Study Highlights Housing Tradeoffs in Inclusionary Zoning Policies

A new report authored and published by two of California’s most prestigious universities highlights a point the BIA continually stresses with local elected leaders and other decision makers: inclusionary zoning works but only to a point, and if pushed too far it will reduce home building at a time when we need an abundance of housing stock.

“Although inclusionary zoning can help increase housing for low-income families, the mandates also suppress overall housing production if taken too far,” says the new report authored by the UCLA Lewis Center for Regional Policy Studies and published by the Terner Center at UC Berkeley.

The report examines how inclusionary zoning rules impact housing production and affordability.

“The report primarily focuses on the city of Los Angeles’ Transit Oriented Communities (TOC) program. This program was implemented in 2017 with a goal of boosting housing production, including below-market rate units, near bus and train stations,” a story highlighting the report says.

“Inclusionary zoning (IZ) refers to local government ordinances that require a certain percentage of new residential construction to be sold or rented at below-market rates. According to the Terner Housing Policy Simulator, Los Angeles’ TOC program, with an IZ requirement of 11%, has likely boosted below-market-rate (BMR) homes with minimal negative consequences for overall housing production,” the story says. “However, increasing the required percentage of BMR units under IZ policy could sharply reduce overall housing production with declining benefits for overall housing affordability.”

Inclusionary zoning mandates vary among municipalities across San Diego County. In San Diego, the percentage is 10 but it’s higher in some other places and that spells trouble for home building. At least one councilmember in Oceanside wanted to increase the inclusionary mandate in that city to 20 percent, which would eliminate most or all housing production. The Oceanside City Council voted to approve a 15 percent inclusionary mandate, which many would argue is too high and leads to projects that “don’t pencil” and therefore don’t get built.

While there clearly is a need to build more affordable housing across our region, we must be careful that these policies do not attract unintended consequences, especially as we work toward reducing government regulations and fees to clear the way for more housing San Diegans can afford. Saddling home builders with more regulations and fees will only exacerbates our region’s housing crisis.

CLICK HERE to read the full story from NAHB, “Study Highlights Housing Tradeoffs in Inclusionary Zoning Policies.”

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