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• Crickey7 on January 11, 2016 at 10:23am

  This is a fine program for its kind. My issues with it are that it grants extra density as the carrot. Planning decisions for such things as appropriate density should be based on what is truly appropriate, and not in essence withhold some from the cap to create the necessary sweetener for the program. It calls into question the entire validity of the calculus for deciding what density is appropriate. Second, administration of the program itself is expensive, and has resulted in creation of a modest number of units aimed at the segment of the affordable market most likely to find alternatives.

  And this is the best of the affordable housing initiatives.

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• Urban Observer on January 11, 2016 at 10:27am

  I really don't like the term “inclusionary zoning.” The problem is that by limiting who can rent / own those apartments this policy actually excludes people who could otherwise afford them.

  So…we have a situation in which the government is creating artificial scarcity and keep people who could otherwise afford to live there out. This is exclusion.

  Let's use a more accurate term. How about “selected tenant housing” or “preferred tenant housing.”

  I am disappointed that GGW uses the term “inclusionary"so uncritically.

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• charlie on January 11, 2016 at 10:34am

  Well again kids, if you wonder why you can't afford to buy a place in DC—this is in.

  The addition transfer tax means existing owners don't want to sell.

  Developers are preferring to build apartment rentals over condos because of IZ rules and the failure of the IZ condo market.

  You're raising the prices of existing market rate units.

  Or course IZ is more about making sure we keep low income voters in the city so certain political classes can continue to get elected.
  

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• Ustreeter on January 11, 2016 at 10:35am

  @Urban Observer.

  Exactly. My rent (and others) is higher because of programs like this. Subsidized housing solves nothing. Put the money we are wasting on this into public transport so people can live cheaply outside the city.

  Nobody has a “right” to live in hip, urban areas, contrary to what this blog sometimes argues.

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• Urban Observer on January 11, 2016 at 10:38am

  @Crickey7,

  What exactly do you mean by the “the affordable market”?

  It's odd to hear a subsidized segment of the population referred to as a “market.” Usually a market is a set of buyers with some common characteristics that sellers are competing to sell to.

  In the case of “affordable housing”, the “market” is not a set of buyers who engage in a voluntary transaction but a set of people competing to be takers of a subsidized good (in this case, price-regulated housing).

  Let's not confuse buyers who pay full value for their products in mutually voluntary transactions with takers who are seeking a subsidized deal at somebody else's involuntary expense.

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• Zach_the_Lizard on January 11, 2016 at 10:41am

  I think it would be better to increase the allowed density in all projects, not just a narrow range of special projects. Even better would be upzoning areas that are absurdly limited, e.g. the SFH neighborhoods near the Metro in Arlington.

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• Crickey7 on January 11, 2016 at 10:52am

  My point is that the income group this program helps is more likely to find housing than groups earning a lower percentage of the median income.

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• MLD on January 11, 2016 at 11:05am

  Great news. Hopefully this makes this program better and available to more people who need it.

  @Urban Observer
  Disagree that this is not a “market.” It's a restricted market, but still a market.

  And of course this does raise prices for others somewhat. I and others believe that preserving income diversity in neighborhoods is worth that cost.

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• Urban Observer on January 11, 2016 at 11:24am

  @MLD,everybody is willing to take different tradeoffs (“There are no solutions. Only tradeoffs. - Thomas Sowell) and I certainly don't begrudge your having ones that are different from mine.

  But at a higher level my preference would be to have people who value things like income diversity gather together to subsidize it with their own money rather than mine and that of developers who are forced to sell and rent space for less than it is worth.

  Consider this outstanding model:

  https://www.washingtonpost.com/local/these-neighbors-spent-2-million-to-block-a-mcmansion-will-their-bet-pay-off/2015/12/20/ba51e124-a336-11e5-ad3f-991ce3374e23_story.html

  I have a lot of respect for these folks. They are paying for the kind of neighborhood they want with their own money rather than offloading the cost on others through regulation.

