Inclusionary zoning is a tool used by cities to ensure a supply of affordable housing units. Such laws often require that new developments contain a certain percentage of affordable units and/or rental units, or they impose fees when multi-unit buildings are converted from rental properties to resident-owned condos. The percentage of affordable housing units required by inclusionary zoning laws is typically in the range of 10-30% of total units built. Inclusionary zoning laws can vary a great deal from one place to the next. Some variables include:
- Using a carrot or stick approach: while many cities require inclusionary housing, many more offer zoning bonuses, expedited permits, reduced fees, cash subsidies, or other incentives for developers who voluntarily build affordable housing.
- Exemptions for developments that fall below a minimum development size.
- Ability to build off-site affordable units, if onsite inclusion is too burdensome.
- Allowing payment of fees in lieu of unit construction.
- Price of “affordable” and maximum income level for residents of affordable units. 1
Inclusionary zoning laws can be enacted at the municipal, county level, state level. According to Wikipedia, more than 200 communities in the United States have some sort of inclusionary zoning provision. 2
Impacts on cohousing development
Inclusionary zoning laws can present barriers to the creation of cohousing units. For example, in Oakland, California, if a group of 10 people were to buy a 10-unit building for the purpose of creating cohousing for themselves, they might be required to create a certain number of replacement rental units in their building or elsewhere in the city. 3 Such laws add significant costs to a project and can negatively impact the feasibility of resident-developed cohousing projects. Cities should make special exemptions for owner-occupied units that are cooperatively developed by the people intending to live in the units.
Note that it may be possible to structure the cohousing entity in such a way that it avoids meeting the definition of a stock cooperative or condominium. For example, if people form an entity to purchase a multi-unit building to rent to themselves, and if there are some non-resident owners of that entity, this becomes, in effect, a hybrid between a rental property and a resident-owned property, and it may not be restricted by inclusionary zoning rules.