On the Unintended Consequences of Inclusionary Zoning

On the Unintended Consequences of Inclusionary Zoning.


The City of North Vancouver has been using this policy when approving new developments as a method to increase ‘affordable housing’.  i.e. the Onni development, the Kimpton and many more.  Some Councillors have argued that much more could be done with the money to benefit more people.

This article agrees with those Councillors,

“Affordable housing policies have a long history of hurting the very people they are said to help,” says Emily Washington, citing public housing and rent control as evidence. She would also add inclusionary zoning to the list of failed policies.

“While support for older housing affordability policies has dissipated, the same isn’t true of inclusionary zoning,” writes Washington.

“IZ has emerged as the affordable housing policy of choice because it has the benefit of supporting socioeconomic diversity, and its costs are opaque and dispersed over many people.”

“However,” writes Washington, “IZ has several key downsides including these hidden costs and a failure to meaningfully address housing affordability for a significant number of people.”

After acknowledging that inclusionary zoning beneficiaries win a lottery, Washington explains that “IZ’s effects are not limited to beneficiaries, and its costs are not fully borne by developers. Because developers will lose money on the IZ units they build, this cost has to be made up in the market rate units in order for the project to go forward. This adds to construction costs and also incentivizes luxury units that can better absorb the cost of the IZ units relative to more affordable construction.” Stated another way: “IZ appears free to everyone except developers because it’s not paid for out of city budgets. But ultimately housing consumers share in the cost of IZ units through a hidden tax.”

Full Story: How Affordable Housing Policies Backfire

Metro’s definition of ‘inclusionary zoning’:

1.1 What is Inclusionary Zoning?

Inclusionary zoning refers to a regulatory instrument available to
local government that either encour
ages or requires the provision
of affordable housing as part of residential developments.
Typically, an inclusionary policy will require new residential
developments to include a percentage of affordable housing units
as a condition of development approval.

The objectives of inclusionary zoning policies are to:
• increase the supply of affordable housing through the
recapturing of value that is created by public decisions to
change land use;
• create that socially and economically integrated
communities; and
• provide opportunities for residents to obtain affordable
housing in locations that are well located to employment,
transportation choices and services.

Inclusionary zoning may be combined with density bonusing and
other incentives such as relaxed development regulations,
lowered development fees or fast-tracking permits to offset the
cost of providing affordable units.


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