  Now, they may end up losing money on their project. But so what? This is what they wanted and were willing to pay for and they shouldn't be able to offload the cost and risk to others through regulation.

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• MLD on January 11, 2016 at 11:29am

  Yes, maybe the accounting of this could be improved if DC gov paid for the units initially and then sold them as IZ with covenants.

  But my guess is that would cost more than the way it is done currently. My guess is the current method means developers absorb some portion of the cost out of profits.

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• Kevins on January 11, 2016 at 11:33am

  It's no surprise government's solution to affordable housing doesn't work. Inclusionary zoning actually creates less affordable housing.

  The San Francisco Bay Area has some of the oldest inclusionary zoning regulations. It's the priciest US market with only 230 affordable units built annually. Despite an increase in job growth, the rate of housing construction declined after inclusionary zoning regulations were implemented.
  

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• BTA on January 11, 2016 at 12:02pm

  I personally think the density tradeoff is a good tool given that it is more or less cost neutral to the city budget. I think DC needs a zoning framework that allows the city more leeway in utilizing this kind of density bonus, beyond even affordable housing but also other required contributions and mandatory dedications. Much of this could be done without touching the height limit even just maximizing zoning under its umbrella.

  Total aside, has GGW ever done an analysis of the difference between approved zoning and the max height limits? My impression is its pretty significant in some areas.

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• CrossingBrooklynFerry on January 11, 2016 at 12:06pm

  Income diversity is not a luxury neighborhood attribute. It is key to the kind of society we want to live in, and effects the life chances of the less well off. In particular as long as we have neighborhood schools it impacts school integration. Far from being a failure, I has been adopted in more and more communities, including several in the suburbs of DC.

  Associating it with higher density is appropriate because it is a social good that the developer provides in exchange for the density, just like school proffers and public art. It may also help widen the coalition for higher density.

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• Steve on January 11, 2016 at 12:10pm

  I don't understand how the “tradeoff” in bonus density is a win. The people who usually don't want increased density are the immediate neighbors to a project. How they benefit from getting an even bigger building plus people who couldn't otherwise afford to live in the area is beyond my understanding.

  I see how the city as a whole benefits, since it has a stated goal of keeping diverse incomes, but the city itself doesn't care about individual increases in density.

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• Moose on January 11, 2016 at 12:19pm

  Third paragraph, should be “scarce” not “scare”.

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• Neil Flanagan on January 11, 2016 at 12:21pm

  The density tradeoff is for the developers, since financial institutions they get money from don't like affordable minimums.

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• charlie on January 11, 2016 at 12:27pm

  @Steven, well DC doesn't benefit. It is relatively unique in that DC has access to multiple revenue stream - property tax, income tax, traffic fines—that a normal city would not be able to grab.

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• Urban Observer on January 11, 2016 at 12:36pm

  @Charlie, I'm not sure I understand why DC's access to those revenue streams is unique. That sounds pretty standard to me.

  @Steve,

  “How they benefit from getting an even bigger building plus people who couldn't otherwise afford to live in the area is beyond my understanding.”

  Yes, that is something to ponder, isn't it? Who actually benefits? And who actually pays? And who brokers (so to speak) the transaction?

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• Tom Coumaris on January 11, 2016 at 12:53pm

  The facet making it easier for IZ condo units to be bought for rental to low-incomes is very important. IZ for condos is a miserable failure and is forcing developers to go rental much more than they would otherwise.

  Condos are a much bigger boon to the property tax base since few owners have the tax avoidance ability of developers.

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• Crickey7 on January 11, 2016 at 1:52pm

  If you zone for less density with the “right” amount of density available as a sweetener, you will wind up overall with less than the “right” density, since many property developers will opt not to go through the hassle of the IZ program. Further, you have no control over when and where the density bonus will be used. It may occur at times when the market is less stressful for lower income households; it may occur in places where the need is less.

  As a planning tool, you should decide what the supportable density is, and allow it. The alternative is an overall increase in housing costs as development occurs at a lower rate.

