The Eminent Domain

The Furman Center at NYU Law School has just released an ambitious analysis of the impact of inclusionary zoning, focusing on the two most important (and difficult to answer) question about the affordable housing development policy. One, how effective is IZ in creating affordable housing units? And two, in doing so to what extent, if any, do these mandates or incentives for developers to create affordable housing increase the cost of housing overall or limit its production? These are important questions for New York City, where the official policy is to consider inclusionary zoning on a case-by-case basis for areas being rezoned.

The Furman Center is asking enormous questions, and by its own admission the report’s answers are far from conclusive. Researchers focused on IZ programs in suburbs of Boston, San Francisco and Washington, D.C., a palette of dozens of local initiatives that each operate under their own rules and operate within extremely local market conditions. The indicators the study looks at are also rough, and not really applicable to New York City; for instance, the researchers looked at how IZ affected the production of single-family homes, not apartments. One of the study’s main conclusions is that we need much more data than we have now about the performance of inclusionary zoning (it recommends some helpful information-gathering measures cities can take, which NYC would do well to follow).

But here are the most important points to glean from the Furman Center study:  The impact of IZ on overall housing production ranged from nonexistent to minor. And to the extent that developers are compelled to increase prices on their market-rate units to offset the loss they’re taking on the affordable housing they’re creating, density bonuses — essentially, permission to build bigger on their property than they would have been able to otherwise — are an effective way to make up for the hit.