Inclusionary Zoning (and Density Bonuses)

Inclusionary zoning policies require developers to reserve a portion of new units to households of a certain income level, as determined by the jurisdiction. The application of this tool can vary, from being required of all new development, all new development in a certain area, or, most commonly, in exchange for benefits like increased density. In some cases, developers may choose to pay into an affordable housing fund in lieu of providing affordable units on site. The non-obligatory version of this tool, where developers opt to provide a public benefit such as affordable housing in exchange for additional density, is often referred to as a density bonus.

Without additional funding, the affordable units produced by this tool are considered the “Affordable Rent” or “Workforce” type of assisted housing. Rents are capped at a level affordable to a household of a certain level, and households with incomes above that level are not allowed to rent these units. However, as rents are not tailored to household incomes, it is still possible for people with very low incomes to be cost burdened while living in these properties. (Though they will probably be less cost burdened than in a market rate unit)

Per Washington State law, affordable units produced through inclusionary zoning must be dedicated as affordable for at least fifty years and serve households at or below 50% of County AMI. (RCW 36.70A.540) Affordability is usually restricted over this period through the use of Affordability Covenants which are recorded on the property and carry over from owner to owner. The PSRC has a full discussion of Affordability Covenants here.

Where it works

Inclusionary zoning is most appropriate for areas with very strong housing markets, or where a future development surge is predicted. (In the areas adjacent to future transit stations, for example) This tool can help mitigate displacement in these areas, where rents can rapidly rise out of reach to local lower income workers. At the same time, jurisdictions must take great care when developing inclusionary zoning policies to make sure they do not crush the local housing market, further exacerbating supply pressure. In addition, these policies should not be so conservative as to offer benefits in exchange for providing what could otherwise be produced at market rate.

Local Examples

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