Inclusionary Zoning - Differences in Ordinances

Differences in Ordinances

Inclusionary zoning ordinances vary substantially among municipalities. These variables can include:

• Mandatory or voluntary ordinance. While many cities require inclusionary housing, many more offer zoning bonuses, expedited permits, reduced fees, cash subsidies, or other incentives for developers who voluntarily build affordable housing.
• Percentage of units to be dedicated as inclusionary housing. This varies quite substantially among jurisdictions, but appears to range from 10-30%.
• Minimum size of development that the ordinance applies to. Most jurisdictions exempt smaller developments, but some require that even developments incurring only a fraction of an inclusionary housing unit pay a fee (see below).
• Whether inclusionary housing must be built on site. Some programs allow housing to be built nearby, in cases of hardship.
• Whether fees can be paid in lieu of building inclusionary housing. Fees-in-lieu allow a developer to "buy out" of an inclusionary housing obligation. This may seem to defeat the purpose of inclusionary zoning, but in some cases the cost of building one affordable unit on-site could purchase several affordable units off-site.
• Income level or price defined as "affordable," and buyer qualification methods. Most ordinances seem to target inclusionary units to low- or moderate-income households which earn approximately the regional median income or somewhat below. Inclusionary housing typically does not create housing for those with very low incomes.
• Appearance and integration of inclusionary housing units. Many jurisdictions require that inclusionary housing units be indistinguishable from market-rate units, but this can increase costs.
• Longevity of price restrictions attached to inclusionary housing units, and allowable appreciation. Ordinances that allow the "discount" to expire essentially grant a windfall profit to the inclusionary housing buyer, preventing that subsidy from being recycled to other needy households. On the other hand, preventing price appreciation removes a key incentive for home ownership. Many programs restrict annual price appreciation (by, for instance, enrolling inclusionary housing in community land trusts), often tying it to inflation plus market value of home improvements, striving to balance the community's interest in long-term affordability with the homeowner's interest in accruing equity over time.
• Whether housing rehabilitation counts as "construction," either of market-rate or affordable units. Some cities, like New York City, allow developers to count rehabilitation of off-site housing as an inclusionary contribution.
• Which types of housing construction the ordinance applies to. For example, high-rise housing costs more to build per square foot (thus raising compliance costs, perhaps prohibitively), so some ordinances exempt it from compliance.