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• Michael on January 11, 2016 at 3:42pm

  This post seems to have missed the point and left out the major changes being proposed by CSG: increasing the bonus density, increasing the matter-of-right height in many zones, and eliminating the lot occupancy limits in many zones. As with the initial IZ regulations, which increased matter of right density by 20%, increased some height limits, reduced some lot sizes and reduced some lot occupancy requirements, the main beneficiary is the developers of large projects in high rent neighborhoods, with the most valuable bonus density and the lowest set-aside requirements. The losers are the city as a whole and the residents of areas where new development will exceed what can be supported by the available infrastructure and which is out of scale with the surrounding neighborhood.

  @crickey7: ITA that this does mean that we should be planning and deciding what the supportable density is and zoning for the “right” amount of density. For many areas in DC, the pre-IZ zoning limits were based on plans that took into account many factors, including context and infrastructure, and zoned for the “right” heights and density.

  IZ’s 20% increase in the allowable density produced zoning limits that are unsustainable. This proposal would increase the bonus density even more, to 22%, while also increasing allowable height and eliminating lot occupancy limits. BTW, this is mandatory inclusionary zoning, so if a developer will have 10 or more units, there is no option to “opt not to go through the hassle of the IZ program.” They are automatically allowed to take the bonus density and are automatically subject to the requirement that they provide the affordable units unless the entire project is set aside for households with no more than 80% AMI or the BZA grants a variance.
  

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• Aimee Custis on January 11, 2016 at 4:14pm

  This post seems to have missed the point and left out the major changes being proposed by CSG

  Michael - actually, I do talk explicitly about the density bonus (it's the second bullet point). As to the other changes you mention, while what you say is certainly correct, my focus in this piece wasn't just to get into the weeds on what the changes are, but more the why overall that they're needed and beneficial.

  Too much technical jargon like matter-of-right, and my eyes start to glaze over… which is why for you wonderfully wonky people, I included hyperlinks to the ZC case and the proposed text amendments.

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• oboe on January 11, 2016 at 4:26pm

  And so one of the few DC programs designed to encourage workforce housing slowly devolves into a social welfare program for “the poorest of the poor”.

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• asffa on January 11, 2016 at 8:11pm

  oboe - Yes. And “need based” becomes picking whose life appears the largest disaster or about who knows who rather than a random choice among the qualified. Owning a home takes money. Not just monthly bills. And what happens is these programs move people into neighborhoods “they can't afford to either live in or move away from” as I read as description of public housing in an article about what leads to abuses in public housing repair.
  

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• Peter L. on January 12, 2016 at 1:37am

  “So…we have a situation in which the government is creating artificial scarcity and keep people who could otherwise afford to live there out. This is exclusion.”

  Urban Observer-
  As Amiee already notes, most of the units are at 80% AMI, which is over the average for the District itself. These buyers already have higher elasticity, they can go just about anywhere they want. If a few units are reserved for those at 60 or 70% AMI, the 80-100 folks will simply go elsewhere, and the developers will always magically find a way to meet their demands too. Its not the government excluding already elastic buyers, its developers excluding slightly less elastic buyers, and everyone else below them.

  This program is a start, but really also kind of fighting for table scraps at the same time. The supply will always follow the demand of the higher incomes. The government is simply reserving a few units as a stop gap to ensure the city still has a shell of a “middle class” left, not simply the very rich and very poor.

  Kevins-
  The Bay area dynamics are like DC on steroids. Astronomical job growth, with developers falling all over themselves to meet the highest income brackets of the demand, which is a double problem for even moderately above average earners: 1. The developers totally ignore their price range, so instead of being elastic buyers, their affordable options (supply) becomes very inelastic, for no other reason than developer greed. They could make 80% of current margins and significantly open up supply, but why do that if the gravy train of 1%ers keeps the flowing and the city looks the other way too?
  2. In their rush to meet the top 1% of the demand, the developers have run over and tossed aside both the city government and its existing residents, many of whom haven't been living lavishly, but well above average. Their displacement further constricts supply down the line.

