Will Philly's New Mandatory Inclusionary Zoning Yield Results?

City leaders hope a new affordable housing law will increase the supply of affordable units in the city, but critics say the policy may lead to reduced construction and higher housing costs.

February 21, 2022, 5:00 AM PST

By Diana Ionescu @aworkoffiction


EB Adventure Photography / Shutterstock

As Matthew Rothstein reports for Bisnow, "On Jan. 18, Mayor Jim Kenney signed into law Philadelphia City Council Bill No. 210633, which requires any new residential buildings of 20 units or more to set aside 20% of those units for affordable housing." The new mandatory inclusionary zoning law only applies to portions of two council districts, prompting questions about unintended consequences like displacement and gentrification

According to Rothstein's article, "The Olde Kensington overlay created by the law overlaps with HACE’s service area, where a heavily Latino population is feeling the pressure of an ongoing wave of development bringing higher-income households to the area." Rothstein cites critics of the law who say that "Philadelphia housing doesn’t achieve the market-rate rents and home prices necessary to keep development going in the affected areas."

In an article in the Fairfield Sun Times, M. Nolan Gray argues that "Between high construction and land costs – in addition to the new mandate that developers give up a fifth of all the units they produce –  it’s likely that few developments, if any, will prove viable." Gray points to examples from other cities: "Since adopting a similarly aggressive ordinance in 2016, Portland has seen new multifamily permit applications plummet." According to Gray, "Indeed, to the extent that mandatory inclusionary-zoning programs act as a major new tax on housing development, they have been found to drive up housing costs."

Gray provides a series of recommendations that include "allowing more housing construction in high-opportunity neighborhoods with ample access to jobs and transit" while also finding more effective uses for existing assets like city-owned vacant lots. "To avoid the fate of other high-cost cities along the northeast corridor, Philadelphia must keep its current housing boom alive, while being smart about preventing displacement and adding new affordable housing."

Monday, January 31, 2022 in Bisnow

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