Few housing policies have attracted as much attention, or controversy, in recent years as inclusionary zoning. While advocates view inclusionary zoning as a way to increase the stock of economically-integrated affordable homes at little cost to the public, critics charge that inclusionary zoning policies amount to a "tax" on new development that unduly burdens developers and adversely impacts the cost and availability of market-rate homes.

Legal objections to inclusionary policies may also be raised, challenging their constitutionality or the local statutory authority to enact an inclusionary zoning ordinance. As many communities have found, however, opposition to inclusionary zoning can be reduced by adopting a well-designed policy that incorporates input from a broad group of stakeholders and balances the priorities of both advocates and developers.

Click on the links below to learn about more about arguments against inclusionary zoning, and legal issues that may arise when implement inclusionary ordinances: Arguments against inclusionary policies Legal issues

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You are currently reading: Other Considerations Few housing policies have generated as much attention and controversy as inclusionary zoning. Beyond the basic mechanics of the ordinance, there are other key issues that communities thinking about inclusionary zoning should consider. Other pages in this section: Affordability Provisions All inclusionary zoning policies contain basic components specifying when and how the policy is applied, including whether participation is mandatory or voluntary, the income level(s) targeted and the share of units that must be set aside as affordable. Incentives and Cost Offsets Mandatory inclusionary zoning policies frequently include provisions, such as density bonuses, designed to "offset" any foregone revenue associated with the inclusionary requirements. In a voluntary inclusionary zoning program, similar concessions are provided as incentives for participation. Click here to view more resources on inclusionary zoning.

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Arguments against inclusionary policies

Common arguments in opposition to inclusionary zoning policies include:

Inclusionary zoning ordinances increase the cost of new development, which may then be passed on to market-rate buyers through increased home prices. Inclusionary zoning ordinances cause developers to build fewer units - either because developers choose to build in jurisdictions without inclusionary policies and/or because the inclusionary policies change the economics of development such that other land uses (e.g., retail) are more profitable. By reducing the supply of new homes, the argument goes, inclusionary policies increase the cost of market-rate housing in the community implementing the policy and in neighboring areas (as reductions in supply in one jurisdiction may increase home prices for the whole metropolitan area by reducing the supply of housing available to satisfy the area's demand).  During a period of slow development, community members may also express concerns that inclusionary zoning policies will make it harder for development activity to get back on track. Inclusionary zoning policies unfairly place the burden of economic integration on housing developers.

Many of these critiques can be resolved through a well-structured ordinance that enables developers participating in an inclusionary program to earn returns that are equivalent to, or greater than would otherwise be possible. When developers are able to build as profitably with an inclusionary zoning policy as without one, new construction activity will be much less likely to taper off following adoption of an inclusionary zoning ordinance. Because market conditions can change rapidly, it is important to periodically revisit inclusionary requirements and offsets to ensure they are in line with the market.

The Center for Housing Policy commissioned a study from the Furman Center at New York University to examine these questions. While authors of the study, The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston areas, were not able to provide definitive answers, it nevertheless represents the best-available data on these issues.

The study found no statistically significant relationship between inclusionary zoning and the price or supply of market-rate homes in the San Francisco area, but did find that the adoption of an inclusionary zoning ordinance among suburban Boston jurisdictions was associated with a small but significant increase in home prices and decrease in supply. While preliminary, these findings confirm the importance of carefully designing inclusionary zoning policies to ensure they provide economically meaningful and realistically achievable offsets to minimize any unintended consequences on the price or supply of market-rate homes.


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Legal issues *

Legal challenges to inclusionary zoning can be based on several arguments. Even when challenges are unsuccessful, they can take years to resolve, using up valuable time and money. As noted earlier, through outreach, consultation, and negotiation, communities can build support for inclusionary zoning policies among a broad range of stakeholders, reducing the likelihood of litigation.

Enabling authority - In some states, state enabling legislation may be needed before local jurisdictions can adopt inclusionary zoning ordinances. This prerequisite is particularly important in states that actively enforce the Dillon Rule, where failure to adopt enabling legislation may result in challenges to local inclusionary zoning policies. "Dillon Rule" states assume that municipalities are allowed only the powers that are explicitly granted to them by the state legislature, in addition to those considered essential for the municipality to function (as opposed to Home Rule states, which give municipalities the authority to govern their own internal affairs). Failure to obtain explicit authority to adopt an inclusionary zoning ordinance may lead to accusations that the locality exceeded its statutory authority, rendering the ordinance invalid. Takings challenges - The Fifth Amendment of the U.S. Constitution declares "nor shall private property be taken for public use, without just compensation," and is often used as the basis for so-called "takings" challenges. In the land use world, a "taking" may occur when developers are not fairly compensated for land that has been "taken" from them - either literally, or through regulations that result in excessive devaluation of property - for a public purpose. To avoid takings challenges to mandatory inclusionary zoning ordinances, it is important to show that developers will be able to receive a reasonable economic return on residential development, even with an inclusionary policy in place. Most zoning laws and land use regulations impose limitations that reduce the economic value of property in some way; however there is no single test or formula used to determine when devaluation has gone too far. Rather, challenges are considered on a case-by-case basis. [1] Involving developers in the design of the policy can help to ensure that set-asides and incentives are properly calibrated so that development can still be profitable. Takings challenges to inclusionary zoning ordinances may also be based on failure to demonstrate a "rational nexus" between the local need for affordable homes and the role of an inclusionary set-aside and/or fees in-lieu in meeting that need and serving the public interest. Communities can undertake a nexus study, similar to the studies required before adopting impact fees, to establish the relationship between affordable homes and inclusionary zoning.

Solutions in Action

Fairfax County, Virginia passed one of the country's first inclusionary zoning ordinances in 1971. This mandatory ordinance required developers of multifamily projects with more than 50 units to set aside 15 percent of units for households earning between 60 and 80 percent of area median income. No cost offsets or incentives were provided to developers in exchange for participation. Only two years later, the ordinance was overturned by the Virginia Supreme Court, which ruled that failure to provide just compensation resulted in a "taking." The ordinance was further overturned on the grounds that Virginia is a "Dillon Rule" state and the County failed to receive state legislative authorization to adopt a local inclusionary zoning policy. In 1990 Fairfax County adopted another inclusionary zoning ordinance that offers density bonuses on a sliding scale. A 1989 amendment to the Virginia code explicitly permits local jurisdictions to enact inclusionary zoning ordinances. Since making these revisions, Fairfax County has not yet been faced with any court challenges. Click here to learn more about Fairfax County's Affordable Dwelling Unit program.

In addition, it is important to show that the affordability requirements imposed on developers are roughly proportionate to the affordable housing needs created by the new development. Data gathered while conducting the nexus study can be used to help demonstrate the impact of new market-rate development on economic integration and the availability of land for affordable homes. Learn more about the concepts of rational nexus and rough proportionality in the Impact Fees section.


* This section draws heavily from Opening the Door to Inclusionary Housing [PDF]. By Mary Anderson. Chicago, IL: Business and Professional People for the Public Interest, pp. 46-60; Inclusionary Zoning: Legal Issues [PDF]. 2002. Prepared by the California Affordable Housing Law Project of the Public Interest Law Project and Western Center on Law & Poverty; and Zoning Affordability: The Challenges of Inclusionary Housing. 2003. By Lynn M. Ross. Zoning News. Chicago, IL: American Planning Association. Please see these resources for further information.


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[1] Inclusionary Zoning and the Constitution. 2002. By Jerold S. Kayden. In Inclusionary Zoning: Lessons Learned in Massachuetts. NHC Affordable Housing Policy Review 2(1).