Could Inclusionary Zoning alleviate the Bay Area’s housing crisis?

By: Will White

Living and working in the Bay Area can be extremely rewarding. From great weather to a vibrant economy to ethnic and cultural diversity, our region offers a number of rewards for potential residents. However for many working families, these advantages are getting harder and harder to enjoy due to the high cost of living and in particular–the high costs of housing. (For a full report on the real cost of living in the Bay Area and throughout California, check out “Struggling to Stay Afloat: The Real Cost Measure in California 2018“.)

As these costs continue to rise, our region sees more working families pushed to the Bay Area’s periphery where housing is more affordable and commutes to the Bay Area’s job centers  longer. While several cities and counties have approved housing bonds to construct additional affordable housing, we as a region should be using every tool in the toolbox to address our housing crisis.

Due to a new state law that went into effect this year, housing advocates and city leaders have another tool to employ in the fight for affordable housing: Inclusionary Zoning. While this isn’t exactly a new tool, it’s a powerful one that will ensure more affordable housing units in Bay Area cities.

Originally adopted in the 1970’s, Inclusionary Zoning ordinances require new multi-family construction projects to set aside a certain percentage of units as affordable, usually to low and moderate-income families. These set-asides ranging anywhere from 15% to 20%, have resulted in thousands of affordable units and have been popular with cities throughout the region.

However, in 2009 a court decision made it much harder for cities to enforce their inclusionary requirements. Commonly referred to as the Palmer Decision, this case ruled that inclusionary requirements were in violation of the Costa-Hawkins Act, the law that regulates rent control policies throughout the state. Due to this court decision, it became much harder for cities to control levels of affordability for low-income residents in new construction.

While some Bay Area cities in recent years have seen an increase in construction, many of the units are extremely expensive and well out of reach for low and moderate-income working families. Without the ability to regulate affordability in new construction, many cities have seen massive displacement of lower income workers who are unable to afford pricey new units. Thankfully, the legislature saw the need to address this situation and last year issued a “fix” for the Palmer decision. AB 1505 allows any city or county in California to adopt an inclusionary ordinance requiring up to 15% of new units being affordable. Cities are also allowed to adopt inclusionary requirements higher than 15%, if they perform an economic feasibility study showing that their requirements will not discourage production.

Since AB 1505 does not require local jurisdictions to adopt inclusionary ordinances, it is up to the cities and counties themselves to adopt their own inclusionary policies. While several cities throughout the Bay Area already have inclusionary policies on the books, it’s just a matter of updating them to make them comply with the new state law.

But for those cities that have never adopted an inclusionary policy, AB 1505 provides a new opportunity to advance the creation of affordable housing in the Bay Area.

This is another powerful tool at the region’s disposal and if we’re going to make a significant impact in generating more affordable housing, we need to make sure we’re using all of the tools available to us. Advocates, city leaders, and developers should all work together to make sure we keep the Bay Area affordable for working families. Inclusionary zoning could be a promising way to accomplish that goal.

Contact your City Council representative to see if your city has updated its inclusionary ordinance to comply with the new state law.

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