Inclusionary housing programs are local policies that tap the economic gains from rising real estate values to create affordable housing for lower income families. An inclusionary housing program might require developers to sell or rent 10 to 30 percent of new residential units to lower-income residents.
Many, but not all, programs partially offset the cost of providing affordable units by offering developers one or more incentives such as tax abatements, parking reductions, or the right to build at higher densities. Most programs recognize that it’s not always feasible to include affordable on-site units within market-rate projects. In some cases, developers can choose among alternatives, such as payment of an in-lieu fee or provision of affordable off-site units in another project.
Inclusionary housing policies were first developed to specifically counteract a history of ‘exclusionary zoning’ policies that reinforced economic and racial segregation. Although not intended to completely right racial injustices embedded in our nation’s housing practices, done right inclusionary housing can meaningfully advance racial equity.