On the Unintended Consequences of Inclusionary Zoning

"While support for older housing affordability policies has dissipated, the same isn’t true of inclusionary zoning," writes Washington.

"IZ has emerged as the affordable housing policy of choice because it has the benefit of supporting socioeconomic diversity, and its costs are opaque and dispersed over many people."

"However," writes Washington, "IZ has several key downsides including these hidden costs and a failure to meaningfully address housing affordability for a significant number of people."

After acknowledging that inclusionary zoning beneficiaries win a lottery, Washington explains that "IZ’s effects are not limited to beneficiaries, and its costs are not fully borne by developers. Because developers will lose money on the IZ units they build, this cost has to be made up in the market rate units in order for the project to go forward. This adds to construction costs and also incentivizes luxury units that can better absorb the cost of the IZ units relative to more affordable construction." Stated another way: "IZ appears free to everyone except developers because it’s not paid for out of city budgets. But ultimately housing consumers share in the cost of IZ units through a hidden tax."