Housing And Health: The Role Of Inclusionary Zoning
Better housing is known to improve a variety of health outcomes. Neighborhood characteristics also have a major impact on health-related determinants, such as the availability of healthy food and exposures to environmental toxins, gun violence, and other morbidity and mortality risks.
The Moving to Opportunity for Fair Housing demonstration reported positive health outcomes, such as reductions in the prevalence of diabetes and improved mental health indicators, among people given a chance to move from a high-poverty to a low-poverty neighborhood. Studies also suggest that the creation of affordable housing in low-poverty communities could lead not just to improved overall living conditions for disadvantaged families but also to better educational and professional opportunities.
Inclusionary zoning (IZ) is an approach designed to create affordable housing in low-poverty neighborhoods and foster (or maintain) socioeconomic and racial integration. IZ has been adopted by many jurisdictions across the US. It transfers some of the burden for developing and managing affordable housing from the public to the private sector and has grown in popularity in recent years, as cities have struggled to ensure that workers of all income levels can afford housing in the area. IZ policies and programs require or encourage developers seeking approval for the construction of market-rate homes to also create or set aside a certain percentage of housing units for low- to moderate-income families—often in exchange for cost-saving incentives.
Some IZ policies include an option for developers to build the affordable units somewhere else, rather than as part of the new complex. Other programs allow developers to pay in lieu fees that the jurisdiction can use to support affordable housing in other ways. These funds are often set aside to create units in less economically robust neighborhoods, where it may be possible to build more housing for less money than in more expensive areas. These options allow jurisdictions to use IZ policies not only to increase affordable housing in low-poverty areas but also to help revitalize struggling neighborhoods. (IZ in lieu fees should not be confused with “impact” or “linkage” fees—a policy tool that is distinct from IZ but similarly ties new commercial development to the production of affordable housing.)
The relationship of zoning to affordable housing remains a contested issue, especially in regions with high housing costs. Many jurisdictions, such as suburbs seeking to preserve their traditional characteristics, have long relied on exclusionary zoning and strict land-use regulations—including mandating minimum lot sizes and limiting housing density. Such provisions can reinforce existing residential inequities by promoting racial and economic segregation and disproportionately affecting people who are already disadvantaged.
In contrast, IZ policies and programs are designed to help foster greater social and economic mobility and integration. The main goal is to increase the supply of affordable units interspersed throughout market-rate housing in low-poverty, high-opportunity areas. In other forms of affordable housing (those not created under IZ policies), the low- and moderate-income units are more likely to be clustered in less expensive and less economically robust neighborhoods—an approach with its own benefits and drawbacks.
The first identified IZ ordinance was enacted in Fairfax County, Virginia, in 1971. Montgomery County, Maryland, created its well-established program in 1974. In 2017, a national survey identified 1,379 inclusionary housing programs (including linkage-fee programs) in twenty-four states and the District of Columbia (exhibit 1). The following three states accounted for over 90 percent of the inclusionary housing programs: New Jersey (55 percent), Massachusetts (26 percent), and California (10 percent). These three states have state-level policies promoting IZ.
Exhibit 1: Number Of Inclusionary Housing Programs By State, 2016*
*These data include both inclusionary zoning and linkage fee programs.
Source: E. Thaden and R. Wang. Inclusionary Housing in the United States: Prevalence, Impact, and Practices. Lincoln Institute of Land Policy Working Paper WP17ET1, 2017. Used with permission of the Lincoln Institute of Land Policy.
New Jersey’s law, in fact, arose out of a court ruling in 1974 that jurisdictions had to provide their share of affordable housing—a result of a legal challenge to exclusionary zoning policies. Yet such local exclusionary zoning policies continue to constrain affordable housing development in some states. In the fall of 2017, California passed legislation designed to restrict the use of exclusionary zoning. In contrast, several states have considered or passed laws restricting or barring IZ, arguing that such policies can impede rather than promote development and lead to higher overall housing costs. In 2016, Oregon eliminated a law that had barred the use of IZ in the state.
IZ is an important strategy in efforts to increase affordable housing. However, it should be viewed not as a stand-alone solution but as part of a coordinated package of efforts to address the problem. Opponents of IZ have argued that affordable housing requirements can raise the cost of development and ultimately translate into greater housing shortages and higher prices overall. Much of the impact depends on local economic conditions, including the housing market and community income levels.
