Researching Public Law and Public Policy in the Public Interest

The Economics of Inclusionary Development

From the Urban Land Instiute:

Whereas many U.S. cities have experienced a post-recession economic revival, the accompanying run-up in housing costs is threatening to undermine this success by pricing workers out of cities, lengthening commutes, and diminishing livability, the report notes. As a result, local officials are turning to inclusionary zoning (IZ) as a way to combat the shortage of housing that is affordable to moderate- and lower-income workers.

IZ policies take a market-based approach to affordable housing development by requiring or incentivizing the creation of below-market-rate units in exchange for approval of a market-rate project. Inclusionary zoning leverages private development to achieve a public benefit.

And while the concept seems straightforward, implementation of IZ is more complex. This may be why a relatively modest number of affordable units—a conservative estimate is 150,000—have resulted from roughly 500 incldusionary development programs across the United States, according to the report.

Read this report in its entirety at the Urban Land Instiute