  Bottom line- The 1% could live anywhere, but developers have figured out how to max out prices, making them only accessible to the 1%. This unnecessarily taxes the upper middle class on down, and stresses already broken government budgets.

  SF's rather feeble attempts at inclusionary zoning got run over by a somewhat unique tech jobs market.

  Hopefully, the dynamics in DC never get as bad, and the changes in inclusionary zoning will loosen up some non 1% supply short term.

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• charlie on January 12, 2016 at 7:46am

  @oboe, yep.

  And a few months ago we were being told that IZ was working great in DC.

  http://greatergreaterwashington.org/post/20150/inclusionary-zoning-making-slow-progress/

  I'd be curious to see a chart that can show a slowdown in the construction pipeline as a result of the IZ rules. Certainly there was a rush to get projects approved before 2012.

  And none of the advocates want to address what happens when a IZ tenant goes over the income limit. They are tracking that information but it doesn't appear to have any consequences.

  I'd also be curious to see what rules they have for sub-leasing or airbnbing an iZ unit.

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• Cheryl Cort on January 12, 2016 at 11:49am

  @charlie: DC is at 25-year record high for housing production - far exceeding pre-recession highs. In fact, you can correlate the start of IZ with blast off of housing production. There were a lot of grandfathered projects due to the run up to the recession & the delay in IZ implementation, but we have cleared out most of those projects now. For the chart of housing permit trends & start of IZ, see page 4 here: http://www.smartergrowth.net/wp-content/uploads/2015/05/CSG-testimony-PR-21-137-IZ-roundtable-COW_4-28-151.pdf

  Over-income tenants is an issue that the initial rules didnt address well—kicked out over-income residents with no flexibility for a buffer of modest increase in income during annual re-certification. I think they fixed that to allow some income growth as other housing programs do.

  Subleasing is illegal. This is an enforcement challenge. Airbnb puts a whole new dimension to subleasing and enforcement - but it's not too hard to catch it since they are advertising. DHCD needs to step up enforcement for all price restricted properties where this is a problem.

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• Kevins on January 12, 2016 at 12:26pm

  Peter L., the decline in the rate of new construction and rise in costs hit after inclusionary zoning took effect in SF Bay area decades ago. It made projects less profitable forcing builders to produce less and sell higher.

  DC's much more recent inclusionary zoning regs had the same effect despite DC's job growth being much slower than SF. But job growth has picked up in DC this year.

  If this continues and if these proposed inclusionary zoning changes go through, DC housing will only get more expensive and less affordable units will be built.

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• ustreeter on January 12, 2016 at 2:11pm

  @Peter L.

  The “shell” of the middle class is better served other ways. Subsidizing housing is not one of them. Nobody has a right to live in the most expensive areas. There are plenty of places in DC that are affordable.

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• MLD on January 12, 2016 at 2:17pm

  Nobody has a right to live in the most expensive areas.

  Maybe I'm confused. Is this program somehow conferring a “right” for people to live in a certain area. It doesn't seem like that's the case.

  What's gone unsaid here is the real opinion: “there's no reason to try to preserve, subsidize or create mixed-income communities.”

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• CrossingBrooklynFerry on January 12, 2016 at 2:30pm

  Odd, it seems to me some of the same people who think that adding IZ requirements leads to less construction and thus higher prices for market rate units, do not feel the same way about parking requirements, general process delays, FAR or height limits. In those cases we are told that developments are profitable anyway, so the cost falls purely on the developer, and/or that adding supply has no impact on price. Hmmmm.

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• Kevins on January 12, 2016 at 2:44pm

  MLD, the government's effort to create mixed-income communities has made housing costs higher for everyone and less affordable housing available to low income earners.

  Median home sales are up 50% since inclusionary zoning took effect in DC. Low cost units as a percentage of the market halved from 40% to 20%.

