Expanding Housing Opportunities Through Inclusionary Zoning in USA
Introduction:
Inclusionary zoning (IZ), also known as inclusionary housing, has become a popular policy tool that local jurisdictions use to increase the production of affordable housing. Inclusionary Zoning IZ ordinances either require or encourage builders of new residential developments to set aside a certain percentage of the housing units for low- or moderate-income residents. A key observation is that, although inclusionary zoning has increased the supply of affordable housing units in these two sites, IZ requirements must be clear and administered consistently so that developers can effectively predict when it is economically feasible to build projects that require inclusionary housing units.
Inclusionary zoning (IZ) Approach:
An increasingly popular approach to addressing the provision of affordable rental and for-sale housing is inclusionary zoning (IZ). As of 2004, an estimated 400 IZ programs were in operation across the United States and the number has grown since then. Inclusionary Zoning IZ is a tool used to support the development of affordable housing units by requiring or providing incentives for developers to reserve a certain percentage of housing units in a market-rate development for low- or moderate-income households or by enabling developers to comply with Inclusionary Zoning IZ requirements through other ways, such as building affordable units off site or paying a fee in lieu of construction.
History and Evolution of Inclusionary Zoning in Montgomery County:
The challenge to meet the needs of low and moderate-income families by providing more affordable housing units is not new to Montgomery County. This challenge first emerged as a public policy concern in the 1930s when rapid growth of the federal workforce expanded the demand for homes in Washington, D.C. suburbs. It intensified during the post-war housing boom. By the 1960s, rapidly increasing housing demand, increasing regulatory constraints on housing development, and increasing public concern about housing issues at all levels of government created pressure for a policy response.
Current Features of the Program:
Current features of the MPDU program reflect nearly 40 years of program implementation and policy adjustment. Today, the threshold development size for requiring MPDUs is 20 or more housing units. MPDUs must constitute 12.5 to 15.0 percent of the total units approved. Density bonuses are granted only if the development includes more than the required minimum percentage of units, and the maximum density bonus is 22 percent.
The Siding Scale of MPDU Requirement:
Whether the developer uses the density bonus or not, 12.5 percent of new units in developments with more than 20 units must be MPDUs.
Density Bonuses:
Density bonuses are intended to help developers achieve both profitability and reduce opposition and legal claims from developers. The density bonuses act as a payment to developers, who would otherwise argue that the diminished profits associated with inclusionary zoning regulations represent an unconstitutional taking of land without just compensation.
Affordability Terms:
Rental MPDUs that were built after the 2005 amendment have affordability terms of 99 years, which essentially make the units permanently affordable.
Income Limits:
In Montgomery County, income limits are based on the AMI and vary by household size, tenure, and unit type. Income limits are updated annually by the Director of the Department of Housing and Community Affairs.
Housing Opportunities Commission:
The Housing Opportunities Commission (HOC), formerly the Housing Authority of Montgomery County, was established in 1974, the same year as the MPDU program. Like other housing authorities, HOC manages rental and ownership programs including public housing, the federal voucher program, and several other programs for very low-, low-, and moderate-income households.
Conclusion:
Research into housing agencies’ and nonprofit organizations’ use of Inclusionary Zoning IZ-produced units would be valuable for understanding how the depth and length of Inclusionary Zoning IZ affordability can be sustained and extended. Any study of the sustainability of Inclusionary Zoning IZ unit affordability would need to factor in the disposition of units purchased by housing agencies and nonprofit organizations.