Inclusionary housing programs refer to any programs or policies that require the creation of affordable housing when new development occurs, including impact or linkage fees that generate revenue for affordable housing.
As inclusionary housing is gaining attention as a way to combat displacement amid current housing market trends, mainly, increasing housing costs, authors Emily Thaden, Ph.D, and Ruoniu Wang, Ph.D, of Grounded Solutions Network released a September 2017 Working Paper titled Inclusionary Housing in the United States: Prevalence, Impact, and Practices, which was published by the Lincoln Institute of Land Policy.
The paper documents nearly 200,000 affordable housing units that have been created and nearly $2 billion in fees paid by developers in lieu of building affordable units. To discover this, the study surveyed the landscape of inclusionary housing in the U.S., identifying 886 jurisdictions in 25 states that have enacted the policy.
The study found that the vast majority of jurisdictions with inclusionary housing are located in New Jersey at 45 percent, Massachusetts at 27 percent, and California at 17 percent. The authors note that “these places have statewide inclusionary housing policies or state policies that promote the local adoption of inclusionary housing policies.”
Based on the study’s sample, 143 jurisdictions submitted surveys, and researchers completed surveys for an additional 37 jurisdictions, for a total sample of 180 jurisdictions. Of those 180 jurisdictions, 12 reported that they do not currently have an inclusionary housing program, but seven reported their jurisdictions had a program in the past. The chart below shows how the jurisdictions that responded with using a program in the past noted that the programs did produce affordable homes.
Although comprehensive data on impact and program characteristics were not available for the majority of programs, the study did find that “373 jurisdictions reported a total of $1.7 billion in impact or in-lieu fees for the creation of affordable housing.”
In addition, results also found that jurisdictions reported creating a total of 173,707 units of affordable housing, with 443 jurisdictions reported creating 49,287 affordable homeownership units, 581 jurisdictions reported creating 122,320 affordable rental units; and 164 jurisdictions reported an additional 2,100 affordable homes.
The study also gathered responses from 273 inclusionary housing programs for which information on program characteristics was collected. Results discovered that the most common ways that developers could provide affordable housing were through “on-site development in 90 percent of programs or through paying in-lieu fees or providing off-site affordable housing in roughly half of all programs.”
The most common enticements offered to developers were density bonuses at 78 percent, other zoning variances 44 percent, or fee reductions or waivers 37 percent.
In the end, this study supports that inclusionary housing programs are an, “increasingly prevalent tool for producing affordable housing.” Additionally, local inclusionary housing programs are prioritizing on-site affordable housing development, “which may be an effective strategy to place affordable housing in neighborhoods of opportunity, and ensuring long-term affordability, which is an effective way to maintain community assets and the affordable housing stock,” according to Thaden and Wang.
The report notes that a limitation to this study is due to missing data, therefore these numbers are an underestimate of the total fees and units created by the entire inclusionary housing field.
Click here to view the full paper.