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How Can Zoning Policy Design Promote Affordable Housing?

Examining the Effects of Policy Design on Affordable Unit Production under Inclusionary Zoning Policies
Ruoniu Wang and Xinyu Fu
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To combat the growing affordable housing shortage, some local governments have implemented inclusionary zoning policies, which aim to reduce the impact of exclusionary and single-family zoning practices that have limited the number and types of units that can be built. Inclusionary zoning aims to leverage land-use planning and zoning systems to require or encourage the production of affordable housing units. In this study, the authors investigate inclusionary zoning policies across the US to determine the relationship between specific features of inclusionary zoning policies and affordable housing production.

The authors’ primary source of inclusionary zoning data is the Inclusionary Housing Program Database. This database provides information on inclusionary zoning policies across the US, including policy names, locations, adoption year, standardized characteristics, and outcomes in terms of affordable unit production up to 2019. They combined these data with census data to account for local factors such as housing supply and demand, affordability, population change between 2010 and 2019, and political and institutional effects. The result is a sample of 539 inclusionary zoning policies, 265 of which resulted in the production of affordable units and 225 of which did not.

The authors then used different forms of regression models to determine the effects of inclusionary zoning policy design on affordable unit production.

Key findings
  • Mandatory inclusionary zoning policies were 1.5 times more likely to produce at least one affordable unit than voluntary policies.
  • On average, inclusionary zoning policies that created rental units were associated with the production of 17.9 more affordable units per year than policies that created for-sale units.
  • Inclusionary zoning policies that were older, were mandatory, covered the entire jurisdiction, and had more complex income requirements all had higher odds of being in the top 15 percent of high-producing policies (defined as producing 20 or more units per year).
  • Among policies designed to produce affordable rental units, those that covered the entire jurisdiction and those with more complex income requirements were more likely to be in the top 15 percent of high-producing policies.
  • Longer affordability terms (i.e., the number of years of affordability constraints mandated by the policy) are sometimes thought to deter new development, resulting in fewer affordable units. But this study found that longer affordability terms didn’t affect affordable unit production.
Policy implications
  • Based on the inclusionary zoning policies studied here, policymakers could consider mandatory policies and policies with more complex income requirements to effectively produce affordable units.
  • Though mandatory inclusionary zoning policies had higher productivity rates, voluntary policies, when designed appropriately, can also be an effective means of advancing affordable housing.
  • The authors emphasize that policymakers should refrain from simply maximizing the policy features associated with higher unit production. Rather, effective inclusionary zoning design should also consider local policy objectives, housing market conditions, community preferences, and their broader regulatory and political environments.