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Inclusionary Zoning

Best Practice Category

Complete Neighborhoods Affordable Housing

Description

Inclusionary zoning (IZ) requires or encourages developers to reserve a portion of housing units for low-income residents as a condition of permitting approval. Inclusionary zoning programs may be mandatory or incentive-based. Possible incentives include density bonuses, expedited permits and approvals, relaxed design standards, or and/fee waivers.

According to Reconnecting America and the Center for Transit-Oriented Development (2016), key components in effective IZ policies include:

  • Restricting off-site compliance to sites located within ½ mile of a transit station
  • Prohibiting or discouraging use of in-lieu fees and focusing efforts on building affordable units as part of the proposed development project
  • Allowing developers to meet inclusionary requirements through 100% affordable buildings, instead of requiring buildings to feature a mix of market-rate and affordable units. In this scenario, market-rate developers can contract with nonprofit developers to produce and manage affordable housing more efficiently
  • Applying inclusionary requirements to condominium conversions (when other condominium conversion controls are not already in place)

Ultimately, IZ policies work best when implemented as a multi-faceted affordable housing strategy (Mukhija et al., 2015) and are most often seen in larger cities with high cost housing markets and low housing production (Schuetz, 2011; Madar 2015). According to Damewood and Young-Laing (2011), IZ policies may also minimize adverse effects of gentrification, such as displacement of low income families. Furthermore, there is evidence that IZ programs that include density bonuses and exempt smaller projects are effective in producing more affordable housing (Schuetz, Meltzer, and Been 2009).

Outcomes

  • Increased access to affordable housing
  • Increased access to quality housing
  • Increased socioeconomic diversity within neighborhoods

Examples

Los Angeles Cornfields Arroyo Seco Specific Plan (LA CASP) – The Cornfield Arroyo Seco Specific Plan encourages developers to include affordable housing in their developments through a density bonus. With a floor area ratio (FAR) set at 2.5, developers who include affordable housing are eligible for FARs above 2.5. It is seen as a landmark plan largely because it is one of the first efforts to codify these incentives in a community’s land use policy.

West Hollywood, CA – The City of West Hollywood runs an Inclusionary Housing Program which requires 20% of units in new housing projects to be affordable for income qualifying households. Developers of residential projects with 10 or fewer units may elect to pay a fee instead of providing an affordable rental unit. These fees are placed in the West Hollywood Affordable Housing Trust Fund. Residential projects of 11 or more units must provide units on-site.

Pasadena, CA – The City of Pasadena’s Inclusionary Housing Ordinance (IHO) requires that residential developments of ten or more units set aside 15 percent of dwelling units as affordable housing. Since the onset of the ordinance in 2001, approximately 1,370 affordable housing units have been produced near transit (ULI, 2014). The City’s approach to affordable housing has been multi-faceted, with the adoption of a Housing Incentives Fee Program in 2004 and a Density Bonus Ordinance in 2006.

Additional Examples

Montgomery County, MD – Montgomery County’s “Moderately Priced Dwelling Unit Ordinance” is one of the oldest mandatory inclusionary zoning policies in the country. From 1976 to 2013, the program produced more than 14,000 affordable units. Although a large portion of those units are no longer affordable, the county has altered the requirement for rental units to remain affordable for at least 99 years, and that ownership units remain affordable for at least 30 years. This stipulation is renewed each time the property is sold.

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