Inclusionary Zoning for Affordable Housing

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					 Inclusionary Zoning for
   Affordable Housing
       Douglas R. Porter
The Growth Management Institute
       February 21, 2007
          Inclusionary Zoning
 Developers required to
  include affordable units in
  residential developments
 Key Points:
  – Percentage of affordable
  – Specified income level
  – Design requirements
 Stems from Three Housing Trends

1. Nationwide escalation of housing prices

2. Increase in households with inadequate
   incomes for decent housing

3. Decline in federal housing subsidies relative
   to need
Borrows from Two Regulatory Trends

1. Increased public use of exactions from

2. Requirements for “fair-share” housing
 Piggy-backs on market forces.

 Creates mixed-income housing wherever
  residential development occurs.

 Generates units as growth occurs.

 Retains developer responsibility for site and
  housing production.
             Raises Issues
 Fair or legal to require developers to help
  meet public responsibilities for decent
  – Perhaps not, but uses developers’ expertise
    and market forces to meet community goals
  – Generally considered legal if incentives help
    offset development costs
             Another Issue
 Who pays?
 -- Costs absorbed by premium prices for
    market-rate homes
  – Costs reduced (at least in part) by
  – Economists: Landowners absorb costs as
    markets adjust
  – Developers: cost of doing business in a
    desirable market
             How It Works
1. Mandatory or voluntary
2. Affected projects: size and location
3. Specified proportion of affordable units
4. Incentives offered
5. For-sale and/or rental units
             How It Works
6. Household income eligibility
7. Options for off-site construction, in-lieu
8. Guidelines for unit dispersal, size,
9. Duration of affordability (control period)
10. Owner/renter selection process, unit
       Project Size, Location

 One unit (Boulder) to 50 units (Fairfax Co.)
 Entire jurisdiction, designated areas, zoning
 Offsite option – neighborhood, area, or
   Density bonus: 10 – 25 %
   Fast-track approval process
   Reduction in standards (parking)
   Fee reduction, deferral, or waiver
   Subsidies for affordable units
   Exemption from growth controls
   Tax abatement
    Inclusionary Zoning in Practice
 State mandates (esp.
  California, New Jersey,
 Regional programs – a
  sometime thing
 Local programs: 350 to
  400 jurisdictions
 Production: 80,000 to
  90,000 units since 1970
Fairfax County, Virginia
Montgomery County,Maryland
    Inclusionary Zoning in Practice
 New trend: central city initiatives:
  – Boston
  – Denver
  – New York
  – San Diego
  – San Francisco

 Under consideration:
  – Washington, Atlanta, Chicago
             Big-City Hurdles
   Most market action is in suburbs
   Effective developer opposition
   Fragmented constituency
   Complex regulatory environment
   Expensive construction costs
Getting Started
        1. Make affordable
           housing more than an
        2. Build leadership and
           political will
        3. Expect to take short
        4. Recognize the need for
           a rigorous
           administrative process
               Getting Started
5. Knit IZ into a
   housing program
6. Borrow ideas, not
7. Choose incentives that
   make sense (cents)
8. Seek a state or regional
   commitment that will
   energize local
       Where to go from here?
 State/Regional Leadership
  – Requirements for local housing plans
  – Enabling statutes
  – Model ordinances
 More comprehensive applications
  – Conversions and adaptive use
  – Rehabilitation of existing units
  – In-lieu fees (high-rise, outlying, below-threshold)