Inclusionary Zoning Policies Work, but With Caveats

Sule Aygoren Carranza is managing editor of Real Estate Forum.

[IMGCAP(1)]NEW YORK CITY-The success of a project with an affordable housing component as well as its impact on the local community depend on the affordable program that is implemented. NYU’s Furman Center for Real Estate and Urban Policy and the Center for Housing Policy in Washington, DC recently analyzed some developments that utilize inclusionary zoning (IZ), one of the most used but also most controversial policies in the creation of affordable housing.

Under IZ, developers often receive incentives or are mandated to set aside a portion of the housing units in a new market-rate development as affordable housing. In return, the developer typically receives benefits such as density bonuses or fast-track permitting. To analyze the details of such programs, the researchers took a look at IZ policies in markets three different regions–Boston, the Washington, DC area and San Francisco.