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Study Shows Varying Impact of Inclusionary Zoning

By Donna Kimura

Inclusionary zoning (IZ) policies that provide density bonuses or other effective cost offsets to developers may be less likely to drive up the price or decrease the supply of market-rate homes, according to a new report.

A study of the effects of IZ on local housing markets was commissioned by the Center for Housing Policy in Washington, D.C., and conducted by researchers at the Furman Center for Real Estate and Urban Policy at New York University.

“Our analysis refutes the ‘sky is falling’ cries from IZ opponents; we find no evidence that IZ programs have reduced housing production in the San Francisco area and find evidence of only slight effects on production in the Boston area,” said Vicki Been, director of the Furman Center. “However, we found that IZ policies have produced only a modest number of affordable housing units, suggesting that IZ by itself is not a panacea for a community’s affordable housing challenges.”

IZ programs require market-rate developers to set aside a portion of their housing developments as affordable housing.

In the San Francisco area, the study found no evidence that these programs have increased the price or reduced the production of single-family homes, despite the fact that 93 percent of the programs are mandatory.

In suburban Boston, the study found that the programs resulted in small decreases in production and slight increases in single-family home prices, said the report. The authors explain that the design of IZ programs may matter considerably. The programs that provide density bonuses or other effective cost offsets may be less likely to increase the price or decrease the supply of market-rate homes. In the San Francisco area, programs that provided density bonuses also produced more affordable housing units.

For more information, visit http://furmancenter.nyu.edu or www.nhc.org.