Jury is out on inclusionary zoning

Minnesota cities are embracing so-called inclusionary zoning rules despite a thin record of research on the pros and cons of the policies.

Inclusionary zoning is a tool cities use to push developers to include affordable units in market-rate multifamily developments. Some policies are mandatory for some or all projects, while other cities make it an opt-in program with various incentives for developers that participate, according to Ed Goetz, director of the Center for Urban and Regional Affairs at the University of Minnesota’s Humphrey School of Public Affairs in Minneapolis.

It’s a hot trend for public officials in many markets, including the Twin Cities, he said.

“Everyone’s doing it because it doesn’t always require public expenditure,” Goetz said in an interview. “It’s a way of getting affordable housing built when private sector and market-rate housing is getting built. If the program is structured correctly, then it doesn’t often require these kinds of big subsidies from programs that aren’t well-funded in the first-place.”

Economists studying the issue so far have found signs the policies can, indeed, spur the creation of a considerable amount of affordable housing, and also spread such units into neighborhoods that wouldn’t have had them otherwise, Goetz said. But the research is too spotty, and many policies too new, to fully evaluate their impact, including warnings from many opponents that inclusionary zoning leads to less development and higher market-rate rents, he said.

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"Jury is out on inclusionary zoning"; by William Morris; Finance and Commerce;March 7, 2019

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