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Though often laden with controversy, inclusionary zoning policies have proven effective at providing affordable housing to economically exclusive communities throughout the country. They create a greater number of total affordable units as well as a more thorough diffusion of wealth than the status quo in regions where they are implemented. However, these results are far from a panacea. To properly address affordable housing shortages and income inequity across communities, other housing and economic development policies must work in concert with IZ. Furthermore, IZ is measurably more effective when it is tailored to the economic circumstances of individual cities rather than implemented uniformly on a regional scale. Therefore, a thorough demographic analysis at the regional and municipal levels is important before proposing an IZ policy at either scale.

Below are the questions that were raised for discussion at the beginning of the document.

As a regional agency, CMAP has no regulatory authority over inclusionary zoning or other housing policies, but can give advisory recommendations and promote best practices. As a regional agency, what approach should we take to inclusionary zoning?

What would be the overall effect of adopting an inclusionary zoning ordinance in your community? What positives and negatives would come from this? What specific features would an inclusionary zoning policy in your community need to make it successful?

If inclusionary zoning ordinances were adopted by communities across the region, what would the overall effects be, both on your community and region-wide?



Case Studies


Like many other cities, Denver, Colorado recognized a growing affordable-housing crisis as real estate appreciation rates outpaced incomes. In 2002, an inclusionary zoning policy was enacted to help address this issue. In addition to the ordinance, Denver rezoned large scale developments and proactively planned for affordable-housing development. As a result of these policy changes, 3,395 affordable homes were created within three years of the policy's inception. The ordinance requires that all new construction of for-sale units with more than 30 units set-aside 10% as affordable for persons earning less than 80% of the Area Median Income (AMI). These units must remain affordable for 15 years. Cost-offsets are provided to make the set-asides feasible to developers and encourage this type of development. These include a 10% density bonus, $5,000-$10,000 subsidy per unit for up to 50% of new units, parking requirement reductions, and expedited permits. Additionally, developers may be approved to pay a fee in lieu of creating the affordable units (50% of the price per affordable unit not built), or can build the affordable units off-site if the number of units exceeds the required minimum. A voluntary policy with the same thresholds exists for rental housing, except rental units must be affordable to persons earning less than 60% of the AMI. (BPI 2005) As shown by the complexity of this ordinance, the Denver ordinance illustrates the flexibility and variation in form that inclusionary zoning policies can take.


In July 2006, the Baltimore City Task Force on Inclusionary Housing released a report entitled, At Home in Baltimore: A Plan for an Inclusive City of Neighborhoods. The report outlines the process in which ten goals were established that guided the recommendations for an inclusionary zoning policy. The task force consisted of 13 members appointed by the City Council. However, the creation of recommendations for an inclusionary zoning policy took place over seven months and involved more than 100 community-based organizations, business representatives, advocacy groups, and additional stakeholders. The process included informational sessions on inclusionary zoning, workgroup meetings, interviews, and cost-modeling sessions. Through this process, great care was taken in determining an appropriate and realistic ordinance that would be effective and feasible for Baltimore.

San Francisco

San Francisco is such an example and has since adopted modified guidelines that have increased the benefits of inclusionary zoning. The original ordinance was enacted in 1992 and applied to only planned-unit developments (PUDs), and developments that required a conditional use permit. The nature and size of land and residential developments in San Francisco limited the number of residential projects meeting both requirements. Throughout the 1990s, the stock of affordable housing further diminished and low-income households were displaced at higher rates due to rising property values. In January 2002, the inclusionary zoning ordinance was changed to apply to all residential developments of 10 or more units. The set-aside requires 10 percent of residential development be affordable, however the developer is given the option to build the affordable units in a different location. If the developer opts to build the affordable units off-site, then a 15-percent set-aside is required. Under the new ordinance, PUDs and developments that require a conditional-use permit must provide a 12-percent set-aside for on-site units and 17-percent set-aside for off-site units. This new ordinance resulted in the development of 90 affordable units in its first two years, with an additional 745 in the pipeline as of November 2003 (Brunick, Goldberg and Levine).


The inclusionary zoning ordinance enacted by Boston in February 2000 has been described as immediately effective, although based on the data available, its effectiveness appears to be somewhat questionable. The Executive Order mandating inclusionary zoning requires a 10-percent set-aside for onsite units and 15 percent set-aside for off-site units on all residential developments that are either financed by the City of Boston or the Boston Redevelopment Authority (BRA), developed on land owned by the City of Boston or the BRA and includes 10 units or more, or requires zoning relief and is 10 units of more. Nearly all residential developments of 10 units or more require some zoning relief due to the zoning structure. (Brunick, Goldberg and Levine) This criterion of developments requiring zoning relief has been critical to generating affordable units. In its first year, the policy applied to eight privately financed developments of 10 units or more, which were largely located in high-end, more desirable neighborhoods. In its first two years, 72 affordable units have been built as a result of the policy and over $4 million have been contributed to an affordable housing trust fund by developers that chose the cash contribution option instead of building affordable units. This option requires the developer to make a contribution to the BRA of 15 percent of the total number of market-rate units multiplied by an affordable housing cost factor. (Kiely) Based on the available data for the first two years of the policy, this seems to be a choice taken approximately as often as the decision to build affordable units. The number and location of the affordable units built by the BRA with developer fees-in-lieu is not published information. Therefore, the ultimate impact of the policy is uncertain.

