Overview

Mandatory inclusionary housing policies generally have a much better record of producing affordable homes than incentive-based, voluntary policies. However, some localities have adopted strong forms of voluntary inclusionary housing tied to developer requests for significant rezoning. These policies, sometimes referred to as “inclusionary upzoning,” are becoming more common and may be an easier fit than traditional, mandatory policies in places where legal, market or political barriers have historically impeded the adoption of inclusionary housing.

Inclusionary upzoning may apply in the instance of a request for a conditional use permit, as part of a comprehensive rezoning or as a condition of utilizing new development options made available through a specific area land use plan or zoning overlay.

Case Studies

Inclusionary Development Policy (Boston)

In 2000, former Mayor Thomas Menino signed an executive order creating the city’s Inclusionary Development Policy (IDP). The policy applies to any residential development of 10 or more units seeking zoning relief and requires the equivalent of 13 percent of total housing units to be affordable. The policy also applies to any residential development built on public land or with public financial assistance.

To create new housing, most Boston developers need some form of zoning relief, usually in the form of additional height or density, because the zoning code in most areas of the city has not been updated for decades and allows only small-scale buildings by right. For nearly all developers, then, the IDP policy is technically voluntary but functionally mandatory.

Developers may be asked to provide greater than 13 percent affordability when requesting a Planned Development Area (PDA) zoning change. PDAs are overlay districts that offer considerable zoning flexibility for large-scale, mixed-use developments, similar to Planned Unit Development (PUD) zones in other parts of the country. The new Fenway neighborhood PDA, for example, requires 20 percent affordability.

Developers have the option of building the affordable units within the proposed development, constructing them off-site or paying a “buyout fee.” As of early 2015, the Boston IDP has produced 1,718 affordable units and generated an additional $32.3 million in buyout fees, according to Nick Martin of the Boston Redevelopment Authority.

Buyout fee revenues are deposited in a city fund that supports affordable housing citywide. A minimum of half of these funds must be spent in neighborhoods where the percentage of affordable housing is less than the citywide average.

Half of affordable units for sale must be affordable for households earning less than 80 percent of median income (AMI) and half for households earning between 80 and 100 percent of AMI. Rental inclusionary units must be affordable for households earning less than 70 percent of AMI. Rental units must remain affordable for 50 years, and for-sale homes must have a 30- to 50-year affordability term.

For More Info:

Phil Cohen, Boston Redevelopment Authority
Email: [email protected]

Tysons Plan (Fairfax County, Va.)

In 2010, Fairfax County adopted the 20-year comprehensive Tysons Plan to guide major changes to the county’s sprawling commercial center known as Tysons Corner. The plan envisions significantly greater development intensity within walking distance of four new Metrorail stations, which opened in 2014, along with mixed-use development, a walkable street grid and other physical changes that support transit use.

To access the lucrative redevelopment options outlined in the plan, developers are expected to make 20 percent of residential development units affordable to low- and moderate-income households, or contribute $3 per square foot to the county’s affordable housing trust fund if building commercial or hotel space. By adhering to these guidelines, developers can build to an unlimited floor area ratio (FAR) within a quarter-mile of each Metro station, or up to a FAR of 2.4 or 3.0 elsewhere in each transit district.

As of early 2015, the policy had produced 120 affordable units. County staff estimates that if existing development proposals are fully built out they will include a total of nearly 2,300 affordable units for households earning between 81 and 120 percent of area median income (AMI) and another 1,500 affordable units for households at less than 70 percent of AMI. These housing units will be required to stay affordable for 50 years if rented and 30 years if owner-occupied.

The 17 million square feet of commercial and hotel space under construction or in the pipeline in Tysons Corner is expected to also generate tens of millions of dollars in contributions to the county’s affordable housing trust fund, all of which must be spent in the Tysons Plan area.

For More Info:

Charlene Fuhrman-Schulz, Fairfax County Department of Housing and Community Development
Email: [email protected]

Cornfield Arroyo Seco Specific Plan (Los Angeles)

In 2013, Los Angeles incorporated a voluntary approach to inclusionary housing in its new, transit-oriented land use plan for an up-and-coming industrial area of the city where the Los Angeles River and Arroyo Seco converge. The Cornfield Arroyo Seco Specific Plan (CASP) offers significantly higher density for predominantly residential developments that include a percentage of affordable rentals or for-sale housing.

The CASP sets baseline floor area ratio (FAR) limits at 1.5 for predominantly residential developments with more than 15 units, but increases the maximum FAR in most areas to 3.0 or 3.15 (depending on the district), if the developer reserves five percent of the units for households earning less than 30 percent of AMI, 11 percent for households earning less than 50 percent of AMI or 20 percent for households up to 80 percent of AMI.

This decision to set baseline FAR limits at 1.5 was motivated by a third-party pro-forma analysis that found that density incentives applied to higher baseline FARs would be unappealing for developers.

As of January 2015, no new developments had been built under the CASP, a year and a half into its implementation, but senior city planner Claire Bowin reported that two mixed-income projects were moving forward with plans that included affordable housing.

For More Info:

Claire Bowin, Los Angeles Department of City Planning
Email: [email protected]