, 2005;Jacobus, 2015;Mukhija et al, 2015;Thaden & Wang, 2017), although strength of requirement can be more granular (Porter, 2004). Household income requirements, which vary widely from a single maximum income threshold to multiple income group targeting, help identify program beneficiaries (Calavita & Grimes, 1998;Dain, 2005;Jacobus, 2015;Mukhija et al, 2015;Porter, 2004;Thaden & Wang, 2017). Other commonly discussed program features include affordability term, the duration for which incomerestricted units remain affordable; compliance options, whether the contribution of income-restricted units is through on-site development or alternative options, such as off-site construction, payment of in-lieu fees, and rehabilitation of existing affordable units; set-aside requirement, which is typically set as a percentage of the total units in the development that need to be created at affordable rents or prices for target income group; incentives, which include cost-offsets such as density bonuses, zoning and design flexibility, and expedited approvals; affected development, the development type and/or minimum size that triggers the IH program; and geographic targeting, whether the IH program applies to an entire jurisdiction or certain parts.…”

Access to Affordable Houses for the Low-Income Urban Dwellers in Kigali: Analysis Based on Sale Prices

“…This approach to low-cost housing development is commonly referred to as inclusionary housing, which tends to maintain housing units within the reach of low-income groups, and therefore promote their integration in the growing urban fabric [83][84][85]. In any country, the inclusionary housing approach could be a government choice, by making it mandatory or voluntary for real estate developers, with respect to existing housing policy or affordable housing schemes [86,87]. Respondents to our survey questionnaires and participants in our interviews suggested that the government of Rwanda can introduce this affordable housing development option in collaboration with real estate developers.…”

Challenge of capturing socially generated land values: principle versus practicality

“…A parallel initiative emerged in the United States during the housing boom of the 2000s in the form of "inclusion zones". In these zones developers provide a percentage of affordable housing usually on a mandatory basis, but sometimes they receive an incentive in return (Mukhija et al, 2015).…”