Achieving Lasting Affordability Through Inclusionary Housing

Introduction

Inclusionary housing policies are local land use policies that link approvals for market rate housing to the creation of affordable homes for low- and moderate-income households. The primary goals of inclusionary housing programs are to expand the supply of affordable housing and promote social and economic integration. The ability to not only produce affordable homes, but also to ensure their long-term affordability, is critical for meeting the housing needs of the lower-income families and individuals that inclusionary housing programs aim to serve. Even as inclusionary housing programs have become more prevalent, there is a lack of information on successful strategies for facilitating lasting affordability. This paper analyzes a set of 20 inclusionary housing programs to highlight how long affordability periods, strong legal mechanisms, carefully designed resale formulas, dedicated program stewardship, and strategic partnerships can help preserve affordable homes produced through inclusionary housing programs for multiple generations. In addition, this research describes initial findings from a first-of-its-kind, national directory of local inclusionary housing programs.

Inclusionary Housing Policies and Their Role in Housing Affordability

Inclusionary housing policies are local land use initiatives that require developers to include affordable housing units in market-rate residential projects. These policies have gained traction in many urban areas where rising housing costs have made it increasingly difficult for low- and moderate-income families to access stable housing. The primary goals of inclusionary housing programs are to increase the supply of affordable homes and promote greater social and economic integration by ensuring that individuals from different income levels can live in the same neighborhoods. However, to truly address the needs of lower-income families, inclusionary housing policies must not only create affordable housing but also ensure the long-term affordability of these homes.

The Importance of Long-Term Affordability

The long-term affordability of homes is a crucial aspect of inclusionary housing programs. Housing affordability is an ongoing concern in many cities, where market forces continue to push housing costs out of reach for many low- and moderate-income families. If affordable housing units created through inclusionary policies are not protected over time, they risk being sold or rented at market rates, effectively displacing the families they were designed to help.

Therefore, ensuring that affordable homes remain affordable for multiple generations is essential for achieving the long-term objectives of inclusionary housing policies. The key challenge lies in developing mechanisms that preserve affordability even as housing markets evolve. Without such protections, affordable housing programs risk losing their effectiveness in meeting the needs of lower-income households.

Key Strategies for Preserving Long-Term Housing Affordability

This paper analyzes a set of 20 inclusionary housing programs to identify successful strategies for maintaining the affordability of homes created through these policies. The analysis highlights several key elements that are essential for ensuring lasting housing affordability:

1. Long Affordability Periods

   One of the most important strategies for preserving affordable housing is the establishment of long affordability periods. Many inclusionary housing programs require that the homes remain affordable for periods ranging from 30 to 99 years. Longer affordability periods protect affordable homes from being lost to the market, ensuring that they remain available to low- and moderate-income families for several generations. These extended periods provide stability for residents and help prevent displacement due to rising housing costs.

2. Strong Legal Mechanisms

   To enforce long-term affordability, inclusionary housing programs must include robust legal mechanisms that prevent the early termination of affordability requirements. These mechanisms may include deed restrictions, affordability covenants, or other legal instruments that ensure the homes are kept affordable regardless of changes in ownership or market conditions. Effective legal mechanisms are critical for preventing loopholes that could allow properties to be sold at market rates or rented at unaffordable prices.

3. Carefully Designed Resale Formulas

   Resale formulas are another important tool for maintaining affordability in inclusionary housing programs. These formulas regulate the price at which a home can be resold, typically based on the original purchase price, adjusted for inflation or other factors such as improvements made to the property. By setting limits on resale prices, these formulas prevent homeowners from selling their homes at inflated market prices, which could undermine the long-term affordability of the unit. Carefully designed resale formulas strike a balance between allowing homeowners to build equity while keeping the home affordable for future buyers.

4. Dedicated Program Stewardship

   Successful inclusionary housing programs require ongoing stewardship to ensure that affordable housing remains in compliance with program rules and continues to serve low-income households. Program stewardship involves monitoring the affordability of units, ensuring that they are properly maintained, and addressing any issues that may arise with homeowners or tenants. Effective stewardship also involves providing assistance to residents who may face financial difficulties, helping them remain in their homes without falling out of compliance with the affordability requirements. By maintaining oversight and support, dedicated stewardship helps ensure the program’s long-term success.

5. Strategic Partnerships

   Strategic partnerships between local governments, non-profit organizations, and private developers play a crucial role in the success of inclusionary housing programs. These partnerships can help secure funding, share resources, and provide expertise in the creation and management of affordable housing. Collaboration between stakeholders allows for the pooling of resources and ensures that the program is able to meet the needs of both developers and low-income households. Furthermore, strategic partnerships can help ensure that affordable housing remains well-integrated into the broader community, fostering social and economic integration.

National Directory of Inclusionary Housing Programs

In addition to analyzing specific strategies, this research introduces the first-ever national directory of local inclusionary housing programs. This directory serves as a comprehensive resource for policymakers, housing advocates, and developers who are interested in learning from successful inclusionary housing programs across the country. By sharing data, best practices, and key insights, the directory aims to facilitate the replication and scaling of successful programs, ultimately helping to expand housing affordability nationwide.

The directory provides valuable information on the design and implementation of inclusionary housing policies, as well as case studies of successful programs. By compiling this information into a centralized database, the directory serves as a tool for learning and innovation, enabling cities and communities to adopt strategies that have proven effective in other areas.

Conclusion: Ensuring Lasting Housing Affordability

As housing affordability remains a significant challenge for many low- and moderate-income households, inclusionary housing policies offer an important solution. However, to achieve the long-term objectives of these policies, it is critical to ensure that the affordable homes created remain affordable for future generations. By establishing long affordability periods, implementing strong legal mechanisms, designing effective resale formulas, committing to program stewardship, and fostering strategic partnerships, inclusionary housing programs can successfully preserve affordable homes over time. The insights gained from analyzing 20 inclusionary housing programs and the development of a national directory will help guide future efforts to expand housing affordability and promote more inclusive communities.

Also read: What is Inclusionary Housing?