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Best Practices in Inclusionary Housing Policy Design

www.affordableownership.org

We support inclusionary housing andhomeownership programs to preserve

long-term affordability and community stability.

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What is Inclusionary Housing

“Any municipal or county ordinance that requires or allows a property owner, builder, or developer to restrict the sale or resale price or rent of a specified percentage of residential units in a development as a condition of receiving permission to construct that development.”- National Association of Homebuilders

Inclusionary Housing 4-Plex, Bolder, CO

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Other Names

• Inclusionary Zoning • Incentive Zoning• “Mixed-income

strategy to encourage the production of reasonably-priced housing”

• Other?

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Why Adopt an IH Policy?

• Economic Integration

• Workforce Retention and Attraction

• To Avoid Displacement Caused by Gentrification

• OtherPonce City Flats, Atlanta, GA

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• Voluntary or Mandatory? • What is the inclusionary percentage (typical range is 10% to

30%)?• What is the threshold size for projects?• What income groups will be targeted? • What is the timing of performance? • What is the duration of affordability requirements?• Will specific design standards apply to the IH units?• Is the policy geographically targeted? • Will in-lieu fees be allowed?• Will off-site performance or land dedication allowed?• What incentives will be offered?

Key Choices

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• Most common approach nationally

• The cost of affordable units creates an incentive to build to the maximum density

Mandatory IH

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Voluntary Incentive

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Provides incentives to developers to voluntarily include a certain percentage of affordable units in new projects.

Examples: Seattle, Charlotte, Austin.

M Station Apartments, Austin, TX

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Inclusionary Percentage

• Typical range is 10% to 30%.

• Many jurisdictions require a lower overall percentage in exchange for deeper levels of affordability.

Palmers Dock Apartments, Brooklyn, NY

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Project Threshold Size

• Trigger points can vary widely. In most jurisdictions, typical threshold size is 5 to 10 units.

• In Boulder, CO and some other high cost areas, IH policies apply to all projects regardless of size or tenure.

Bolder, CO

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Income Targeting

• Typically defined as a % of Area Median Income (AMI) or Median Family Income (MFI).

• Income targets can be as high as 120% of AMI for ownership projects in high cost areas to 30% of AMI for rental projects.

• Typical range is 80% AMI for ownership and 50% AMI for rental.

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Timing and Duration

Each municipality can decide how long the affordable units must be required to stay affordable. Longer periods of affordability maximize the return on public investment.

M Station, Austin, TX

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Design Standards

Charlotte, NC Multi-Family Design Standards:Affordable units must be dispersed within the development:• If there are more than 25 affordable units, then those units may be contained in a single structure• Buildings within the development must externally blend in architecturally with other units to include materials and style (such as roof pitches, foundations, windowtypes, building materials)

Policies often include standards to ensure the quality and comparability of IH units.

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Geographic Targeting

High-cost jurisdictions with mandatory policies typically apply IH policies in all areas.

Other jurisdictions with mixed markets, apply requirements to specific zoning districts, neighborhoods or census tracts.

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In-Lieu Fees

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• Flexibility

• More units

– Potential for leverage of outside funds

– Use expertise of nonprofits

– Can simplify financing of market rate units, particularly if development community is not used to IZ

• On site performance can be hard to monitor and manage (income verification, HOA dues)

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Why Not Do In-Lieu Fees

• Prices often set too low• Can slow down the process• Can be difficult to get units in neighborhoods if

land is not available or too expensive• There may not be strong non-profits to give

the money to• Subsidies may already be spoken for

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Off-Site Performance/Land Dedication

• Provides flexibility and can increase the amount of overall production by leveraging other resources.

• Benefits? • Drawbacks?

Off-Site Inclusionary For-Sale Project, San Francisco, CA

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Incentives

Source: Nonprofit Housing Association of Northern CA

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Density Bonus

• Most common form of incentive.

• Provides an increase in allowed dwelling units per acre (DU/A), Floor Area Ratio (FAR) or Height.

• Typical increase of between 10% and 20% over baseline permitted density.

• In CA, State Law requires a density bonus of up to 35% plus additional incentives for developers providing affordable units.

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Expedited Processing

• Moves projects with an affordable component to the front of the line in zoning, planning and building permit processing.

• Can shave months or years off of the entitlement process

• Reduces risk and financing costs and allows developers to bring product to market faster.

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Fee Reduction/Waiver

• Provides a reduction or waiver of planning and impact fees.

• Varies widely by jurisdiction.

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Parking Ratio Reduction

• Reduces the parking requirement based on the percent of affordable units.

• Can result in significant construction cost savings.

• Most common in urban, infill settings.

• Reductions of 10% to 20% in required parking common.

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• Tax Abatement or Exemption• Subsidy• Design flexibility• Other?

Other

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Contact Information

@ http://affordableownership.org/