Trends and Opportunities in Inclusionary Zoning and Education

Inclusionary zoning, a concept conceived in the 1970s, provides incentives for housing developers to build affordable homes in high-cost, low-poverty neighborhoods.

Approximately 500 communities have introduced the inclusionary zoning concept in some way, including Denver, Santa Fe and New York City, according to Heather Schwartz, PhD, a policy researcher at the RAND Corporation and a professor at the Pardee RAND Graduate School. Schwartz has written extensively on the topic, including the potential education benefits of children whose parents were able to buy or rent a home near a strong public school through inclusionary zoning.

Developer Incentives and Business Community Buy-In

Schwartz says that Montgomery County, Maryland—a suburb of Washington, D.C., and one of the wealthiest counties in the country—offers the oldest and most successful example of inclusionary zoning practices and now includes nearly 14,000 units. The incentive for developers to price some of the units at below-market rates is often a zoning waiver that allows them to build more units than originally allowed in order to recoup the profit lost on the lower-priced homes.

Schwartz says Montgomery County has been successful with its inclusionary zoning program because the business community has been on board from the start. At the time that the policy was initiated in the early 1970s, the businesses and public services in the county, which posted some of the highest housing prices in the country, needed skilled but lower-wage employees such as firemen and teachers. However, public transit didn’t yet connect lower-cost Washington, D.C., with Montgomery County. The demand for this workforce provided an impetus for inclusionary zoning.

The county’s inclusionary zoning program requires developers to set aside 12 to 15 percent of homes they build to be sold or rented at below-market prices and the county’s housing authority has the right to one-third of those units. Over the last few decades, the housing authority has bought hundreds of units available through inclusionary zoning.

How Inclusionary Zoning Affects Education

While inclusionary zoning has been an important housing tool in Montgomery County, it has also been critical education tool. A 2010 study, “Housing Policy Is School Policy,” conducted by Schwartz for the Century Foundation found that children in low-poverty schools achieve higher education results on average than children in high-poverty schools. The study tracked the performance of 858 elementary school students in public housing—including those public housing units developed under the inclusionary zoning program—across Montgomery County from 2001 to 2007. Nearly half the students ended up in schools where less than 20 percent of students qualified for subsidized meals, a measure of income. The rest of the students attended schools where up to 60 percent of the students were from low-income families. After seven years, the children in the lower-poverty schools performed 8 percentage points higher on standardized math tests than their peers attending the higher-poverty schools, even though the county had provided extra resources to the higher-poverty schools.

A policy brief released earlier this year by the MacArthur Foundation with Schwartz as the lead author looked at 11 inclusionary housing zones, and found that most families moving into inclusionary zones moved nearer to lower-poverty, better-performing schools.

Drawbacks and Challenges

But Schwartz’s research also finds some drawbacks to inclusionary zoning:

  • It tends not to serve the poorest of the poor.
  • The large majority of families living in inclusionary zoning homes were homeowners, not renters.
  • Demand well exceeds supply.

Ultimately, says Schwartz, inclusionary zoning has the potential to help families in need and to provide children access to high-performing schools, which can have a lasting impact. However, the program is currently only “a small slice in the affordable housing pie” with only roughly 150,000 units built in the United States over several decades. By comparison, the Housing Choice Vouchers program serves approximately 2 million households and nearly one million units have been built with Low-Income Housing Tax Credits.

Schwartz says that many inclusionary zoning programs dissolve due to lack of monitoring and funding to support them. She says data on a house’s most recent sale or rental price can be lost, leaving no information that it was set aside under inclusionary zoning.

“The continued affordability of inclusionary zoning has been a challenge because it requires auditing and enforcement and it’s not something that’s been thought about as deeply as it could be,” says Schwartz.