Does Inclusionary Zoning Really Improve Affordable Housing Supply?

Inclusionary zoning — requiring market rate developers to provide or fund a certain number of affordable units — has been under legal attack by builders and property rights advocates. Earlier this week, the California Supreme Court upheld San Jose’s inclusionary zoning ordinance, although as my colleague Rick Frank suggests at Legal Planet, the battle may soon continue on appeal to the U.S. Supreme Court.

But the question remains: does inclusionary zoning really work, when it comes to producing enough affordable housing? The results at least in San Francisco have not been promising:

John Rahaim, chief of the San Francisco Planning Department and formerly planning director in Seattle, said inclusionary zoning was also a major tool in the Bay Area. Developers have the option of paying a fee, providing the affordable housing on-site, building off-site, or dedicating a piece of land for the city to build affordable housing. San Francisco is also looking at the density bonus approach, where additional height is allowed in return for more affordability.

But for all that effort, a total of 1,787 affordable units have been built since 1992, Rahaim said. “We should be building that many on an annual basis.” Currently, average rent for a two-bedroom apartment in San Francisco is $4,580 per month, and the median home purchase price is over $1 million. All the while, the Bay Area continues to grow, in people and jobs. Projections are for a population increase of 250,000 over the next five years. The city has already hit 40 percent of its 30-year projected job growth.

If this paltry result is consistent across other cities, then affordable housing advocates shouldn’t either get too excited by the California decision or too afraid of a U.S. Supreme Court intervention. Because we’ll need policy tools that offer a much better chance at providing a sufficient affordable housing supply. A permanent source of funding for affordable housing would be a good start.


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