St. Cloud

An inclusionary zoning policy was put into place in the five city St. Cloud area, located approximately 70 miles northwest of Minneapolis. The policy, known as the Joint Powers Agreement for Affordable/Life Cycle Housing ordinance, has not reached expected results since its inception in 2002. The ordinance was implemented with the objective to meet a 15% target of affordable new construction single and multi-family units. This agreement was put into place to maintain at least the current ratio of affordable housing to ensure an adequate supply of housing options. To lessen the cost to developers, subdivision design standards were modified to allow for greater density and a portion of fees to cities were reduced. Despite these off-sets, the program was not reaching its goals. This is primarily due to insufficient public and private grant funding as well to changes in the housing market. The program was based on a broad regional effort rather than being project specific, which reduced its competitiveness for certain grant funding. The housing market changes included a rash of first time home- owners and existing home-owners purchasing higher cost housing, resulting in vacant more affordable homes. In 2007, it was decided that the program should be terminated at least until market conditions are more appropriate for such a program.


Table 1. Regional Affordability in 2000


Affordable Units in 2000

% of Total Housing
that is affordable in 2000




Cook w/o Chicago





















* Including Chicago


Table 2. Universal Inclusionary Zoning Policy with a 10% Set-Aside (aggregated to county)


Affordable Units in 2000

% Affordable in 2000

Annual Growth Rate

Additional AF Units Created by IZ in 2030

% Affordable w/ IZ in 2030

Cook 901,621 47.11% 0.05% 14,482 47.77%
Cook w/o Chicago 308,165 36.14% 0.04% 7,472 36.91%
DuPage 56,339 19.18% 0.06% 4,925 20.57%
Kane 51,358 38.59% 2.16% 7,865 41.70%
Lake 56,255 28.62% 1.15% 5,748 30.70%
McHenry 15,493 25.62% 2.95% 6,310 29.98%
Will 50,582 44.64% 3.15% 11,362 48.60%
Total* 1,131,648 41.75% 0.86% 50,693 43.20%
* Including Chicago

Table 3: Municipalities with Greatest Net Increase in Affordable Units w/10% Inclusionary Policy as Percentage of Total Units

City County Annual Growth Rate Total Number of Units in 2000 2000 % Affordable Additional
Affordable Units Created by IZ in 2030
2030 % Affordable with IZ
Chicago Cook .05% 1,060,972 55.94% 7010 56.51%
New Lenox Will 5.39% 5,822 19.98% 1789 26.32%
Sugar Grove Kane 9.71% 1,289 9.70% 1762 18.17%
Elgin Kane 2.03% 31,532 45.42% 1430 47.89%
Naperville DuPage .96% 43,715 9.03% 1324 11.31%
Plainfield Will 5.19% 4,284 13.61% 1318 20.35%
Frankfort Will 5.36% 3,420 6.90% 1206 14.27%
Huntley McHenry 6.66% 2,369 14.73% 1195 22.03%
Aurora Kane 1.24% 46,577 48.46% 1068 50.05%
Manhattan Will 9.24% 1,153 38.86% 927 44.54%

Table 4: Tiered Policy by County


Affordable Units in 2000

% Affordable in 2000

Annual Growth Rate

% Affordable in 2030 w/o IZ

Additional Affordable Units Created by IZ in 2030

2030 % Affordable with IZ

Cook 901,621 47.11% 0.05% 47.25% 14,839 47.93%
Cook,w/oChicago 308,165 36.14% 0.04% 36.37% 7,828 37.17%
DuPage 56,339 19.18% 0.06% 18.93% 5,365 20.45%
Kane 51,358 38.59% 2.16% 36.54% 7,557 39.53%
Lake 56,255 28.62% 1.15% 28.51% 6,771 30.96%
McHenry 15,493 25.62% 2.95% 25.29% 6,683 29.91%
Will 50,582 44.64% 3.15% 38.56% 11,816 42.68%
Total* 1,131,648 41.75% 0.86% 40.53% 53,029 42.04%


Data Sources

Data sources include the 2000 census and 2030 forecast data from the Northeastern Illinois Planning Commission. In order to measure the impacts of IZ, the current supplies of affordable households in each municipality were calculated as were the municipal growth rate. The following outlines the process of developing each data set.

