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BIA releases report on inclusionary zoning

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October 16, 2017

BIA releases report on inclusionary zoning

The BIA commissioned economist and board member Kevin C. Gillen, Ph.D., to analyze the existing research literature on housing affordability and inclusionary zoning programs throughout the U.S., and to conduct a cost-benefit analysis of the "Mixed Income Housing Program" legislation that was recently introduced by Philadelphia City Council.

The research and data strongly suggest four results:
  1. Philadelphia does not have a housing affordability problem, whereas comparable large cities with IZ programs do have serious housing affordability problems, as defined by the federal government’s housing affordability guidelines. 
  2. There is no single example of a jurisdiction where IZ has produced significant amounts of new affordable housing or has had absolutely no adverse effect on other housing outcomes.  At best, its results have been mixed to very modest.
  3. Philadelphia does not meet any of the necessary conditions for IZ to be successfully implemented, as outlined by the Urban Land Institute’s survey of IZ programs.
  4. An examination of four representative case studies of recently completed large-scale residential development projects in Philadelphia found that the average profit margin declined by 88%, thus making each project impractical, even under very generous assumptions. 
These results indicate that not only is housing affordability not a general or citywide issue in Philadelphia, but that the implementation of the IZ bill in its current form would likely have serious adverse effects on the quantity and affordability of Philadelphia’s housing stock.  A more constructive approach to increasing the quality and quantity of affordable housing is likely to be found in a public-private partnership that seeks to lower the cost of constructing new housing and increasing the ROI for improving and rehabilitating Philadelphia’s existing housing.

Click here to download the full report.