What is Inclusionary Zoning?

One of the many types of zoning policies is inclusionary zoning.  The purpose of inclusionary zoning is to encourage real estate developers to build more units appropriately priced for low and moderate-income people and families.  In most communities, this is known as “affordable housing.”  Throughout the United States, providing more affordable housing has become a priority for politicians and community leaders.  There is no one standard form of inclusionary zoning; instead, it is flexible and depends on the municipality or state implementing the policy.

Do we have inclusionary zoning policies in Oregon?

In 1999, Oregon passed House Bill 2658. Metropolitan districts, cities, and counties in the state were prohibited from adopting mandatory land-use policies that impacted the sales price of a housing unit or parcel of land.  These policies would have created more housing for low and moderate-income families.  Low-income households earn less than 80% of the area median income (AMI), and medium-income households make between 80 to 120% of AMI.

However, In 2016, Oregon passed a new law with bipartisan support, SB-1533.  This law allows cities to require a specific portion of new housing units for rent or sale to meet requirements as “affordable housing units.”  For example, a municipality may require that up to 20% of the units in a multifamily structure are sold or rented as affordable housing.   The most important facts about SB-1533 include:

1. Building type:  The law only applies to multifamily structures with 20 or more units.
2. Affordability:  The law allows the jurisdiction to require 20% of the units to be available as affordable housing units to those earning 80% or less of AMI.
3. Incentives: Incentives must be offered to offset building costs partially.
4. Fees:  The jurisdiction must allow the developer to pay a fee instead of building the affordable housing units.

The Department of Housing and Urban Development (HUD) sets the income and pricing limits for Oregon-assisted housing programs.  One well-known program that HUD manages is “Section 8” housing.  For a three-person family in Jackson County, a low-income household family is limited to $55,000, and the maximum rent that can be charged for a two-bedroom unit to a low-income family at $860. 

Not all regions of Oregon have implemented inclusionary zoning policies.  Portland led the way in 2017 as the sole jurisdiction to start a program.  Between 2017 and 2019, Portland’s inclusionary zoning program led to 422 affordable housing units being constructed across 65 housing developments.  

Since the passage of SB-1533, cities have been carefully weighing the pros and cons of adopting inclusionary zoning.  While many feel the benefit of increased affordable housing is essential to our communities, they are also concerned about increased costs and, thus, fewer construction projects overall.

Do you have questions about how inclusionary zoning policies may impact your real estate development plans?

If you’re in the real estate development business and need to keep up on land-use policies that may impact your projects, contact the professionals at Richard Stevens & Associates.  We assist our clients with all work related to rural and urban land use planning permits and zoning laws. Our team will work to understand your needs and help you understand the legal processes involved with reconfiguring the classification of your property to achieve your goals.