A. Determining Regional "Affordability" and Local Supply of Affordable Units

  1. Data was extracted from the 2000 Census SF-3 data at the municipal level, for rental and owner-occupied housing prices. Area median income (AMI) was drawn from the Chicago Primary Metropolitan Statistical Area (PMSA).
  1. The 2000 AMI for the Chicago PMSA ($51,680) was used to calculate affordability for rental and owner-occupied units. Convention dictates that, to be deemed "affordable," (as established by US HUD and IHDA) rental units should be available to those earning up to 60 percent of the AMI; and ownership should be available to those earning up to 80 percent of the AMI. Additionally, a household should not be expected to pay more than 30 percent of its income toward rental housing, or three times their annual salary for owner-occupied units.
  1. The 60/80 income thresholds were applied throughout the region to determine the current number of units that qualify as affordable. Results are shown in table one and map one

i. The affordable rental threshold was calculated with the formula: [((51,680*.6)/12)*.3 = $775/month].

ii. The affordable ownership threshold was calculated with the formula: [(51,680*.8)*3] = $124,032].

B. Unit Projections in a "Baseline" environment

  1. Using The Chicago Metropolitan Agency for Planning's 2030 household forecast data, growth rates for each municipality were calculated with the formula: [(2030 HH/2000 HH)^(1/30)-1]
  1. Using the compounding growth formula ([(Ux = U1 *(1+R)^X]where U= Housing Units, R= Annual Growth Rate and X= Number of Years Projected into the Future), the total number of units (rental and owner-occupied) expected per municipality in 2030 were estimated. The growth rate for each county is shown in table two.

In 2030, it was assumed that the same ratio of affordable housing for each municipality would remain consistent with 2000 data. (Though municipal affordable housing percentages remained constant through the projection period, the aggregate percentage did not. This can be attributed to the different growth rates among municipalities and the subsequent changes in each's regional share of total households.)

  1. This ratio was used to determine the total number of affordable units for each municipality in 2030

Table 1: Regional Growth Projected to 2030

County Total Housing Units in 2000 Total Housing Units in 2030 Annual Growth Rate
Cook 1,913,741 2,193,370 0.00456
Cookw/oChicago 852,769 973,306 0.00442
DuPage 293,669 353,475 0.00620
Kane 133,074 252,712 0.02161
Lake 196,570 276,678 0.01146
McHenry 60,461 144,651 0.02950
Will 113,318 287,053 0.03147
Total* 2,710,833 3,507,939 0.00863
* Including Chicago

C. Unit Projections with Inclusionary Zoning

Before applying the appropriate set-aside for each policy, the annual market-rate households that would be created through 2030 were calculated. (The number of market-rate households (MRi) is the difference between total households (HHi) and affordable households (AFi). [(HHi)- (AFi) = (MRi)] All IZ policies were applied to market-rate households createdbetween 2000 and 2030 [(MRi31)-(MRi1)].)

It was assumed that the housing mix would remain constant from 2000. (i.e. the number of market rate owner-occupied and renter-occupied units in 2030 will be proportionate to the mix in 2000).

The following outlines the methods used to execute each IZ policy.

Method One: Ten-percent set-aside for all new residential units applied to each municipality.

Ten percent of all market-rate households created between 2000 and 2030 were set-aside as affordable for each municipality. These numbers were then aggregated to the county level.

Method Two: Stratified IZ policy with tiers of no policy, 10 percent set-aside, and 20 percent set-aside, dependant on 2000 affordable housing percentages.

The mean percent of affordable housing was calculated and the standard deviation was used to determine which cities should get which IZ policy. The mean is 33.4 percent and the standard deviation is 25.6.

No Policy: Applied to places one standard deviation above the mean (>59% AF). The cities in this category would not create any affordable units through an IZ policy.

10- Percent Policy: Applied to places between one standard deviation above and below the mean (7.81% to 59% AF). For cities in this category, the number of new market rate units in each city was multiplied by (.10) to determine the number of affordable units created through IZ.

20-Percent Policy: Applied to places one standard deviation below the mean (0% to 7.8% AF). For cities in this category, the number of new market rate units in each city was multiplied by (.20) to determine the number of affordable units created through IZ.

Table three shows how the policy was dispersed by county.

Table 2: Municipal Breakdown of Policies by County

County Number of Cities by Tiered Policy Total
No Policy 10-Percent 20-Percent
Cook 34 69 16 119
DuPage 0 25 5 30
Kane 2 18 1 21
Lake 5 21 20 46
McHenry 2 20 3 25
Will 8 15 2 25
Total 51 168 47 266



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