Funding the Mandate: The Relationship Between Inclusionary Requirements and Local Commitments for Affordable Housing

• In Event: Place-Based Investments and Local Policy Implementation

Abstract

This study delves into the crucial yet underexplored relationship between inclusionary zoning requirements and municipal spending on housing and community development programs. Contrary to the common perception of inclusionary zoning as a shift of responsibility from the public to the private sector, our research uncovers that these policies typically lead to higher municipal spending commitments. Utilizing a comprehensive dataset of U.S. cities from 2007-2022 and two-part models, we investigate how inclusionary requirements influence both the likelihood of spending and the scale of expenditures for housing and community development.

Our findings, derived from two-part models, demonstrate that inclusionary requirements positively influence municipal spending amounts. Specifically, when a city adopts an inclusionary requirement, housing and community development spending increases significantly in groups of cities. This relationship persists across multiple model specifications and sensitivity tests, suggesting a consistent association. The two-part analysis reveals that inclusionary requirements primarily operate through the second part of our model - affecting the amount spent rather than the initial decision to fund housing programs.

The positive relationship contradicts the assumption that inclusionary zoning primarily reduces government financial responsibility. Instead, inclusionary programs require significant municipal funding to support their administrative infrastructure, adapt policies to local needs, and provide necessary developer incentives. The effectiveness of these requirements depends on government funding to maintain a robust implementation apparatus capable of monitoring compliance and enforcing regulations.

Notably, we account for crucial contextual factors, including state preemption laws that can limit or prohibit local inclusionary policies. We cross-referenced survey responses with state legislation to ensure accurate categorization of cities with actual inclusionary authority versus those prevented from implementing such requirements.

These findings have implications for policymakers considering inclusionary requirements as a mechanism to address housing affordability challenges. While inclusionary zoning offers potential benefits for expanding affordable housing access, officials should anticipate increased rather than decreased municipal spending commitments. This underscores the need for specific research to examine the effectiveness of these expenditures and identify optimal funding strategies to maximize the impact of inclusionary policies on affordable housing options.

Author

• Agustin Leon-Moreta, University of New Mexico
  Presenting Author