Effects of Inclusionary Zoning on Local Housing Markets

Are inclusionary zoning policies good or bad? Download the PDF report (Effects of Inclusionary Zoning)

Published in March 2008 by the Furman Center for Real Estate & Urban Policy: The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas, the report defines inclusionary zoning (IZ) as an affordable housing tool that links production of affordable hosing to the production of market-rate housing. Policies could include requiring new residential developments to make a certain percentage of housing units affordable in exchange for density exemptions or fast-track permitting.

The report attempts to answer 3 key questions:

1) What kinds of jurisdictions have adopted IZ?

2) How much affordable housing has been produced in different IZ programs, and what factors have influenced production levels?

3) What effects has IZ had on the price and production of market-rate housing?

Proponents of IZ policies argue that these programs promote economic and racial integration when units are built on-site and developers can recoup costs through density exemptions. Opponents argue that IZ constricts housing developments and increases costs to market-rate units in order to subsidize the affordable units. In addition, the burden of providing affordable housing should not be solely the responsibility of developers.

Chinatown has been a model for inclusionary zoning policies. Developments that have been built or is being proposed such as the Archstone, Metropolitan, Kensington, Avana Lofts, 120 Kingston/Dainty Dot and Parcel 24 have ranged between 10%-50% in affordable units depending on cost and market factors. In the case of Kensington, the development received a Planned Development Area (PDA) designation which expedited the permitting process. Unfortunately, this report does not include the City of Boston in the data collection. The report noted: “While the City of Boston has an IZ program, it was not included in the database that forms the basis of our study because Boston has different authority over land use regulations than other jurisdictions in the state.”

In the report’s key findings on inclusionary zoning’s impact on production and prices of market-rate housing”

- In the San Francisco area, there is no evidence that IZ impacts either the prices or production of single-family houses

- In suburban Boston, IZ seems to have resulted in small decreases in production and slight increases in the prices of single-family houses.

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The Wikipedia describes the Furman Center as: “The Furman Center for Real Estate and Urban Policy is a joint center at New York University School of Law and the NYU Wagner School of Public Service. The Furman Center was established in 1994 to create a place where people interested in affordable housing and land use issues could turn to for factual, objective research and information.”

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