How Does Inclusionary Zoning Work?
IZ policies can take a variety of forms. Although some are voluntary, most are mandatory. Some cover entire jurisdictions; others apply just in specific districts or neighborhoods. Jurisdictions have a range of incentives they can offer developers, such as approving increases in density, expediting the permitting process, reducing or waiving fees, and offering other ways to offset costs. Most IZ policies also require that units remain affordable for at least thirty years.
The optimal approach for IZ policies or programs depends on, among other factors, the demographic characteristics, housing requirements, economic status, and other characteristics of the community served. Affordability requirements are often defined in terms of the area median income, or AMI—the midpoint in the range of family incomes for a given region. For example, programs in many jurisdictions include provisions for families earning 50–80 percent of the AMI. Thus, unless combined with vouchers or other subsidy programs, they are not geared toward the poorest segments of the population.
In 2017, several hundred surveyed jurisdictions with IZ policies and programs reported a total of $1.7 billion in fees paid for the creation of additional affordable housing units off site. One downside is that residents of these off-site locations do not necessarily have access to the same amenities and opportunities that they would have if they lived in mixed-income complexes.
But the alternative IZ approach of paying in lieu fees instead of creating housing units has advantages as well. It can provide greater flexibility for both jurisdictions and developers, while still linking new affordable housing to residential construction. And creating off-site affordable housing in less-expensive neighborhoods can lead to the development of more units overall. Moreover, many people with modest incomes prefer to remain in their own neighborhoods instead of moving to a more expensive and unknown area.
IZ policies are often structured so that the affordable units provided match the requirements and needs of the area’s population of low- and moderate-income residents. For example, if seniors are disproportionately represented among those seeking affordable housing, then an IZ program may create incentives for the building of studio and one-bedroom units. If families with children are more significantly affected, programs may focus on creating larger units with multiple bedrooms.
The Impact Of Inclusionary Zoning
IZ policies and programs are attractive to public officials because they can increase the supply of affordable units without requiring a direct outlay of public funds. For these and other reasons, IZ programs and policies have become a popular strategy in recent years, as regions around the country have grappled with shortages of affordable housing. They appear to have the best chance of success in areas where market-rate units can generate enough return to make the overall projects financially viable and when implemented as part of a comprehensive affordable housing strategy.
It can be challenging to conduct research on the specific impact of IZ, since it is usually part of a package of strategies designed to increase the availability of affordable housing. Nonetheless, studies have generally found that IZ policies lead to an increase in affordable housing units—although the size of the increase seems to depend on a wide range of factors. And affordable units created through IZ policies are more likely to be located in higher-income neighborhoods, compared to other kinds of housing available to families with low incomes. They also provide access to better schools.
The jurisdictions participating in the 2017 national survey of IZ policies and programs reported having developed more than 170,000 affordable housing units through these initiatives. More than two-thirds were rental units, with the rest designated for ownership. That figure represents almost 10 percent of the approximately two million affordable units generated through the Low-Income Housing Tax Credits program, the nation’s largest affordable housing program.
The available evidence therefore indicates that IZ policies and programs have a modest but real impact on the overall number of affordable units. And they do not appear to significantly raise the cost of housing, as opponents feared. According to a 2008 study of IZ programs in San Francisco and suburban Boston, “the empirical analysis suggests that the ideological debate over IZ has greatly exaggerated both the benefits and the dangers of IZ: any negative effects on housing prices and production have been relatively modest, but only modest amounts of affordable housing have been produced through IZ programs.”
More recent research has provided a similar perspective. A 2012 RAND Corporation study of the impact of IZ ordinances found that three-quarters of the affordable units created were in low-poverty neighborhoods, compared to 34 percent or less of the units available through other affordable housing programs. In Montgomery County, Maryland, children from families in IZ-associated affordable housing achieved better results in elementary school, compared to those in other types of affordable housing that did not provide access to a low-poverty educational setting.
Examples Of Inclusionary Zoning
Jurisdictions small and large have implemented IZ programs. For example, Burlington, Vermont, was an early adopter of IZ, launching its policy in 1990. The program applies to all new developments of five or more homes and conversions of nonresidential structures into at least ten units. Depending on the prices of market-rate homes, 15–25 percent of the units must meet affordability requirements. In return, developers can receive permission to increase the residential density of their new buildings by 15–25 percent above current zoning limits. They also receive waivers on parking requirements and various fees. They can opt to build the affordable units off site but then must increase the number of the units.
