Let’s get started. If you’re thinking that an inclusionary housing requirement would be a useful policy to help address affordable housing, gentrification, and displacement issues in your community, you must first determine at what level of government (local, regional, state) you should target your efforts towards. This section will help you decide where to start and will then discuss several of the legal, logistical, and technical factors to consider when advocating for the adoption of an inclusionary housing policy in your community.
 

Legal issues. The general legal foundation for inclusionary housing is the concept of ‘municipal police power’. This well-accepted concept grants a jurisdiction the legal authority to enact regulations that will ensure that development within its boundaries serves the public interest. Relatedly, jurisdictions can avoid legal challenges based on claims that inclusionary housing results in an uncompensated takings (i.e., by reducing the potential value of developable land) by providing compensatory incentives to offset developers cost of providing the affordable units. Such compensation can be in the form of increased regulatory flexibility or direct financial assistance as discussed in the ‘Guide’ above.

In California, the specific legislation that encourages inclusionary housing is based on state General Plan law which requires that all jurisdictions prepare a ‘General Plan’ establishing the policies and goals that will guide future development within that jurisdiction. One of the required ‘elements’ (or chapters) that the General Plan must contain is a ‘Housing Element.’ The Housing Element is a five-year plan that “shall make adequate provision for the existing and projected needs of all segments of the community” and identify potential sites for residential development “for all income levels” (Government Code, Section 65583). In addition, the law requires each jurisdiction to create policies and programs that will enable it to meet its “fair share” of its region’s affordable housing needs, as identified by the regional council of governments.

The California Department of Housing and Community Development (DHCD) is required to review each jurisdiction’s Housing Element and certify them as being in compliance or non-compliance with state law, although DHCD itself does not have the authority to mandate any changes. However, under General Plan law, jurisdictions without a state-certified Housing Element can be sued if their Housing Element is found to ‘out of compliance.’ One outcome of such litigation (often brought by housing advocates or developers) is that the jurisdiction’s entire General Plan can be invalidated, effectively imposing a moratorium on the issuance of building permits until a new Housing Element is developed and certified. In addition, eligibility for state-administered federal housing funds is also contingent on the existence of a DHCD-certified Housing Element. Thus, the potential of a lawsuit bringing all development to a halt and/or the loss of federal housing dollars, prompts most California cities and counties to comply with the affordable housing requirements of the state law in order to get their Housing Element certified.

Thus, while California’s General Plan Law does not explicitly require jurisdictions to adopt an inclusionary housing requirement, it does require them to adequately address the affordable housing needs in their region, and one of the most effective policies that jurisdictions can adopt to comply with this directive is a mandatory inclusionary housing requirement. It should be noted that even if a jurisdiction’s Housing Element has been certified by DHCD as identifying appropriate development sites to accommodate its fair share of regional affordable housing needs does not necessarily mean that the affordable housing will actually get built. Unlike a mandatory inclusionary zoning ordinance in which the affordable housing requirement is automatically triggered by any residential development project that meets the ordinance’s parameters (size, location, etc.), incorporating an inclusionary housing requirement into the Housing Element requires ongoing monitoring to ensure that the policy is actually being implemented (see the ‘Housing Element or Zoning Ordinance?’ section to compare the advantages and disadvantages of incorporating inclusionary housing requirements into your community’s Housing Element of the General Plan versus amending the Zoning Code using an ordinance).

Logistical issues. The timeline for developing an inclusionary housing proposal, building community and political support, obtaining legislative approval, and seeing the policy implemented can be as short as a few months or can stretch out over several years (in which case a sustained commitment and broad-based support is critical to your groups’ eventual success). However, the first step in getting an inclusionary housing policy implemented is to make the case for affordable housing. In this section we discuss how to document the need for affordable housing, develop a proposal, and build support for your campaign.

Document the Need. In documenting the need for affordable housing in your community, you will need to gather the ‘hard numbers’ that illustrate how the extent of the affordable housing gap in your community. Quantitative data about housing conditions, commute distances, and income levels in your community can be obtained by contacting a local housing advocacy organization, realtor’s association, and the city, county, or regional planning department (experienced activists can also get this information directly from the U.S. Census Bureau). The nonprofit organization PolicyLink (see ‘Internet Resources’) recommends gathering the following information:
 

To complement your ‘hard numbers’, you should also develop a ‘community profile’ of the residents in your area that are in need of more affordable housing options and better locational choices. This profile should include individual stories of residents who can’t afford adequate housing within their own community, who have to commute long distances to find affordable housing, or who have been displaced due to rising housing prices.

