It’s no secret that the most vibrant communities usually exhibit substantial income diversity. Ghettos—whether of the rich or the poor–tend to lack resilience.
Inclusionary housing refers to any programs or policies that boost income diversity by requiring or incentivizing the creation of affordable housing when new development occurs, including impact or linkage fees that generate revenue for affordable housing.
Now, in October of 2017, the Lincoln Institute of Land Policy has unveiled the largest study to date of inclusionary housing at Intersections 2017, the annual affordable housing conference of the Grounded Solutions Network, in Oakland, California.
Through the most comprehensive investigation on inclusionary housing conducted to date, this study identifies 886 jurisdictions with inclusionary housing programs located in 25 states and the District of Columbia at the end of 2016. The vast majority of jurisdictions with inclusionary housing are located in New Jersey (45 percent), Massachusetts (27 percent), and California (17 percent). These places have state-wide inclusionary housing policies or state policies that promote the local adoption of inclusionary housing policies. Many jurisdictions reported having more than one inclusionary housing policy; a total of 1,379 were identified in 791 jurisdictions on which this information was available.
Inclusionary housing is gaining attention as a bulwark against displacement amid soaring housing costs. In the Working Paper Inclusionary Housing in the United States: Prevalence, Impact, and Practices, authors Emily Thaden and Ruoniu (Vince) Wang, of Grounded Solutions, survey the landscape of inclusionary housing in the United States, identifying 886 jurisdictions in 25 states that have enacted the 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 – likely underestimates because of missing data.
The paper also breaks down policies by different characteristics, including whether they are mandatory or voluntary, whether they create for-sale or rental units, and crucially, the length of time for which they require units to remain affordable. The paper finds that least 90 percent of inclusionary housing programs require that units remain affordable for 30 years or longer.
“This trend in local inclusionary housing programs differs from the relatively short-term affordability requirements in federal housing programs, which range from five to 30 years,” Thaden and Wang conclude. “The embrace of long-term and lasting affordability requirements by local governments illustrates their commitment to preserve the affordable housing stock in their communities as well as the more prudent use of public and private investment in affordable housing.”
As the authors point out, successful inclusionary housing policy depends on management and stewardship to ensure compliance and upkeep of units.
The paper builds on a body of work on affordable housing, gentrification, and displacement. The 2015 report Inclusionary Housing: Creating and Maintaining Equitable Communities, by Rick Jacobus, offers solutions for overcoming the major political, technical, legal and practical barriers to the adoption of inclusionary housing. The 2014 Working Paper Achieving Lasting Affordability through Inclusionary Housing by Thaden, Robert Hickey, and Lisa Sturtevant, provides a case study analysis of 20 programs.
The Lincoln Institute has done extensive research on community land trusts, a mechanism for providing permanent affordable housing that can be used on its own or in conjunction with inclusionary housing. According to data released in 2009, homeowners in community land trusts are much less likely to lose their homes to foreclosure than owners of market-rate homes, a finding further explored in a 2010 Land Lines magazine article, Outperforming the Market. In addition, The Community Land Trust Reader, a collection of 46 essays, brings together the seminal texts that inspired and defined community land trusts, and the report The City-CLT Partnership (also available at Intersections 2017) outlines how cities can provide investment and support to community land trusts.
Although comprehensive data on impact and program characteristics was 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. Jurisdictions also reported creating a total of 173,707 units of affordable housing, which predominantly excludes additional units created with the $1.7 billion in fees:
- 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.
Due to missing data, these numbers substantially underestimate the total fees and units created by the entire inclusionary housing field.
Of the 273 inclusionary housing programs for which information on program characteristics was gathered, over 70 percent were developed after 2000, and 71 percent of programs applied to the entire jurisdiction. The most common program type was mandatory, and policies applied to both rental and for-sale development in 61 percent of programs. Approximately, 90 percent of all programs reported affordability terms of at least 30 years. The most common ways that developers could provide affordable housing was 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 incentives offered to developers were density bonuses (78 percent), other zoning variances (44 percent), or fee reductions or waivers (37 percent).
This study supports that inclusionary housing programs are an increasingly prevalent tool for producing affordable housing. Additionally, local inclusionary housing programs are: (1) prioritizing on-site affordable housing development, which may be an effective strategy to place affordable housing in neighborhoods of opportunity; and (2) ensuring long-term affordability, which is an effective way to maintain community assets and the affordable housing stock.
Photo of Oakland via Adobe Stock.