After slow start, Inclusionary Zoning program yielding more affordable housing

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The District's building boom is resulting in additional affordable units being provided through the city's Inclusionary Zoning program. (Brian Kapur/The Current/April 2017)

After struggling for years to get off the ground, a D.C. program to guarantee affordable housing in new developments is seeing a blossoming in the production of units reserved for lower-income residents, according to a recent city report.

Under Inclusionary Zoning, or IZ, developers of most multifamily buildings must set aside units for households earning significantly less than the median family income. And by offering additional IZ units, they can also build at a greater density than would otherwise be allowed.

In fiscal year 2016, developers built 191 IZ units, as compared with 124 in 2015 and just 34 in 2014. Allison Ladd, deputy director of the D.C. Department of Housing and Community Development, attributes the program’s expansion to the booming real estate market.

“We’ve seen an uptick in real estate development in the city, so that in turn also creates more units that are available to the IZ program,” Ladd told The Current. “So we really follow the market’s condition.”

Cheryl Cort, policy director for the Coalition for Smarter Growth, which has advocated for inclusionary zoning, agreed that a growing real estate market has helped to grow the program. So did Lynn Hackney, president of the D.C. Building Industry Association, a group that represents developers.

Another reason more IZ units are being produced now is that there is a shrinking backlog of projects that were approved before inclusionary zoning rules took effect, Cort said. The program was established in 2006 but wasn’t implemented until 2009. During the interim, developments weren’t required to include IZ units in their proposed buildings.

After the financial crisis in 2008, a number of these projects were suspended, only to be restarted again when the market later rebounded. This meant that even after the program’s implementation in 2009, there were still projects with an IZ exception “grandfathered in,” which slowed the growth of the program, Cort said.

“Now we really have a strong baseline to start tracking IZ as a program that is really ramping up and delivering a good number of affordable units every year,” she said.

Residential developments of 10 or more units are required to set aside 8 to 10 percent of their floor area for IZ units. Certain areas of the city are exempt from the program, as are projects that are already being created for affordable housing.

Officials say inclusionary zoning is producing units across the city, just as was originally envisioned.

“Our mayor really is one who wants to ensure that people who live here — whether it’s five generations or five minutes — have affordable housing options, and we want to give them choice,” said Ladd. “And so IZ is just another tool in our toolbox that we’re able to use to help give families choice of neighborhood.”

The program also has income level requirements for the various units. Originally, the IZ units in low-density zones were created for a mix of households earning below 50 percent and 80 percent of median family income, or MFI (a term now being used by the city as more descriptive than area median income). In high density zones, all units were created for 80 percent MFI households.

However, the Zoning Commission recently approved changes that will reserve more units for families in the greatest economic need. Under the new rules, rental units will be created for 60 percent MFI households, while for-sale units will be set aside for the 80 percent group. A public comment period on related regulations runs through Sept. 30.

As before, it will take years for units to become available under the new standards, as projects already in the pipeline will continue following the previous rule.

Inclusionary Zoning is one of a number of affordable housing programs that the District oversees. Other programs include rent payment assistance, public housing, emergency housing, home purchase assistance and foreclosure prevention.

Anyone interested in receiving an IZ unit must take an orientation class from an approved community organization, and complete an online registration form. For more information about the program, visit tinyurl.com/IZ-process.

When Inclusionary Zoning was first proposed, many developers and other critics worried that strict affordable housing requirements would make it difficult to profitably construct new housing in the District. Hackney of the building industry association said that after the rules went into effect, the city initially struggled to provide qualified applicants to buy or rent the units that were being constructed.

However, the procedure is now much smoother, she said. Originally, it took six months on average to get an IZ unit filled, but the average has dropped to 60 days, Hackney said. At the beginning, the lottery system for filling units was unclear, as was the process of marketing the units, but she said both systems have “exponentially improved” in recent years — “100 percent, it has improved across the board.”

“Now, are there certain aspects of it that have been tweaked that are not exactly what the developers want? Absolutely,” she said. “But overall, the program definitely improved.”