Learn the ‘Lay of the Land’. Understanding the responsibilities of the many different government agencies that play a role in the physical development of your community is critical to the success of your campaign for inclusionary housing. Recognizing the interests and ambitions of people in positions of power is also important. Now is the time to begin (or continue) building cordial and effective working relationships with any individuals or institutions who impact the development process in your city, county, region, and state, and who ultimately may have a say on whether your inclusionary housing proposal is implemented. Establishing and nurturing these contacts now will be helpful in improving the power of your group’s analysis and the credibility of the policy that you propose. Strategic contacts include elected representatives, appointed officials, developer and building industry officials, and staff members of public agencies such as planning, housing, community/economic development, and transportation.

Team Up. Recruit a diverse team of partner organizations that will support inclusionary housing as a viable strategy to increase the supply of affordable housing in your community. Potential partners include housing and homelessness advocates, tenant groups, major employers, the chamber of commerce, open space preservationists, labor unions, and faith-based groups.

What’s Your Bright Idea? Based on your research in documenting the need and your ongoing discussions with your partner organizations, develop an inclusionary housing proposal that is tailored to the unique political and economic conditions in your community (jump to the ‘Technical Issues’ section below to see how). Your final proposal can be as simple as a bulleted list of the critical policy components you want to see adopted or as formal as a model ordinance or bill that is ready for your elected representative(s) to bring before the City Council, County Board of Supervisors, or State Legislature. You document should a) include your earlier ‘needs research’ (to introduce and justify your proposal), b) clearly state your policy goals, and c) provide an analysis of the effects of your proposal on development costs and the affordable housing supply.

Go Live. Distribute copies of your proposal to local community organizations, planning commissions and planning departments, elected officials, and the media (statewide proposals should be distributed to the appropriate state planning, redevelopment, and/or housing agencies and to elected state representatives). Get your document noticed by issuing a press release and holding a press conference. Build ongoing support for inclusionary housing by presenting your findings to local community groups as well as municipal, county, and/or state elected officials.

Get It On the Books. If your elected representatives are convinced of the benefits of inclusionary housing after reviewing your proposal, urge them to bring the proposal before their colleagues for deliberation and a vote. If your representatives remain unsupportive of inclusionary housing, ask your partner organizations to help lobby them to support the proposal. Organize a ‘community lobbyist’ day where affordable housing activists travel as a group to the offices of the applicable legislative body in order to create a visible show of support for inclusionary housing.

Technical issues. This section reviews the range of policy options that you can choose from in developing an inclusionary housing policy that responds to your community’s unique political and economic situation. Except for the most experienced of activists, legal advice and/or technical assistance will be necessary for drafting a watertight inclusionary housing zoning ordinance. Some law firms provide pro-bono assistance to community groups and government planning or housing agencies should be able to provide some technical assistance to residents of that jurisdiction. See the ‘Dig a Little Deeper’ section for more resources.

Housing Element or Zoning Ordinance? In California, inclusionary housing requirements are implemented in the Housing Element of the jurisdiction’s General Plan or with a specific zoning ordinance amending the jurisdiction's Zoning Code. Using the Housing Element is generally considered just as effective as a zoning ordinance because for a development project to be approved in California communities, a finding must be made that the project is consistent with the goals and policies of the General Plan. However, while an inclusionary housing policy contained in a jurisdiction’s Housing Element is itself legally sufficient to require developers to include affordable units in market-rate residential development projects, Housing Element policies are sometimes very general and are therefore often ‘negotiated away’ during the development review process. In contrast, a mandatory inclusionary housing ordinance could be written to be as specific as desired and would be automatically triggered by any residential development proposal that is submitted for review to the jurisdiction’s planning agency.

