Over 400 cities and counties across the nation have enacted inclusionary zoning policies to increase the supply of affordable housing in their communities. Inclusionary zoning or housing can be mandatory or voluntary. Mandatory programs require developers to set aside a portion of housing units in new or rehabilitated projects to be affordable to low- and moderate-income families. Many localities also provide incentives to developers, such as floor area or density bonuses, expedited permitting, and fee waivers, to offset the costs of providing the affordable units. New York is one of the few larger cities in the nation to implement inclusionary zoning. The city’s program is voluntary and depends on aggressive density bonus incentives to encourage developer participation. In 2009, the city adopted amendments to its inclusionary housing program, aimed at increasing the number of affordable units, expanding affordable homeownership, and streamlining administrative processes.
A view of the Greenpoint neighborhood in New York City.
Inclusionary Housing Program
New York City’s Inclusionary Housing strategy, jointly implemented by the Department of City Planning and the Department of Housing Preservation and Development, consists of two programs: the R-10 program and the designated areas program. Adopted in 1987, the R-10 program offers floor area increases of up to 20 percent to developers in exchange for providing affordable housing in some of the highest density areas (zoned R-10 or equivalent commercial) in Manhattan. The housing units, which can be located on or offsite, must be permanently affordable to households earning at or below 80 percent of the area median income (AMI). The city expanded this program in 2005 for designated areas being rezoned to medium- and high-density residential, as part of Mayor Michael Bloomberg’s New Housing Marketplace Plan, which seeks to create and preserve 165,000 units of affordable housing by 2013.
The expanded inclusionary housing program offers an even higher density bonus of up to 33 percent. Developers can use public subsidies in conjunction with floor area increases to build affordable units in these locations. To take advantage of the maximum density bonus offered, developers must set aside 20 percent of floor area to house low-income families earning no more than 80 percent AMI.
Last May, city officials celebrated the opening of Williamsburg Community Apartments, 347 inclusionary units that are part of a condominium development known as The Edge, located along the Brooklyn waterfront. The development was made possible through the city’s 2005 rezoning of 200 blocks in the Greenpoint and Williamsburg neighborhoods. Since 2005, a total of 1,900 inclusionary units have been created through this program.
In July 2009, the city council approved further amendments to the inclusionary housing program to increase the number of affordable units and enable wider participation. Prior to this, the affordable units created through both the R-10 and designated areas programs were required to be rental units and developers participating in the R-10 program were not allowed to use public subsidies. Changes adopted by the city now allow the use of government subsidies as part of the R-10 program.
The city also added an option to create permanently affordable inclusionary homeownership units. The resale price for set-aside ownership units, which must initially be affordable to households earning at or below 80 percent of the AMI, is restricted with a fixed annual appreciation. However, price increases are capped so that the units remain affordable to households earning no more than 125 percent of the AMI. The first inclusionary homeownership project is currently being developed in Manhattan’s East Village Neighborhood. When complete, 13 of the 65 units will be set aside as affordable ownership units.
Conclusion
To date, nearly 3,500 affordable housing units have been created as a result of New York City’s inclusionary housing program. The expanded program in designated areas is expected to generate 10,000 units of permanently affordable housing. City Planning Commissioner Amanda M. Burden expects that recent changes to the program will “provide a significant route to stable, affordable homeownership at a critical time, but it will encourage broader participation in the Inclusionary Housing program, assuring that we meet the Mayor’s goal to house 500,000 New Yorkers by 2014.”
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