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• Kevins on January 12, 2016 at 2:49pm

  *median home sales prices

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• MaxB on January 12, 2016 at 3:33pm

  Median home sales are up 50% since inclusionary zoning took effect in DC. Low cost units as a percentage of the market halved from 40% to 20%.

  However, that was not caused by inclusionary zoning

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• Kevins on January 12, 2016 at 4:23pm

  Max B, almost every city that implemented inclusionary zoning regs experienced the same. Like the San Francisco example above.

  Take Baltimore, which enacted it in 2007. Job and population growth was much slower than DC. Home prices still rose 40%, the share of affordable homes shrunk. The city had to exempt many developments from the inclusionary zoning regulations because developers threatened to walk away. The city also had to compensate other developers $2.2 million.

  The regs not only made affordable housing worse, it cost taxpayers millions.

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• MaxB on January 12, 2016 at 4:32pm

  Kevs:

  https://en.wikipedia.org/wiki/Correlation_does_not_imply_causation

  The time period you describe was a time when urban land values shot through the roof, in general. That demand, not IZ, is what caused the price increases you note.

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• MLD on January 12, 2016 at 4:38pm

  MLD, the government's effort to create mixed-income communities has made housing costs higher for everyone and less affordable housing available to low income earners.
  
  Median home sales are up 50% since inclusionary zoning took effect in DC. Low cost units as a percentage of the market halved from 40% to 20%.

  That information doesn't remotely begin to prove what you said in the first paragraph. Confounding data.

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• Kevins on January 12, 2016 at 4:49pm

  Max B, SF Bay Area's first inclusionary zoning regs went into effect in the 1970s not 2006 or 2007. The rate of new home construction fell despite all factors like job and population growth, that normally increase the rate of construction.

  In Baltimore actually developers threatened to leave if they didn't get exemptions to or outright compensation for the inclusionary zoning regs.

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• MaxB on January 12, 2016 at 5:11pm

  Kevs:

  If you have evidence to show that inclusionary zoning causes home prices to soar, please share it. Otherwise, please stop implying two coincidental numbers prove your point. They do not.

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• Kevins on January 12, 2016 at 5:22pm

  Max B, if you have evidence that inclusionary zoning actually increases affordable housing, please share it. In 3 different housing markets where inclusionary zoning was effectuated in different years, immediately 1) affordable housing decreased, 2) the rate of construction declined, 3) housing prices increased, and 4) the share of affordable housing as a percentage of the market declined. That's far more than “two coincidental numbers” and far more than you've shown.

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• ustreeter on January 12, 2016 at 5:58pm

  @MLD
  
  What's gone unsaid here is the real opinion: “there's no reason to try to preserve, subsidize or create mixed-income communities.”

  It's not the government's job, correct. Anything intervention will have unintended consequences, like higher prices for everyone else.

  The ideal of a mixed-income community in a super dense, rich city is not realistic. Plopping a few poor people in a rich neighborhood doesn't create a “community” at all. Those people wouldn't be there otherwise.

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• Tanya on January 12, 2016 at 11:03pm

  I am a single mom earning $87k. I am not eligbile for inclusionary zoning. However, I cannot afford to purchase a 2bedroom 2bath condo with the $700+ monthly HOA/condo fees.

  I work every day to maintain my benefits, pay taxes and have an advanced degree. I am not low income, but I am not a high earner. I am forced to leave the District or get a lower paying job in order to become eligible to purchase a home. Would I like to have a double income of $100k? Absolutely, but for now I have to figure out a way to make my life work as a DC resident. These programs do not help people like me. They don't help wealthy people and they just placate poor (low income) people.

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• charlie on January 13, 2016 at 7:07am

  @Cheryl Cort; thanks for joining in and posting that link.

  That said, your report to the council is disingenuous. Your chart says it is measuring building permits, but what it really measuring per the US census is the number of housing units being built.

  http://www.census.gov/construction/bps/stateannual.html

  And as both DC and CSG have admitted, the projects being built pre 2012 don't include IZ because they were permitted before 2009.