Mandatory versus Voluntary. As discussed above (‘Is This the Right Tool for You?’), inclusionary housing policies can be mandatory (requiring affordable housing units to be included in all residential development) or voluntary (allowing developers to choose to include affordable units on a project-by-project basis). It is clear that mandatory policies produce significantly more affordable units than voluntary ones. On the other hand, voluntary policies are likely to meet with less opposition from developers. To most effectively increase the supply of affordable housing in your community, you should attempt to implement a mandatory inclusionary housing policy, with a comprehensive package of incentives (regulatory flexibility and/or financial assistance) that respond to developers’ concerns. However, in communities where political opposition to mandatory inclusionary housing is extremely powerful regardless of the incentives, implementing a voluntary policy or expanding the incentives of an existing voluntary policy (to encourage developer participation) may be a necessary interim step. As more developers in your community choose to include affordable housing in their projects under a voluntary policy (in order to take advantage of the available incentives), evidence will accumulate among developers and elected officials that a properly crafted inclusionary housing policy need not reduce developer profits, and future efforts to implement a mandatory policy will likely meet with less resistance.

Developer Incentives. To offset some of the added cost of building affordable housing units in market-rate developments, jurisdictions typically offer developers either increased regulatory flexibility or direct financial assistance. Some of the most common incentives included in inclusionary housing policies are:
 

How Many Affordable Units? The specific percentage of housing units that must be made affordable varies from one jurisdiction to the other, but usually falls somewhere between 10 to 25 percent. Some jurisdictions require specific percentages of affordable units for different income levels (i.e., 10% of units set aside for moderate-income households, 10% for low-income households, 5% for extremely low income households, etc). The higher the total percentage of units set-aside, the more affordable units will be developed in each individual project. However, a policy with a set-aside percentage that developers perceive as too high (or that does not include adequate incentives to help offset developers’ costs) will generate more political opposition and could actually result in less affordable housing being built in your community (if development activity shifts to nearby jurisdictions with a lower inclusionary housing requirement–or none at all).

Jurisdictions can avoid these counterproductive results by providing incentives that will allow developers to at least recoup the costs of building the required affordable units; ideally, the incentives could be structured in such a way that developers could even make a profit on the affordable units. For example, Montgomery County’s inclusionary housing policy requires a set-aside percentage is 12.5 to 15 percent but provide a density bonus of 22 percent, thus ‘giving’ developers nearly 1 additional market-rate unit for each affordable unit required.

Income Thresholds. To determine what income levels the inclusionary housing policy in your community should be targeted towards, you need to know what the most critical housing needs in your community are, as well as what the local political climate will support. Inclusionary housing requirements can be structured produce affordable housing for production for moderate-income households (80-120 percent of the area median income, or AMI), low-income households (50-80 percent of AMI), very low-income (30-50 percent of AMI), extremely low-income (below 30 percent of AMI), or some combination of these categories. According to the Enterprise Foundation, most of the affordable housing produced by inclusionary housing benefits moderate-income households. Jurisdictions can ensure that their inclusionary housing policies create affordable housing for those families that need it the most by including requirements for incomes well below the area median. These requirements can be made more economically and politically feasible by offering enhanced incentives to developers for the units required to be affordable to the lowest-income households and by using the full range of available funding sources (e.g., for rental units serving 30 percent of AMI, a jurisdiction could use Section 8 or the Low Income Housing Tax credits.

Development Size. Inclusionary housing policies typically establish a minimum development size that will trigger the affordable housing requirement. Some jurisdictions require only larger residential developments to comply with inclusionary housing mandates (e.g., 50 units or more in Montgomery County’s ordinance). The logic of a project size threshold is that requiring affordable units in smaller projects creates relatively few affordable units (i.e., a 10-unit project with a 1 percent affordable set-aside will result in just 1 affordable unit) at a relatively high cost to developers (because the developer can’t take advantage of economies of scale). However some jurisdictions have found that by increasing developer incentives for smaller projects, developers can profitably construct affordable housing units even in very small developments (e.g., Palo Alto’s program which requires affordable units in for-sale projects with as few as 5 units and rental projects with as few as 3 units). Lower project size thresholds also ensures that new, high-quality affordable housing will be integrated into infill and mixed-use projects so that these kind of ‘smart growth’ redevelopment projects don’t unintentionally contribute to gentrification and the displacement of existing residents.

On-site or Off-site? In order to help integrate affordable housing throughout the community or region, most inclusionary housing policies require the affordable units to be constructed on the same site as the proposed development. However, some jurisdictions allow the required affordable units to be built at another development site if the developer can demonstrate that constructing the affordable units on-site is impractical (usually because of high land costs or other site characteristics) or that the public interest would be better served by constructing an equal or greater number affordable units elsewhere (e.g., closer to public services, transit centers, or employment centers). Understanding the unique development patterns and transportation challenges of your community will help you determine whether or not to require all affordable units be built on-site.

