California Should Try Rewards, Not Mandates to Encourage Affordable Housing Developers

The old adage of the carrot or the stick has never been more accurate than what is happening in affordable housing in California. One important approach to meeting this need is to induce developers to include affordable units in market-rate multifamily housing developments.

Such policies are commonly called “inclusionary zoning.” It takes two forms:

• mandates requiring the inclusion of such deed-restricted units that must be offered to eligible households at below-market rents, often for 55 years or more, in any new development; or

• voluntary incentives rewarding the inclusion of such units with increased density allowances (more apartments in a given development), reduced or eliminated parking requirements, and other offsets for the reduced revenue a project can generate when including affordable units. 

Recent evidence from Los Angeles suggests that voluntary incentives foster increased production of affordable housing, while mandates alone increase the cost of producing housing, dampening both market-rate and affordable housing production.

CLICK HERE to read the entire opinion report in the Desert Sun