Many inclusionary zoning ordinances include density bonuses or other offsets to compensate developers for the foregone revenue associated with selling or renting homes at below-market rates. Well-designed offsets help to facilitate political acceptance of inclusionary housing policies and lessen the chances of legal challenges. They also reduce the likelihood that inclusionary housing policies will create disincentives for new development, which could reduce the supply—and potentially increase the price—of market-rate homes. Effective offsets may also be useful as incentives for voluntary inclusionary zoning policies. Many jurisdictions also assist developers by offering funds through affordable housing trust funds, tax exemption programs and other funding incentives to encourage the development of affordable units through their inclusionary housing program.
Density Bonuses
One of the most widely used cost offsets included in inclusionary housing policies, density bonuses allow more homes to be built on a parcel of land than would otherwise be permitted by the underlying zoning code. For example, a 10 percent density bonus would allow 110 units of housing in an area originally zoned for 100 units. When offered in conjunction with inclusionary zoning, density bonuses can help developers recoup the reduced revenue associated with offering a share of units at below-market rates by increasing the total number of units that may be sold at market rates.
Practitioners have noted that, in some cases, the promise of a density bonus may fall short of what can actually be achieved on a given site. In some communities, for example, neighbors’ opposition to higher-density development may prevent project sponsors from realizing the full benefit of a density bonus. Moreover, if the surrounding neighborhood is characterized by large-lot or other lower-density development, the proposed structure may be incompatible with existing homes and difficult to market. In other communities, city planners or zoning officials sometimes refuse to allow developers to build as many units as they are entitled to under the density bonus policy. These challenges undermine political support for inclusionary zoning and potentially reduce the number of market-rate units that get built, preventing the market from responding effectively to increased demand. Communities with inclusionary zoning policies should ensure that all local officials are on the same page in making offsets meaningful and achievable.
Relaxation of other land-use regulations, such as those related to required setbacks and lot size, may need to be applied in conjunction with the density bonus for its full benefits to be realized. In addition, public education and outreach can help to allay concerns about the appearance and impact of higher- density development.
Because the neighborhoods around transit stations and other town centers tend to be characterized by higher-density development, developers in these areas should be far less likely to experience the obstacles described above. Public transit systems and local businesses actually require a minimum density to operate successfully and thrive, and density bonuses can help to reach this threshold.
Reduced Parking Requirements
In many communities, the local zoning code establishes a minimum number of off-street parking spaces that must be created for every new residential unit. When implemented on a jurisdiction-wide scale, these regulations may result in an excessive supply of parking spaces, especially in walkable neighborhoods with access to regular public transit service. Parking requirements that have been set too high create several problems, including increased development costs (especially for providers of affordable housing) and limited opportunities to use smaller sites for infill development or provide other services and amenities on-site.
Some communities relax parking requirements for developers participating in inclusionary zoning programs, helping to lower costs and increase the amount of developable land. This incentive may not be practical in low-density areas where residents rely more heavily on personal vehicles, but can work well in compact neighborhoods served by transit. In fact, some localities may have already reduced or eliminated minimum parking requirements in these targeted areas.
Flexible Zoning and Design Standards
In many communities, the local zoning code establishes a minimum number of off-street parking spaces that must be created for every new residential unit. When implemented on a jurisdiction-wide scale, these regulations may result in an excessive supply of parking spaces, especially in walkable neighborhoods with access to regular public transit service. Parking requirements that have been set too high create several problems, including increased development costs (especially for providers of affordable housing) and limited opportunities to use smaller sites for infill development or provide other services and amenities on-site.
Some communities relax parking requirements for developers participating in inclusionary zoning programs, helping to lower costs and increase the amount of developable land. This incentive may not be practical in low-density areas where residents rely more heavily on personal vehicles, but can work well in compact neighborhoods served by transit. In fact, some localities may have already reduced or eliminated minimum parking requirements in these targeted areas.