Inclusionary zoning encourages developers to set aside a certain number of units in a project as affordable housing.
In Boston, any residential development that includes 10 or more units, receives financing from the city, is on city property, or requires an exception to current zoning regulations must designate 15 percent of market rate units as affordable housing.
The Inclusionary Development Policy was first implemented in 2000.
In some cases, developers can choose to build affordable units at a different site, where the number of required units can go up to 18 percent of the total. The Boston Redevelopment Authority can also permit a developer to make a cash payment instead of building units. That contribution, up to $380,000 per unit depending on where in the city the development is located, goes to a fund for affordable housing.
The policy is primarily aimed not at assisting very low-income people, but at retaining middle class residents in booming sections of the city. Unit residents can earn up to 100 percent of the area median income, though some units are reserved for people making 70 percent or less of AMI. As of a year ago, when the policy was updated, nearly 1,500 affordable housing units had been created as part of new developments, another 500 were under construction, and $100 million had been collected.
Many municipalities and cities — primarily those with strong housing markets — have some sort of inclusionary zoning. It can be mandatory or voluntary, which usually means the city offers developers incentives for setting aside affordable units. Studies have shown mandatory programs are more effective at producing affordable units.
New York is in the process of switching from a voluntary to a mandatory program (final vote on the new plan is scheduled for March 22). In Chicago, 10 percent of units in qualifying developments have to be affordable, 20 percent if the project receives financial assistance. Montgomery County, MD, which has the oldest inclusionary zoning ordinance, requires 12.5 percent affordable units, which can be bumped to 15 percent in exchange for a density bonus.
But while affordable housing advocates point to this kind of inclusionary zoning as a way to keep neighborhoods with skyrocketing real estate diverse, not everyone is a fan. Sometimes new ordinances are met with lawsuits.
When San Jose tried to implement its own inclusionary zoning ordinance in 2010, the California Building Industry Association sued, claiming the ordinance amounted to a taking of property. As written, the rule required any residential developments with more than 20 units to sell at least 15 percent of them to low and moderate-income buyers. The suit went all the way to the California Supreme Court, which upheld the law. The U.S. Supreme Court recently decided not to hear the case, which means the previous decision stands and San Jose can start to enforce the rule.
In Pennsylvania, as of 2009, there were a dozen inclusionary zoning laws, all of them voluntary or incentive based. The commonwealth’s largest cities — Philadelphia and Pittsburgh — do not currently have mandatory inclusionary zoning ordinances.
Philadelphia has an incentive-based ordinance, which calls for setting aside 10 percent of a development’s market rate units in exchange for building height and density bonuses. In Pittsburgh, the owner of the ALMONO site, slated for major development, has proposed inclusionary zoning on its grounds. Citywide, the Affordable Housing Task Force is looking into various tools to grow the number of affordable housing units, including inclusionary zoning.