Inclusionary Zoning: Using the Market to Create Affordable Housing Alan Mallach, Senior Fellow National Housing Institute

inclusionary zoning  A Brief Definition An ordinance or program that requires or provides incentives for developers to provide affordable housing as a part of their market- rate developments, either by including the affordable housing in the development, building it off-site, or contributing land or money to a housing trust fund in lieu of construction.

Inclusionary zoning  What can inclusionary zoning achieve? Create a pool of permanently affordable housing Generate resources for an affordable housing trust fund Foster mixed-income housing and greater economic integration

inclusionary zoning  Historical background IH began in 1970’s as strategy for suburban integration Pioneering states were CA, MA and NJ In 1990’s IH began to move into urban areas In past decade IH has become a nationwide strategy

inclusionary zoning  Critical elements in inclusionary zoning Legal authority Economic feasibility/market demand Clearly defined rules Political will

inclusionary zoning  Legal authority Land use or exaction? Statutory authority Court decisions Police power

inclusionary zoning  Economic feasibility Strong housing demand Market prices make development profitable Development ground rules permit reasonably efficient development Availability of cost offsets (density bonuses, fee waivers, tax abatements, etc.) where needed.

inclusionary zoning  Clearly defined rules and standards Number (or %) and affordability level of affordable housing What alternatives are available under what conditions Controls to ensure long-term affordability Effective enforcement of rules

Inclusionary zoning OPTIONS On-site development Off-site development Future development ConstructionBuild on-siteBuild off-siteNA Land contributionNAContribute land to CDC for specific development Contribute land to land bank Cash contribution NAContribute funds to CDC for specific development Contribute funds to housing trust fund

inclusionary zoning  Key elements in managing inclusionary zoning Set ground rules with developers up front Recruit and qualifying buyers and tenants Ensure long-term affordability Manage the trust fund (if buyout funds are collected)

inclusionary zoning  Political will Commitment to creating affordable housing Willingness to confront development industry Support from housing advocacy community Readiness to commit energy and resources to making it work

inclusionary zoning  What can inclusionary zoning accomplish? Create affordable housing in strong market environments Harness private sector energy to create affordable housing Leverage public resources Foster mixed-income, economically integrated communities