  If anything what your chart suggests is exactly what I proposed—that there was a rush by large commercial RE developer to get units built as quickly as possible so IZ would not apply. That is eating future demand.

  And does nothing on the issue I separately raise, which is it forces more rentals versus new condos built.

  (But does explain the mania for micro-units, which are exempt for IZ)

  And I'm delighted we don't have a functioning system for asking people to leave IZ units when they are above the income limits or renting their places out on AirBnb.

  IZ is the pop-up of social housing—they are ugly, terrible things and proponents make themselves look foolish by defending a broken program.

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• JimT on January 13, 2016 at 7:21am

  The chief limit of these programs is that they need alot income monitoring to ensure that their benefits do not go to people who make more than the limits, whether that it because people under-report their income, the agency fails to stay up-to-date, or the rent does not rise to market with tenants who make more than the limit (which would allow a tenant to stay in her home but essentially transfer the subsidy to someone else).

  It's still probably better in that regard than rent control, which in extreme cases transfers the equity interest from the landlord to the owner.

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• charlie on January 13, 2016 at 7:31am

  @JimT, good point.

  some easy fixes:

  1. Remove condos from the IZ requirement.
  2. Make IZ rentals term limited (3 year or 5 year)
  3. Allow developer to pay into the housing trust fund to get out of IZ.

  Of course that isn't on the agenda!

  Chasing the AMI requirements on rentals, however, might not be so horrible. 70^ AMI for 1 person would be about 55K. & Of course the other problem is we are mostly producing IZ for 1BR units.

  Here is an example:

  http://www.socialserve.com/dbh/ViewUnit/708478?ch=DC&hm=vSGsnp8y

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• MLD on January 13, 2016 at 8:42am

  “It's not the government's job, correct. “

  Why not? There's plenty of evidence that mixed income living has benefits for low income people. It's in the government's interest to improve their condition.

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• asffa on January 13, 2016 at 9:10am

  Tanya - Doubt it placates many poor people either, because it's a competition, intended as worst off first choice.

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• ustreeter on January 13, 2016 at 11:50am

  @MLD,

  No, it's not the government's job to ensure the poor live in the poshest of places in an expensive city. That's a mighty big twist of “improving their condition” if you ask me. These are handouts to alleviate guilt for rich people and to allow politicians to say “Hey, at least I did something”.

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• CX on January 13, 2016 at 11:50am

  This conversation shows just how difficult it is to come up with solutions for housing that meets the needs of everyone. Its clear that the market will not naturally account for the needs of everyone from the bottom to the top. I hope that we can continue to tweak and find new ways to meet these needs. I also hope that the questions will be less about why we need to regulate these things and more about how we can regulate them.

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• CrossingBrooklynFerry on January 13, 2016 at 11:58am

  “No, it's not the government's job to ensure the poor live in the poshest of places in an expensive city.”

  This is not about the posshest places in particular, but all new development in DC (and it is being done in Arlington and Alexandria as well)

  ” That's a mighty big twist of “improving their condition” if you ask me.”

  Not at all, it is one part of the toolkit for improving their conditions.

  “” These are handouts to alleviate guilt for rich people and to allow politicians to say “Hey, at least I did something”.”

  You could say that about any policy.

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• drumz on January 13, 2016 at 12:06pm

  No, it's not the government's job to ensure the poor live in the poshest of places in an expensive city.

  1. These specific dwellings are usually aimed at people who make middle class incomes as well. This isn't section 8.
  2. These are not the poshest places in the city. Not much is being build in those places anyway. A place like U street may be hip but there's also tons of variance in economic levels already in this and many of the neighborhoods where IZ is built. IZ helps maintain that so that U street is neither totally rich (a recent trajectory) or totally poor (what it was not so long ago).

  these are handouts
  So? We're talking about helping some people find shelter. That's a basic need. This makes it a bit easier even if without it most people would just live somewhere else rather than actually be homeless. Moreover, no one expects this to be the ultimate or total solution.

