What is inclusionary zoning?

Inclusionary zoning is a flexible tool that uses the momentum of the real estate market to create new affordable rental and ownership opportunities. Inclusionary housing policies may be mandatory or voluntary, and either require or offer incentives for developers of market-rate projects to set aside a modest percentage of units for low- and moderate-income households. Many ordinances require below-market units to be built at the same time, in the same location and with an appearance similar or identical to the adjacent market-rate units [1], helping to create diverse, mixed income neighborhoods and disperse affordable homes throughout the community.

Most inclusionary zoning policies are implemented by cities and counties through a zoning ordinance or executive order, although some states have adopted fair share and other inclusionary programs intended to achieve similar results on a broader scale. Learn more about state-level fair share programs and other inclusionary programs at the state level.

What problems can inclusionary zoning solve? Communities adopt inclusionary zoning policies primarily to increase new housing opportunities for moderate-income families. However, inclusionary zoning can also help stem displacement of existing residents in neighborhoods undergoing redevelopment, where the cost of housing increases to levels that are unaffordable to current residents. In addition to increasing the overall supply of affordable homes, inclusionary zoning can play a role in alleviating the "spatial mismatch" that occurs in many high-cost areas when local housing prices rise out of reach of low-wage workers who serve the community. By ensuring that a portion of newly created homes are affordable to working families, inclusionary policies allow workers to access opportunity- and amenity-rich neighborhoods and avoid long commutes from areas with lower housing costs. While inclusionary zoning policies have been successful in producing affordable housing opportunities in many markets, it is important to note that this tool is not a panacea or a substitute for a broad-based affordable housing strategy. In particular, inclusionary zoning does not address the fundamental problem of regulatory and other obstacles that constrain the ability of the market to respond to increases in the demand for housing, which can drive up housing prices in the first place. Inclusionary housing policies ultimately are most effective as part of a larger and more comprehensive approach to solving a community's housing challenges. Learn more about building a comprehensive housing strategy. Where is inclusionary zoning most applicable? Inclusionary zoning is a market-based policy and its success depends a great deal on market conditions. If a community is experiencing little growth or new development, adoption of an inclusionary zoning policy will not result in the creation of many new affordable homes. However, communities that anticipate future growth may wish to begin the process of designing an inclusionary zoning policy that can be implemented when the market picks up.

Solutions in Action

Photo courtesy of BRIDGE Housing. Poinsettia Station, in Carlsbad, California, is a transit-oriented development providing 92 affordable rental homes within walking distance of a commuter train station, the ocean, and retail services. These units are part of a larger master-planned community, and were developed by non-profit BRIDGE Housing to satisfy the affordability requirements of the Carlsbad Inclusionary Housing Ordinance. Visit the Gallery to learn more about Poinsettia Station.

Similarly, inclusionary mandates may not be useful in declining neighborhoods struggling to attract any development whatsoever, as local officials may want to offer developers maximum flexibility in order to stimulate new investment. However, in areas that are experiencing moderate to rapid growth, inclusionary zoning can be a powerful tool for ensuring that affordability is a part of new development.

Learn more about establishing inclusionary zoning requirements or incentives Go back to learn about other policies that capitalize on market activity

[1] Some inclusionary zoning policies allow affordable units in for-sale developments to be slightly smaller and/or less well-appointed than neighboring market-rate units; however, in some cases too much variation between units may impact the development's overall marketability. Other inclusionary zoning policies allow the affordable units to be built off-site.