Planopedia

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What Is Inclusionary Zoning?

Inclusionary zoning refers to a range of policies and practices that mandate or provide incentives for the inclusion of affordable housing units in new developments to encourage mixed-income neighborhoods and increase the supply of affordable housing.


San Francisco Apartments

Francesca Cappa / Flickr

Inclusionary zoning (IZ) is a planning tool intended to ensure economic diversity and inclusivity in the housing market. Inclusionary zoning policies can include both mandatory requirements or voluntary incentives for the inclusion of affordable, deed-restricted housing units in new or renovated developments. Meant to counteract the effects of exclusionary zoning, the main purpose of inclusionary zoning policies is to desegregate the housing market by ensuring the ongoing production of affordable housing. In theory, the intended outcomes of inclusionary zoning would offer low- and moderate-income households the opportunity to live closer to transit, job centers, and other amenities, but debate continues about the effectiveness of the policies in achieving these goals.

The first inclusionary zoning policy in the United States, drafted in Fairfax County Virginia in 1971, fought its way through state courts and paved the way for others, such as the historic Moderately Priced Dwelling Unit (MPDU) program established in Montgomery County, Maryland in 1972. One of the first statewide inclusionary zoning policies was the affordable housing requirement enacted by the California Coastal Act of 1976, which stipulated that "it is important for the commission to encourage the protection of existing and the provision of new affordable housing opportunities for persons of low and moderate income in the coastal zone." California continues to issue affordable housing mandates to cities with mixed success.

The U.S. Department of Housing and Urban Development (HUD) identifies over 400 localities with inclusionary housing policies, while the Grounded Solutions Network, which monitors inclusionary zoning across the country, has identified more than 860 jurisdictions in 25 states with "some type of inclusionary housing policy." The states with the most programs are Massachusetts, New Jersey, and California. 

New York City's Mandatory Inclusionary Housing (MIH) program, enacted in 2016, requires new buildings in areas "rezoned to allow construction of more residences than current rules allow" to include affordable housing, offering multiple options for how developers can achieve the required thresholds. MIH follows a voluntary program, known as VIH, that provided tax abatements and other developmental benefits in exchange for the inclusion of affordable units. Prior to the enactment of MIH, which also mandates that affordable units share the same entrances and be spread out throughout the building's floors, developers would frequently include affordable housing units with separate entrances and common areas, a phenomenon dubbed "poor doors." In Portland, Oregon, an inclusionary zoning program enacted in 2017 has produced what some call an underwhelming number of new affordable housing units that doesn't keep up with the rising demand for housing in the city. Other recently enacted policies include those in Los Angeles County, Washington, D.C., Santa Monica, Boston, and Atlanta.  

Largely left to local decision makers, inclusionary zoning policies vary widely in a variety of ways:

  • whether a program is mandatory or voluntary
  • the percentage of affordable housing required (generally 10-30%)
  • types of applicable housing and exclusions, minimum size of applicable buildings 
  • eligibility of tenants and income limits
  • the price deemed "affordable"
  • term limits (i.e., how long the units must remain affordable)
  • alternatives and opt-outs for developers (e.g. fees, options for off-site units)
  • incentives (e.g. density bonuses, expedited/reduced cost permitting) 

Although some states have statewide affordable housing mandates, these are often applied and enforced unevenly, if at all. In some cases, state legislatures have hindered the enactment of inclusionary zoning laws. In 2017, 11 states had statutes that prevented localities from enacting inclusionary zoning policies.

Supporters of statewide inclusionary zoning policies assert that creating broad, regional policies will reduce costs for municipalities and provide equitable opportunities for all residents. More recently, movements to strengthen and standardize policies across state or countywide jurisdictions have gained increasing support, not without pushback from localities who want to maintain control of land use regulations. Although most state policies allow for some flexibility based on local conditions, regional and statewide inclusionary zoning is sometimes criticized as a "one-size-fits-all," top-down approach that steamrolls over local concerns, fails to take into account unique local conditions, and imposes blanket policies that can destroy the character of historic neighborhoods. 

Opponents of mandatory inclusionary zoning argue that manipulating the housing market is detrimental to development and discourages much-needed new construction, calling for an approach that encourages more market-rate construction through voluntary programs and incentives, which can ease housing pressures and thus increase affordability through market forces. 

In lieu of or in addition to mandatory requirements, some cities use incentives such as density bonuses or expedited permit approval in exchange for compliance with affordable housing requirements. A density bonus gives developers the right to build more units and/or taller or bigger buildings than normally permitted in an area if they meet certain affordable housing thresholds. Some housing advocates approve of this tactic as a way to increase density and thus raise the total number of housing units on the market.

Studies have found that, for the most part, inclusionary zoning policies have had small but measurable positive effects on new affordable housing construction, and that the policies have the strongest positive impacts in higher-income areas, which means more units reserved for low-income households in high-opportunity zones. Thus, efforts to require affordable housing must be balanced with ensuring that mandates don't discourage development altogether and must include oversight and enforcement mechanisms that ensure compliance at the local level. A 2020 report from the Manhattan Institute found that New York's MIH program led to the creation of 2,065 affordable units, less than a quarter of the number created through the program's voluntary predecessor, VIH, in the same timeframe. The variations in how IZ programs are set up and the local conditions seem to have an effect on the outcome of such policies. A 2008 report from NYU's Furman Center for Real Estate and Urban Policy found that in San Francisco, "nearly all" IZ programs led to the production of at least some affordable units, while close to half of suburban Boston communities with IZ programs had failed to build any new affordable housing at all. A HUD study that assessed the effects of the two oldest inclusionary zoning programs in the country (Fairfax County and Montgomery County) concluded that clearly delineated, consistent, and predictable requirements help keep developers engaged and invested in areas with IZ ordinances. When it comes to economic integration, according to research published by the Urban Institute in 2019, "the limited literature evaluating IZ policies’ effects on integration suggests that they do generally improve economic integration and provide low-income residents access to high-opportunity neighborhoods."

Supporters of inclusionary zoning claim that doing more to legalize multi-family housing, increase density, and require affordable units in high-opportunity neighborhoods will help reduce inequalities and "make it easier for people of all walks of life to live and thrive" in U.S. cities. Inclusionary zoning can be most effective when coupled with other non-zoning strategies that distribute the cost of affordable housing, enforce fair housing laws, and enhance opportunities for low-income households.