"Mandatory inclusionary zoning programs can be expected to increase prices by 1 percent per year that they are in place relative to what that jurisdiction could have expected without the mandatory inclusionary zoning," says Emily Hamilton, the Mercatus Center researcher who wrote the study.
Inclusionary zoning, Hamilton tells Reason, encourages developers to build more profitable but harder-to-lease luxury buildings, with the higher rents being used to recoup the costs of the below-market units they're forced to build.
In Virginia, for example, Arlington County's inclusionary zoning policy requires only 5 percent of units to have below-market rate rents, while Fauquier County demands 20 percent.
Inclusionary zoning programs can avoid becoming a tax on development, but only when they are designed as an opt-in program where developers voluntarily agree to build below-market rate units in exchange for being allowed to construct larger, denser buildings.
"If your density bonus is valuable enough, it will encourage developers to voluntarily take advantage of the inclusionary zoning program, in which case we can be sure the program is not taxing development relative to the status quo," says Hamilton.
Because inclusionary zoning policies act as a tax on development, they usually do a poor job of creating affordable units.
New York City's inclusionary zoning program led to the creation of only 172 units during the first 25 years it was in effect, the study notes.
https://reason.com/2019/10/07/when-mandating-affordable-housing-makes-housing-less-affordable/
Inclusionary zoning, Hamilton tells Reason, encourages developers to build more profitable but harder-to-lease luxury buildings, with the higher rents being used to recoup the costs of the below-market units they're forced to build.
In Virginia, for example, Arlington County's inclusionary zoning policy requires only 5 percent of units to have below-market rate rents, while Fauquier County demands 20 percent.
Inclusionary zoning programs can avoid becoming a tax on development, but only when they are designed as an opt-in program where developers voluntarily agree to build below-market rate units in exchange for being allowed to construct larger, denser buildings.
"If your density bonus is valuable enough, it will encourage developers to voluntarily take advantage of the inclusionary zoning program, in which case we can be sure the program is not taxing development relative to the status quo," says Hamilton.
Because inclusionary zoning policies act as a tax on development, they usually do a poor job of creating affordable units.
New York City's inclusionary zoning program led to the creation of only 172 units during the first 25 years it was in effect, the study notes.
https://reason.com/2019/10/07/when-mandating-affordable-housing-makes-housing-less-affordable/
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