There are a number of different program structures that are commonly used to ensure that new market-rate real estate development helps create housing for people at a range of income levels.
Inclusionary Program Types
Traditional Inclusionary Housing
Traditional inclusionary housing programs can be grouped by the type of program (voluntary or mandatory) and development type (homeownership, rental, or both). The distinction between mandatory and voluntary programs lies in whether developers can choose to opt out of the program. In other words, they are required to provide affordable housing in the former and may choose to provide affordable housing in the latter.
A 2021 study found that mandatory programs far outnumber voluntary programs; there are two-and-a-half times as many mandatory programs as voluntary programs. Also, nine out of 10 programs apply to both for-sale and rental developments (Wang and Balachandran, 2021).
Most of these programs are structured as land use requirements. They may allow payment of a fee “in lieu” of providing units on site, but the primary legal requirement is the provision of on-site units.
No: Several communities have adopted inclusionary policies through methods other than zoning code amendments. This may be by resolution of municipal council or executive order of the mayor, for example. The decision to adopt inclusionary housing as an ordinance or through resolution should be based on the following:
- If the inclusionary program is to be of limited duration and impact (e.g. applied only to select developments or areas), then a resolution may be appropriate.
- If the inclusionary program is of extended duration and universal impact, then it should be adopted through ordinance.
While adopting a policy as an ordinance can be a cumbersome process, it is less subject to changes due to near-term political shifts and changing priorities of municipal officials. It also provides certainty to developers because the regulations are codified as law with defined requirements and application.
Boston, Massachusetts is one example of an inclusionary development policy that has been adopted by executive order. The policy was first adopted through an executive order of the mayor in the year 2000, requiring a 10 percent affordability component in any residential project of 10 or more units that is financed by or developed on property owned by the city or the Boston Redevelopment Authority (BRA), or where zoning relief is requested. The city is currently in the process of amending their zoning code to incorporate inclusionary zoning to (1) increase developer certainty in its implementation and application and (2) make it a permanent ordinance rather than an executive order that is easily changed by political shifts.