Regardless of the source or its purported truth, I think the point is that it is controversial to claim inclusionary zoning is a hoax. I’ve read endless back-and-forth on its merits and drawbacks.
Where I’ve landed over the years though is that cities like Portland and Baltimore provide a great example of how to make it work, by funding their inclusionary zoning with public money.
Portland adopted its first iteration of funded IZ in 2016. It required all multifamily developments with 20 or more units to set aside for 99 years either 10 percent of homes at rents affordable to 60 percent of area median income (AMI) or 20 percent of homes at 80 percent AMI. In exchange, the city granted a 10-year property tax exemption on the value of the entire residential portion of the building for projects in the downtown area. But outside downtown, it limited the exemption to only the value of the subsidized homes—a much smaller tax break.
Portland updated its program in March 2024 after it became clear that because it fell far short of funding the IZ outside of downtown, it was suppressing homebuilding there. The fix was to expand the tax exemption on the whole building to everywhere in the city. The city also took the opportunity to focus on deeper affordability and opted not to fund the 80 percent AMI option outside downtown.
Portland’s IZ abatements will reduce the city’s annual property tax revenue by an estimated $41 to $83 million, which, on the high end, is 0.5 percent of the total collected. (For comparison, Seattle spends about 4.5 percent of its property tax revenue on affordable housing subsidy.) And the program will yield an estimated 300 rent-restricted homes per year at a cost to the public of about $275,000 per home.
In Portland, incorporating affordable homes in privately developed housing is more cost-efficient than typical 100-percent-affordable projects developed by nonprofits. My colleague Michael Andersen writes:
If you do the math to calculate the public’s cost per home, the below-market housing created via fully funded inclusionary housing is less expensive than a comparable home created by a local housing bond. That’s presumably because the affordable homes hitch a ride on a project that was already being financed.
The whole article is really worth a read.
The most important part of inclusionary zoning to me is not about who is paying for it. The important part is that it’s policy that requires us to include affordable housing everywhere, interspersed in mixed income neighborhoods, and makes it a core part of the development process rather than an afterthought that is at the mercy of the success of housing bonds, nonprofits, federal funding, and land availability. Inclusionary zoning is still a huge win even if the private market isn’t paying for it.