Inclusionary Zoning (IZ)

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Inclusionary Zoning (IZ)

At a Glance

Type: Planning or regulatory tool
Where tool is used: Downtowns/transit corridors
Timeline: Medium-term
Who implements: Jurisdictions
Relative density impact: Medium (depends on market-rate production)

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Inclusionary zoning (IZ), also known as inclusionary housing, is a policy that requires or encourages a given share of new housing development to be affordable to low- or moderate- income households. The cost of developing affordable units is typically offset with a density bonus (an allowance to build more units, taller buildings or more floor space than would otherwise be permitted under the zoning). By linking affordable housing to market-rate housing development, inclusionary housing policies promote mixed-income development projects and neighborhoods. IZ tends to be most effective in producing significant affordable housing in locations with strong residential development markets.

Inclusionary zoning ordinances vary widely among jurisdictions. Variations can include:

  • Mandatory or voluntary: some ordinances require all eligible development to provide an affordable component, while voluntary ordinances provide incentives to encourage affordable units.
  • Size threshold at which the ordinance applies: projects below a certain level (e.g. below 10 units) are often exempt from the ordinance.
  • Percentage of units to be dedicated as affordable: typically ranges from 10 to 30 percent.
  • Level of affordability: policies typically target low- and moderate-income households (50-80% and 80-120% of area median income (AMI), respectively) rather than very low- income households.
  • On-site or off-site: some ordinances require affordable units to be built on-site as part of the project, while others allow them to be built off-site nearby, and often requiring a higher percentage of affordable units to be created in exchange for building off-site.
  • Payment of in-lieu fees: some programs allow developers to buy out of their inclusionary obligation by paying a fee into a local housing fund to be used for building affordable housing elsewhere.
  • For-sale or rental: IZ is used for both ownership and rental housing.
  • Length of affordability: many IZ ordinances require long-term affordability periods of at least 30 years, or longer to ensure lasting affordability of inclusionary units. Many programs also restart affordability terms whenever a property is resold within the control period.1

California is a leader in the application of local inclusionary zoning policies; approximately 170 cities throughout the State have instituted IZ policies.2 The following San Mateo County jurisdictions have adopted inclusionary zoning or other below-market housing policies:

  • Menlo Park
  • Millbrae
  • Pacifica
  • Portola Valley
  • Redwood City

In 2015, the California Supreme Court unanimously upheld a San Jose inclusionary law that requires developers of large for-sale residential projects to create some units at below-market rates or pay in-lieu fees to build affordable housing.3 The court’s decision did not address rental housing.

icon_benefits-orange Key Benefits

  • IZ policies foster mixed-income development projects and neighborhoods.
  • IZ programs can disperse affordable housing in low-poverty neighborhoods, and can help mitigate displacement in neighborhoods undergoing development and gentrification.
  • IZ is a market-based tool that leverages private sector development, and as a result, requires limited public investment compared to other affordable housing programs.
  • Research on inclusionary programs has suggested that these programs provide low-income families with access to low-poverty neighborhoods and higher-performing schools. 4

icon_community-orange Community Considerations

  • Inclusionary programs must be designed carefully to ensure they are effective in producing affordable units alongside market-rate development.
  • The features of an IZ program must be tailored to the particular housing needs and market conditions of the jurisdiction, and IZ policies sometimes need to be modified as these conditions change over time.

icon_engage-orangeCommunity Engagement Strategies

  • Develop informational resources for your community: Interactive maps showing jurisdictions with inclusionary zoning ordinances and the number of units created under IZ policies

icon_resources-orangeResources

1 Achieving Lasting Affordability Through Inclusionary Housing, Robert Hickey, Lisa Sturtevant, and Emily Thaden, Lincoln Institute of Land Policy, 2014.
2 Taking Inclusionary Zoning All the Way to SCOTUS, Bretin Mock, CityLab, September 17, 2015.
3 Has the Supreme Court opened the door to more affordable housing?, Editorial, Los Angeles Times, June 17, 2015.
4 Heather L. Schwartz, Liisa Ecola, Kristin J. Leuschner, and Aaron Kofner. 2012. Is Inclusionary Zoning Inclusionary? Santa Monica, CA: RAND Corporation, 13–21.