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Inclusionary zoning

What is it?

Inclusionary zoning is a tool used by hundreds of jurisdictions nationwide — it requires developers to set aside a fraction of newly constructed housing units to be affordable to lower-income households. Typically, a city or county will adopt a land-use ordinance to both to add more affordable homes and to ensure that low- to moderate-income households can live in high-opportunity neighborhoods. Inclusionary zoning advances equitable development by ensuring that housing is available for a diverse workforce; guarding against concentrations of poverty and affluence; and providing ladders of opportunity to lower-income households to gain access to better jobs, schools, transit options, health care, and fresh food grocers.

In California alone, more than 170 jurisdictions have implemented inclusionary zoning policies resulting in the addition of an estimated 30,000 newly constructed affordable homes in higher-opportunity neighborhoods in California. Inclusionary zoning can help to reduce racially and ethnically concentrated areas of poverty, which tend to produce negative impacts for residential health, educational achievement, and economic mobility. Inclusionary-zoning policies should be tailored to match the community’s current needs. For example, in distressed communities that have historically struggled to attract investment, timing the introduction of inclusionary zoning requirements is important so that the market is able to produce the maximum amount of affordable housing.

In addition to the PolicyLink resources listed on the right, see the Grounded Solutions Network, the U.S. Department of Housing and Urban Development, and the Joint Center for Housing Studies at Harvard University for more resources on inclusionary zoning.

Who implements it?

  • Elected and appointed city officials can propose and pass inclusionary-zoning land-use ordinances.
  • Business leaders, particularly equity-oriented developers, can broadcast support for inclusionary zoning as a critical policy to stabilize neighborhoods.
  • Community-based organizations and other advocates can build grass-roots coalitions around housing affordability, incorporating inclusionary zoning as a key measure to protect against gentrification and maintain access as opportunity investments change neighborhoods.

Key considerations

Jurisdictions seeking to implement inclusionary zoning must consider a range of related legal and logistical questions.

  • Nexus requirements: Federal and state laws require that inclusionary zoning policies requiring land or in-lieu fees for affordable housing justify the inclusionary zoning requirements by demonstrating the impact of new market-rate housing developments on the demand for affordable housing in an area. Developers may waive this component by entering into an agreement with a city or jurisdiction to include affordable housing in a project.
  • Voluntary versus mandatory: Communities implementing inclusionary zoning must choose between voluntary and mandatory programs. Generally speaking, mandatory inclusionary zoning is more effective at producing affordable housing, particularly for low- and moderate-income households. Every jurisdiction must balance incentives that encourage developers to choose to build affordable units with mandates for affordability in order to maximize affordable housing production without undermining development altogether.
  • Consideration of other benefits: Affordable housing is critical, but is far from the only public benefit that can result from well-crafted land-use policies. Inclusionary zoning can be paired with other land-use strategies to drive resources toward improving schools, public parks, libraries, emergency services, complete streetscapes, and other opportunity infrastructure.
  • Maintaining long-term affordability: In urban areas where land values are only projected to increase in the coming decades, it is important to think beyond the initial phase of affordability. Creating affordability covenants can help to stabilize long-term affordability. Another approach is having the affordable units administered by a community land trust in which a nonprofit owns the land for the permanent benefit of low-income households.
  • Cost considerations: Inclusionary-zoning requirements can potentially generate revenue with in-lieu fees, and be relatively seamlessly integrated into a jurisdiction’s existing land-use and zoning policies. While public coffers are not directly implicated, private developers do have to address higher production costs, which can result in higher consumer prices, as well as reductions in the size of affordable housing units.

Where is it working?

Inclusionary zoning policies have been implemented in more than 400 jurisdictions nationwide.

  • San Francisco originally passed its inclusionary zoning program in 1992, and voters recently passed a measure that would increase the inclusionary zoning set-aside for affordable units to 25 percent, the highest in the nation. However, the city may choose to lower the rate as San Francisco’s housing market has shown recent signs of cooling. Currently, San Francisco requires that developers devote at least 12 percent of onsite units to affordable housing, or 20 percent off-site.
  • New York City recently made the switch from voluntary to mandatory inclusionary zoning. The voluntary program has helped to create nearly 7,000 affordable units dating back to 1987. The new mandatory program would require 20 to 30 percent of all new units be set aside for affordability, as part of the city’s plan to preserve or produce 200,000 affordable units over 10 years. The plan has been criticized for leaving out extremely low-income households.
  • Montgomery County, Maryland, is the oldest example of inclusionary zoning, and is widely touted for dispersing affordable units relatively evenly throughout the jurisdiction. Its moderately priced dwelling unit program requires that 15 percent of units in new developments of 50 or more dwelling units be set aside for affordability. The program has produced more than 12,500 units since it started in 1974.