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Abstract Inclusionary zoning (IZ), also known as inclusionary housing, has become a popular policy tool that local jurisdictions use to increase the production of affordable housing. IZ ordinances either require or encourage builders of new residential developments to set aside a certain percentage of the housing units for low- or moderate-income residents. This pilot study examines how effective IZ programs are as a strategy to increase the supply of affordable housing and further other housing- and community-related goals in two study sites: Montgomery County, Maryland, and Fairfax County, Virginia. These programs were selected because they operate in the same metropolitan housing market and have been in place for decades. The design and structure of these programs, however, differ significantly and therefore offer potential insight into how contrasting approaches relate to outcomes. The research team collected data, including IZ ordinances and other relevant documents, program data, interviews with key stakeholders, and local housing-market statistics, to evaluate how well IZ strategies provide affordable housing options for low-income communities over time. A key observation is that, although inclusionary zoning has increased the supply of affordable housing units in these two sites, IZ requirements must be clear and administered consistently so that developers can effectively predict when it is economically feasible to build projects that require inclusionary housing units. The researchers recommend that future inquiry should focus on how IZ programs perform across various economic and political contexts. They also suggest that more research is necessary to evaluate the costs and benefits of IZ programs, particularly given the variation among programs.
Foreword During the past 4 years, the Office of Policy Development and Research (PD&R) at the U.S. Department of Housing and Urban Development sponsored a series of research studies in support of PD&R’s Sustainable Communities Research initiative. These studies explore how American communities can become more open, diverse, and inclusive. Such research includes examining various approaches and strategies for removing the barriers to affordable housing and expanding housing options for all. Inclusionary zoning is one tool that a number of jurisdictions embraced for achieving those goals, and it is the focus of this report. Inclusionary zoning, also known as “inclusionary housing,” has become a popular way for communities to address critical housing needs by either requiring or encouraging builders of residential developments to reserve a portion of their housing stock for low- and moderate-income residents. In addition to expanding housing affordability, inclusionary zoning programs seek to promote the economic vitality of surrounding neighborhoods, create racial and economic diversity, increase opportunities for families to have greater access to community amenities and to live closer to employment centers, and contribute to the overall quality of life of the entire community. Inclusionary zoning has a long and varied history, beginning with the historic Moderate Priced Dwelling Unit (MPDU) program established in Montgomery County, Maryland, in 1972. Since then, the number of jurisdictions that have implemented such programs has grown steadily. More than 400 cities, towns, and counties now implement inclusionary zoning programs. This study, Inclusionary Zoning and Its Effect on Affordable Housing: Lessons From Two Counties, begins to examine the degree to which inclusionary zoning programs achieve these goals. This report focuses on Montgomery County, Maryland, and Fairfax County, Virginia—both with inclusionary zoning programs that have been in existence for at least 30 years—and provides a suitable context fo r gauging success over time. It provides an indepth analysis of the two programs to understand the local context under which such programs are developed and implemented. Discussions with local administrative officials, planners, affordable housing advocates, and other key actors provided valuable insight into how these programs operate to address the affordable housing needs of residents over time. The analysis provided several important lessons to learn from the experiences of these two varied local inclusionary zoning programs. First, ordinance requirements must be clear and administered consistently so that developers are able to make more informed decisions about where to build inclusionary housing units. Second, the revision of program requirements, which both counties execute every few years or so, may be a disincentive for a builder to pursue inclusionary zoning units because of ordinance complexity. Therefore, requirements should allow for a reasonable degree of flexibility and offer a range of options or incentives to the developer to produce more affordable housing units. Finally, because land values drive the costs of construction and development, local governments that use or consider using inclusionary zoning to expand housing opportunities for low- and moderate-income families should be cognizant of how these costs can shape development decisions. I am pleased to add this report on inclusionary zoning to the catalog of research that examines local strategies that encourage and enable communities to expand housing choice and opportunity. The study offers insight into how communities, relying on locally devised strategies, can make an important contribution to achieving their affordable housing goals. Although this study is only a starting point in our effort to learn more about these programs, we hope it will offer some insight into how local decisionmakers respond to the increasing demand for affordable housing in response to current economic conditions.Erika C. Poethig signature.
Erika C. Poethig Assistant Secretary for Policy Development and Research Table of Contents Executive Summary?…………………………………………………………………….xi I. Introduction?………………………………………………………………………..1
Purpose and Background of the Study?…………………………………………………………………..1 Research Questions and Approach?……………………………………………………………………….1 Report Overview?………………………………………………………………………………………………..2 II. Case Selection and Program Overview?…………………………………..3
Site Selection Rationale?……………………………………………………………………………………….3 Overview of Programs?……………………………………………………………&hellip