Inclusionary Housing: Secrets to Success

Inclusionary housing programs tie the creation of affordable, below-market-rate units to the construction of new market-rate development. In its simplest form, an inclusionary housing program might require developers to sell or rent 10 to 20 percent of new residential units to lower-income residents at prices they can afford.

If designed properly, inclusionary housing can also be a tool to combat exclusionary zoning and promote racial equity in housing. Scholars like Natalie Moore and Richard Rothstein detail how neighborhood disinvestment and housing disparities are the direct result of federal, state, and local race-based policies. Exclusionary zoning, racially restrictive covenants, and redlining all deprived households of color of equal access to neighborhoods of their choice and of wealth-building through traditional homeownership. The first inclusionary policies were explicitly intended to reduce racial and economic segregation at the neighborhood level.

However, racial equity is not the only reason cities and counties may adopt inclusionary housing policies. Some use it as simply another tool to create more affordable housing. Others use it to promote mixed-income neighborhoods. Some communities see inclusionary housing as a way to reduce the risk of gentrification and displacement linked to market-rate development. And other programs are created primarily to incentivize new development, with the inclusion of affordable units as a side benefit.

There are hundreds of inclusionary housing programs across the nation, and more programs are being adopted every year. Grounded Solutions Network conducted a large-scale data collection effort between 2018 and 2019 to study inclusionary housing programs in local jurisdictions, building upon our previous 2017 working paper. Since 2017, new programs have emerged in places such as Atlanta, Portland, Minneapolis, and Detroit. In response to the growing number of municipal policies, some states have enacted their own laws that either support or impede the adoption of inclusionary housing by cities and counties. Notably, in California, the passage of Assembly Bill 1505 in 2017 (also known as “Palmer Fix” bill) returns power to local jurisdictions to implement inclusionary housing on rental projects. 

Policymakers and advocates want to make sure they are focusing their limited resources and energy on effective affordable housing strategies.

Is Inclusionary Housing a Useful Tool in My State?

In a few states, such as ...