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Inclusionary Zoning

What Is It?

Inclusionary zoning (IZ) requires developers to make a percentage of housing units in new residential developments available to low- and moderate-income households. In return, developers receive non-monetary compensation-in the form of density bonuses, zoning variances, and/or expedited permits-that reduce construction costs. By linking the production of affordable housing to private market development, IZ expands the supply of affordable housing while dispersing affordable units throughout a city or county to broaden opportunity and foster mixed-income communities.

Inclusionary zoning, sometimes called "inclusionary housing," can take many forms.

The Maryland Experience

- Passed in 1974, Montgomery County, Maryland’s IZ program requires 12.5-15 percent of new housing developments of 35 or more units to be affordable for households in the lowest one-third of the county’s income bracket. Between 1976 and 2003, over 11,000 affordable housing units were developed throughout the county.

Some IZ programs are mandatory, while others are voluntary or incentive-driven.  Some jurisdictions require developers to construct affordable units within the development, while others allow affordable units to be constructed in another location.  Some require developers to build the units, while other communities allow developers to contribute to an affordable housing fund.

Inclusionary zoning is a flexible strategy with a proven track record of meeting a community's affordable housing needs. IZ has become a common tool in California, Massachusetts , New Jersey , Colorado , and the DC Metropolitan Area, as well as other cities like Santa Fe , New Mexico and Burlington , Vermont . More than 100 jurisdictions employ inclusionary zoning in California alone; a 2003 survey conducted by the Non-Profit Housing of Northern California and the California Coalition for Rural Housing found that in California more than 34,000 units of affordable housing had been created.

Once common only in suburban jurisdictions, IZ programs are increasingly adopted by urban communities. Generally, IZ policies have been most effective in areas that are experiencing growth, since affordable units are only generated if private residential development is occurring in the community.

This tool provides an overview of inclusionary zoning and considers the key issues related to implementing an effective program.

Last Updated: 2003