It doesn't create much new housing and distorts the housing market, providing little if any help for low-income households. It's no substitute for broad liberalization of zoning policies.
Hundreds of cities around the United States have adopted “inclusionary zoning” (IZ) policies in an effort to meet their communities’ need for affordable housing. Inclusionary zoning can encourage residential developers to rent a portion of their new housing units at below-market rates by providing incentives such as looser zoning-code restrictions. In some cases, inclusionary zoning simply mandates a below-market quota for new apartment buildings above a certain size.
The appeal of inclusionary zoning to politicians is obvious: By enacting IZ policies, they can be seen to be doing something about housing crises without directly spending money from the municipal budget. Instead, the expenses of affordable housing are borne by developers — never a popular constituency and one that frequently gets blamed for causing gentrification.
But a look at the evidence and economic theory raises doubts about the usefulness of IZ. It seldom creates much affordable housing: Even a report by IZ supporters notes that the average number of housing units created by these policies per year is only 27. Moreover, IZ programs might produce broader distortions in the housing market that reduce or even cancel out its benefits for low-income households.
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