One of the District’s affordable housing programs, “Inclusionary Zoning,” is at last showing signs of improvement. Misadministration, the economic recession, and a lawsuit plagued the program for years after it launched in 2009.
D.C.’s inclusionary zoning policy requires developers to set aside eight to 10 percent of the units in most new projects for low- and middle-income families. In exchange, those developers get to build projects larger than what zoning rules would usually allow. But although the program was widely hailed by advocates, zero IZ units had been rented or sold as of late 2012.
D.C. saw its first IZ condo bought in the middle of 2013, almost four years after the program kicked off and following litigation over a 22-unit building near Howard University in which the landlord alleged that the District was preventing an “economically viable use” of the property while two IZ units sat vacant. (A federal judge dismissed the case in February.)
Now, according to a recent report by the D.C. Department of Housing and Community Development, which oversees the program, IZ is on track to create hundreds of affordable units annually through new projects. In the fiscal year spanning October 2015 to October 2016, the District gained 191 new IZ units, of which 140 (73 percent) were rentals and 51 (27 percent) were for sale. That number represents almost half of the total 402 IZ units across 50 eligible projects that have come online since 2011, and a 54 percent increase over the 124 IZ units that were produced during the prior fiscal year.
Still, the program doesn’t always benefit the lowest-income D.C. residents. Last fiscal year, three-quarters of the IZ units that were created were designated for households earning between 51 and 80 percent of the area median income—or about $56,000 and $87,000 a year for a family of four—and a quarter of them were designated for families earning up to 50 percent of AMI. DHCD says that of the more than 7,700 households that are registered for IZ, three-fifths make 50 percent of AMI or less.
Moreover, IZ has mostly served single-member households and couples rather than large families in need of affordable homes. Only a third of IZ registrants so far are families with three or more members, whereas 41 percent are individuals.
Another takeaway from the report is that, logically, the production of new IZ units ebbs and flows with the market. “IZ has not had any significant negative impact on residential development in the District,” DHCD concludes, referring to a worry that developers had when the program commenced. Simply put, more market-rate units means more affordable IZ units.
While IZ may not produce huge amounts of affordable housing in the District, advocates say the program is another tool D.C. is using in combination with subsidies and direct investments to relieve the pressure on households who are at risk of displacement. For example, Mayor Muriel Bowser has put $100 million a year in D.C.’s main affordable housing fund.
“In jurisdictions across the country, IZ only creates some affordable housing units,” notes Claire Zippel, an analyst at the D.C. Fiscal Policy Institute who focuses on affordable housing. “It is the tool you use when it would be almost impossible to subsidize projects.” Zippel calls DHCD’s report “promising” and expects that future ones will show more new IZ units.
In addition, future homes that are produced through IZ should reach more lower-income residents thanks to changes the D.C. Zoning Commission approved last summer (and that the D.C. Council has recently enacted as law) after advocates pressed for them. New developments that contain more than 10 units will now be required to include IZ units at two affordability levels: IZ rentals will be restricted to families earning up to 60 percent of AMI (or about $66,000 for a family of four), while IZ condos will be restricted to families earning up to 80 percent of AMI (or about $87,000 for a family of four).