The prices of the affordable units are controlled for up to ninety-nine years. Much of the work of administering the program is handled by a local community land trust. Outsourcing this work has reduced the city’s need to engage its own staff in the process. In recent years, the city has experienced a softening in downtown construction of housing. Some developers have expressed concerns that the IZ policy is contributing to that trend, and the city is exploring options to tweak the program and boost the various incentives.
In 2017, a report on the Burlington IZ program concluded: “It is clear that while inclusionary zoning has made a real difference for those living in the 270 units generated by the policy, it has not—on its own or in concert with other policies—changed the underlying dynamics of supply and demand that make the Burlington market unaffordable for a large portion of the city’s households.”
In 1987, New York City implemented a voluntary IZ program that allowed developers to build bigger buildings in exchange for creating affordable units on site or in a nearby location. But the impact of the program, and of a revised version introduced in 2005, has been relatively insignificant. According to a 2015 review, the city reported that the program had led to the creation of fewer than 7,000 units during its history.
These figures have not kept pace with the growth of the city’s affordable housing problem. As part of a plan to create or preserve 200,000 affordable housing units, Mayor Bill de Blasio proposed making IZ mandatory for developments in designated areas of the city. In 2016, the New York City Council approved the new program, which remains controversial. Under the mandatory policy, affordable housing set-asides will increase to up to 30 percent of the units when they are provided on site and 35 percent when provided off site. They will target families with incomes of 40–80 percent of the AMI and are to remain permanently affordable.
IZ policies and programs can have modest impacts on the development of new affordable housing units in lower-poverty neighborhoods. But they need to be tailored to the particular needs and characteristics of the targeted jurisdiction or community and combined with other affordable housing strategies. And the IZ approach is not appropriate under all conditions. For example, it may be an ineffective solution in cities or areas suffering from extreme poverty and disinvestment, where developers have little incentive to build.
Policy makers need to remain attentive to changes in economic conditions and the housing market that affect IZ programs. During the recession a decade ago, developers and property managers in some jurisdictions found it challenging to identify enough qualified and eligible renters or buyers for affordable units. Some regions found that they needed to relax their IZ affordability requirements to include families with higher incomes and take steps to increase incentives for developers.
IZ policies and programs require a sustained commitment. They must be monitored to ensure that those who receive the benefits continue to meet the qualification standards. And because of changes in community needs and local economic conditions, the incentives and specifications of such programs should be revisited regularly to ensure that they continue to conform to the identified housing demands.
Moreover, to maximize the benefits from the public investment in IZ, programs should include protections to keep housing stock affordable into the foreseeable future, so that families with low and modest incomes can continue to live in diverse environments. In its 2012 report, the RAND Corporation found that IZ ordinances often did not feature sufficient provisions to oversee and monitor the programs and guarantee that the units would continue to be rented or sold as affordable housing.
A 2014 review of many IZ policies and programs confirmed this finding. In particular, the review recommended a variety of approaches to ensure the programs’ long-term robustness. The review also recommended forming partnerships with nonprofit organizations such as community land trusts as a cost-effective method of administering IZ, especially for jurisdictions with limited resources.
“Strong legal mechanisms, carefully designed resale restrictions, pre-purchase and post-purchase stewardship practices, and strategic partnerships are important for ensuring that inclusionary properties continue to be sold or rented at affordable prices, and are not lost due to illegal sales, foreclosure, or lax rental management practices,” stated the 2014 report.
In the absence of such provisions and protections, market pressures in areas with strong demand for housing could ultimately undermine the stability and longevity of IZ programs. Their success should therefore be measured not just by how many affordable housing units they create but by how effective they are at preserving the units’ affordability over time.
About Health Policy Briefs
This Health Policy Brief was produced with the generous support of the Robert Wood Johnson Foundation. All briefs go through peer
review before publication.
Written by David Tuller of the Center for Global Public Health at the University of California Berkeley.
Cite as: “Housing And Health: The Role Of Inclusionary Zoning,” Health Affairs Health Policy Brief, June 7, 2018. DOI: 10.1377/