Inclusionary Zoning

• Income-eligibility criteria for defining affordability
• Pricing criteria for affordable units
• Restrictions on resale and re-rental of affordable units
• Provisions for in-lieu fees
• Other provisions regarding on-site or off-site construction requirements, transfer of excess affordable housing credits, etc.

• Establishes a local requirement under local control, without depending on state or federal subsidies or the direct involvement of outside agencies.
• Results in lower land costs over time, as affordable housing requirements are known with certainty at the earliest stages of project formulation.
• Expands the supply of affordable housing for lower- and moderate-income households by integrating such housing into the community.

During the Housing Element Process...

• Review Data on Affordable Housing Development. Look at the success of previous efforts to encourage affordable housing development in the local area. If an inclusionary requirement has been in place but few units have been built, identify potential refinements to the existing program that might result in more units being built. If no program has been in place, consider whether implementation of a program might promote more affordable housing development.
• Consider the Experience of Nearby Jurisdictions. Adjacent jurisdictions may have inclusionary programs in place. Talk to staff from these jurisdictions to understand the structure of their programs and how successful they have been.
• Involve Developers. Include both for-profit and non-profit developers in discussions about inclusionary zoning and defining the parameters for a local program. Collaboration between these groups can be the key to successful implementation.
• Consider In-Lieu Fees. The ordinance may provide for alternatives (such as in-lieu fees) for developments that cannot satisfy the inclusionary requirement due to unusually high cost of construction for a particular site. In-lieu fees should not be completely optional for the developer if the desire is to scatter low- and moderate-income units throughout the community. The fee should be sufficient to facilitate the development of the required affordable units at another location in the community.
• Consider Land Donation. Land donation may be considered as a preferred alternative to in-lieu fees. The developer donates (or sells at a considerably reduced price) a portion of the development site to the City or a non-profit housing developer. A non-profit developer then develops the donated land, using their expertise and resources for developing and managing affordable housing.
• Consider Increasing Densities. Increased densities and other land use changes to enhance residential development capacity may accompany inclusionary zoning. This will help offset the financial impact of inclusionary requirements and fees.

• Adopt an Ordinance. Adopt an inclusionary ordinance to implement policies in the housing element. Inclusionary zoning may apply to both rental and ownership units, single and multiple family developments.
• Set Reasonable Requirements. Affordable housing requirements should be relatively modest if there are no development incentives such as density bonuses and fee waivers to reduce the financial impact on the developer.
• Address Very Low Income Households. Inclusionary policies should require some housing targeted for very low income households. Inclusionary zoning is one of the few mechanisms available to address the communitys share of the need for very low income housing.
• Establish Appropriate Fee Level. In-lieu fees, if too low, may not generate enough funding to construct housing units. Also, low in-lieu fees are a major disincentive to construct the affordable housing on-site.
• Vary Requirements by Area. Inclusionary requirements may vary by district. For example, infill housing in downtown areas may have a lower inclusionary requirement because infill housing is desired and/or significant affordable housing may already exist downtown.
• Establish Design Guidelines. Ensure that inclusionary units are integrated within the development so as not to be distinguishable from the market-rate units.
• Establish Criteria for Applicants. Criteria need to be established to screen the applicants for the low-cost units because the demand from eligible buyers and renters is sure to exceed the supply.
• Establish Resale Controls. Set up resale controls for continuing the use of the units by eligible occupants on turnover. This requires on-going management and administration. Some cities and counties have contracted with local housing authorities to run this staff-intensive activity.

Affordable By Choice: Trends in California Inclusionary Housing Programs (2007)
The Non-Profit Housing Association of Northern California (NPH) commissioned a study of housing produced though inclusionary housing programs from January 1999 through June 2006 along with the California Coalition for Rural Housing (CCRH), the Sacramento Housing Alliance (SHA) and the San Diego Housing Federation (SDHF).

On Common Ground: Joint Principles on Inclusionary Housing Policies (July 2005)
The joint policy brief issued by NPH and the Home Builders Association of Northern California. This document identifies flexibility and adaptation to local market factors as keys to a more effective and successful inclusionary housing program. Based on that premise, the NPH and HBANC offer some key principles and recommendations on inclusionary housing programs.

The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas (March 2008)
Inclusionary zoning is a policy tool that ties the production of affordable homes to the production of new market-rate housing by requiring, or providing incentives to encourage, developers to reserve a share of units in new residential developments for low- or moderate-income households. While hundreds of communities have established inclusionary zoning programs since the first policy was adopted in 1972, relatively little is known about the effects of these programs on local housing markets.

1. What kinds of jurisdictions have adopted inclusionary zoning programs?
2. How much affordable housing has been produced by these programs, and what factors have influenced production levels?
3. What effects have inclusionary zoning programs had on the price and production of market-rate housing in these markets?