In-Lieu Fees. While some jurisdictions require that developers construct all the required affordable housing units themselves, most allow developers the option of paying a fee or donating other suitable parcels instead of actually constructing the affordable units. The value of these ‘in-lieu fees’ (or in-lieu land) should be high enough that it will actually have an impact in increasing the affordable housing supply. A 1996 study of 75 California jurisdictions with inclusionary housing policies found that in-lieu fees varied from $600 per affordable unit not built by the developer (Pleasanton) to $36,000 per unit not built by the developer (Oceanside). In-lieu fees in the surveyed communities were used to augment housing trust funds (to be spent on future land acquisition and construction of new affordable units), to purchase and rehabilitate existing affordable units (in order to preserve them as affordable), or to provide low-cost financing assistance to other developers building affordable housing. In-lieu fees were also used for local rent subsidy programs, homeless services, and special needs/transitional housing.

In general, if your community has relatively low development costs and a large supply of developable land (i.e., many other feasible opportunities to develop affordable housing in the near future), you may choose to require an in-lieu cash or land payment of equivalent value to the cost of each unit of affordable housing the developer does not. However, if your community has relatively high development costs and a limited supply of developable land (i.e., very few other feasible opportunities to develop affordable housing in the near future), it may be more effective to require an in-lieu cash or land payment of greater value than the cost of each unit of affordable housing not built, in order to encourage developers to construct the affordable units themselves.
 

LEARN MORE Which Home Is Affordable? (pop up window)

Similar Look, Dispersed Location. Most inclusionary housing policies do not require market-rate and affordable units to be exactly identical in all aspects. For example, developers are often allowed some flexibility with the interior design of the affordable units (e.g., smaller floorplans, reduced amenities, or less expensive finishes), although minimum standards are established. However, most inclusionary housing policies do require that all units have a similar exterior appearance. This requirement ensures that adjacent affordable and market-rate housing will be compatible, encourages a cohesive neighborhood design, and prevents residents of the affordable units from being stigmatized. Relatedly, many inclusionary housing policies require units to be dispersed throughout the entire development rather than clustered in a single area where they might be more readily identified as ‘low-income housing.’ Developers generally have a vested self-interest in adhering to these requirements, since affordable units that are noticeably different in exterior appearance or are clustered together can affect the perceived desirability of the adjacent market-rate housing. As a result, developers have come up with some very creative and cost-effective ways to make the exterior design of affordable and market-rate housing compatible, even in the toniest subdivisions (see 'Which Home Is Affordable?').

Period of Affordability. The length of time that affordable units are required to remain affordable to low- and moderate-income households varies dramatically from one policy to the next: some inclusionary housing policies require an affordability period of 5 years, some require 50 years, and others require that the units remain affordable into perpetuity. The longer the required affordability period, the larger the community’s supply of affordable housing will be in the long-term, as new affordable units are added to the existing supply, rather than simply replacing formerly affordable units that have been converted to market rate housing. In addition, a longer period of affordability allows the public to realize a greater return on its initial investment in developer incentives used to offset the costs of constructing the affordable units. With this goal in mind, some inclusionary housing policies even establish a profit sharing arrangement at the end of the affordability period, so that a portion of the profits from the sale of formerly affordable housing units are returned to the community (and are often reinvested to create more affordable housing).

Inclusionary housing policies that require permanent affordability should also contain a provision for a limited equity arrangement for the for-sale units. Such an arrangement allows owners to build some equity in their home, while preventing windfall profits when an owner sells an affordable unit that was built with public subsidy. Even with shorter affordability periods, many affordability of many units can be maintained by requiring that a public housing authority be given the first chance to buy affordable housing units before they are offered for sale on the open market (known as the ‘right of first refusal’). As with other technical factors considered in this section, understanding your community’s unique housing needs, development conditions, and level of political support for affordable housing is critical in determining the period of affordability that will be required in your inclusionary housing policy.

Secrets of Success: Overcoming Opposition. The initial sources of opposition to an inclusionary housing policy in your community will likely be from developers concerned about added costs, realtors worried about lower sales prices, residents who fear decreasing property values, and elected officials resistant to accommodating affordable housing in their community. Below are some of the most common arguments made against inclusionary housing and effective counter-arguments:

 

Whatever the argument presented against inclusionary housing, your group will be more successful in addressing stakeholders’ concerns if you follow the guidelines below: