Study Identifies Over 1,000 Inclusionary Housing Programs Nationwide

A paper in Housing Studies, Inclusionary housing in the United States: Dynamics of local policy and outcomes in diverse markets,” analyzes the results of a comprehensive national survey of inclusionary housing (IH) programs. The authors identified 1,019 local inclusionary housing programs in 734 local jurisdictions. In more than half (53%) of the jurisdictions reporting the production of affordable homes through an IH program, IH programs produced as many or more affordable homes than the Low-Income Housing Tax Credit (LIHTC), the country’s largest rental housing subsidy program. In most cases, neither IH nor LIHTC produce and operate housing affordable to the lowest-income households.

Inclusionary housing policies require or provide incentives for developers to include affordable units in developments that would otherwise be entirely market-rate. IH programs sometimes also permit developers to pay fees instead of building additional affordable units. This study focuses on local IH programs and excludes state mandates, but program features can be heavily influenced by state laws.

The authors gathered data through an ordinance review and an online survey sent to jurisdictions with an identified IH program between November 2018 and October 2019. The authors reviewed municipal bylaws, zoning ordinances, and regional and municipal housing plans in 92,118 jurisdictions across the country. The survey questionnaire about IH program features and program impact was sent to all 734 jurisdictions with identified programs, and the authors received 394 responses. The response rate for New Jersey programs was just 2%, which the authors attribute to disputes over the legal status of those programs.

The 1,019 IH programs were found in 734 local jurisdictions in 31 states and the District of Columbia, but the vast majority (74%) were found in New Jersey, California, and Massachusetts. Another 13% of IH programs were concentrated in New York, Washington, Florida, and Connecticut. Jurisdictions with IH programs are located in substantially stronger housing markets, with higher median home prices and lower vacancy rates.

The authors classify two thirds of IH programs as “traditional” because they yield affordable on-site or off-site units or payments of in-lieu fees. Most programs (71% of those who responded) offered incentives to developers, with the most common being density bonuses that allow the developer to build more units than would ordinarily be allowed on a site by the zoning code. About half (49%) allowed developers to pay in-lieu fees instead of building affordable units on-site, and 42% allowed developers to build affordable units off-site instead. In 85% of the programs that reported a single income target, the maximum income allowed for affordable units is between 51% and 80% of area median income. Most programs (93%) require affordable units remain affordable for at least 30 years.

One-third of the IH programs are linkage or impact-fee programs, which generate fees for the development of affordable housing from commercial development, residential development, or both. For IH programs that charged fees per square foot of new development, the average fee rate was $5.01 per square foot for new retail, $7.90 per square foot for offices, $11.80 per square foot for for-sale single-family residences, and $14.22 per square foot for rental developments.

A subset of 383 programs provided information on the number of homes produced through their program. Of those, 258 programs reported having produced at least one affordable unit and 125 reported they had produced no affordable units. The programs with positive production numbers cumulatively produced 109,488 to 110,172 affordable units. For 123 programs that reported the amount of development fees received, the cumulative total fee collected was $1.78 billion.

On average, a jurisdiction produces 21 inclusionary housing units a year, which amounts to 9% of all permitted housing units created in that jurisdiction. That estimate does not include affordable units developed by in-lieu fees. On average, jurisdictions produce as many IH affordable units as LIHTC units. IH production was higher than LIHTC production in 34% of jurisdictions.

Read the paper at:

Access a report that summarizes the results and includes additional charts at:

See more about inclusionary housing policies in NLIHC’s 2021 Advocates’ Guide, p. 6-12:

See Memo, 5/21/18 for more research from Grounded Solutions Network on inclusionary housing.