Developed in the 1970s, inclusionary zoning (IZ) is a policy to push the construction of more affordable housing in the private market. Developers need to set aside a certain percentage of newly planned housing units to become available at below-market prices. The main advantage of IZ is that it can increase economic opportunity by cutting off rent prices for low-income residents and creating mixed-income neighborhoods. As a bonus, developers have an opportunity to build taller or denser buildings. If developers do not intend to build affordable units, they have to pay a fee to the Affordable Housing Fund. (Shuetz, 2008)
Since the establishment of the policy, over 800 jurisdictions that have adopted inclusionary zoning policies can be found throughout the US. However, laws of inclusionary zoning can be different from place to place. For instance, some cities or towns require new construction to be built on-site as the market units, while others allow off-site construction.
There are two types of IZ law: mandatory laws or voluntary programs. Mandatory law is most common, and requires developers to set aside low-price houses. Voluntary programs offer incentives to the developers, in order to stimulate building affordable housing.
Effectiveness of IZ is measured by the number of affordable housing IZ produced, the duration of affordable housing and the number of people who benefit from it. Evaluating of the effectiveness of IZ can be difficult because of variations in the design and implementation between mandatory and voluntary IZ laws. For example, according to studies in California, mandatory programs produced more affordable houses than voluntary programs. In the following years, more research needs to be done to indicate the success of the IZ policies. (Ramakrishnan, Treskon & Greene, 2019)