Exploring Inclusionary Zoning’s Effect on Affordable Housing
Local governments have increasingly used inclusionary zoning ordinances — over 400 jurisdictions since the 1970s — as a tool to expand the supply of affordable housing. These ordinances typically provide residential developers with incentives to reserve a certain number of homes in a development at prices affordable to low- and moderate-income households, or require them to make affordable homes available at an alternative site or pay a fee in lieu of development. Inclusionary zoning (IZ) can be a cost-effective way to provide affordable housing, with the public and private sectors assuming the costs of administration and financing, respectively. Some argue that the merits of IZ also include the social benefits thought to be associated with intermingling affordable and market-rate residential units in mixed-income developments.
At a time when declining household incomes, increased demand for rental units, and curtailed lending intensify the need for affordable housing, policymakers are seeking more information about the impact of local inclusionary zoning (IZ) on the affordable housing supply, and want to learn more about inclusionary zoning programs from those who operate them. A recent pilot study sponsored by HUD’s Office of Policy Development and Research, “Inclusionary Zoning and its Effect on Affordable Housing: Lessons From Two Counties,” examined the IZ programs in Montgomery County, Maryland and Fairfax County, Virginia. Both counties have seasoned inclusionary zoning programs and share contextual similarities in that both are located in the Washington, DC metropolitan area with populations that are relatively affluent, well educated, and racially and ethnically diverse. The housing markets in these counties are strong, despite the current slowdown in new construction.
Observations and Findings
Researchers collected primary and secondary source materials about the counties and the two IZ ordinances and conducted confidential interviews with program administrators, developers, property managers, and affordable housing advocates. They gathered information about the basic requirements of each county’s IZ ordinances, the history of their amendments, key stakeholders and their relationships, developer involvement, use of in-lieu fees, issues related to occupancy and unit management, monitoring and enforcement of affordability requirements, effects on consumers, and interactions with other county programs. From this information, the researchers were able to formulate the following findings:
The findings from this pilot study are promising, and suggest that the effects of inclusionary zoning on affordable housing merit possible inclusion on a future research agenda. Specifically, the researchers suggest that further study of IZ administration, developer involvement, consumer effects, and the involvement of housing agency and nonprofit organizations is needed. In-depth analysis of these issues would enhance the understanding of inclusionary zoning programs and their role in expanding the nation’s affordable housing stock.
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