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• charlie on January 13, 2016 at 12:07pm

  @CX; the market is doing a reasonable job of providing housing.

  (Mentally ill people and single mothers with no support network are two exceptions).

  Capitalism is doing a poor job of building new, affordable units at below market prices in high demand areas. Perhaps, as in NYC, the government needs to step in and build those. IZ certainly isn't doing the job.

  Clearly in 10 years, as in MoCO it might grow that, but the downside is introducing some significant distortions. As a condo owner, I should be delighted that we are really restricting new condos being built but long term not a healthy trend.

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• Crickey7 on January 13, 2016 at 12:21pm

  The market in housing functions fine (though regulations drive up the cost). Markets are not about equity, but efficient allocation of resources to meet the aggregate of individual preferences. Any desire to provide affordable housing is not a result of any market failure, which is one reason we implement regulation. It's a policy that seeks to operate outside of the market in order to serve stated policy goals. That's a fine decision to make, but the claims for it should rest on the proper grounds.

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• CrossingBrooklynFerry on January 13, 2016 at 12:32pm

  A.If there are benefits to the less well off (and indirectly to society) from income integration (and other benefits to society), then there IS a market failure - since that is an external benefit of income integration (or an external cost of income segregation, depending on your POV) That is what market failure is - it does not necessarily mean the market is failing to respond to expressed market demand
  
  B. “markets” are not “about” efficiency. They are responses to the possibility of private players benefiting from exchange. They lead to efficiency in certain defined circumstances, and policies to allow/promote markets are done (usually, but not always) in the name of efficiency. The outcomes they create may or may not be equitable. They also may or may not be efficient, depending on circumstances.

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• MLD on January 13, 2016 at 12:34pm

  No, it’s not the government’s job to ensure the poor live in the poshest of places in an expensive city.

  Well, we’re talking about all new construction in all neighborhoods, not just the “poshest.”

  That’s a mighty big twist of “improving their condition” if you ask me.
  If you ask me, asking for some small set-aside for people of a certain income in order to try to preserve income diversity and the benefits that imparts is not too much. And this is just one of many tools. [Deleted for violating the comment policy.]

  These are handouts to alleviate guilt for rich people and to allow politicians to say “Hey, at least I did something”.
  Wait, I thought your premise was “f*** lower-income people who want to live in this neighborhood”? Is IZ a bad policy, or should we be doing more for low-income people?

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• CrossingBrooklynFerry on January 13, 2016 at 12:36pm

  C. The “market” does not exist in isolation. Anywhere. The existing housing market in DC takes place in the context of a range of public policies, from zoning, to public schooling, to the complexities of the tax system, to historic preservation, to an (inevitably) mostly non-market transportation system, etc.

  While we talk alot about zoning and other restrictions on supply, in fact the existence of a state run, free, educational system (largely organized around neighborhood schools, though less so in DC than in the suburbs) is probably the biggest non-market driver of the housing market. The spatial distribution of different social classes interacts powerfully with those school systems. I would say it is impossible to say, a priori, if “market” driven spatial distributions of different social classes is optimal, given that.

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• Crickey7 on January 13, 2016 at 1:17pm

  Markets are the most efficient system we know of to match preferences with resources. To the extent we introduce programs that interfere with the market's functioning, we increase inefficiency. My point is that the tradeoff could be fine if we decide it's worth it, but we need to properly and transparently account for the tradeoff so that we can decide if it is, in fact, worth it. Playing semantic games does not serve anyone's interest in that endeavour.

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• Kevins on January 13, 2016 at 1:24pm

  CrossingBrooklynFerry, the quality of public schools don't make new home construction costs higher. Taxes and regulations do. That's why home prices increased at a faster rate in California cities with inclusionary zoning regs compared to cities without, and builders built smaller homes.

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• CrossingBrooklynFerry on January 13, 2016 at 1:26pm

  “Markets, with proper regulation, and with public provision of public goods, are the most efficient system we know of to match preferences with resources.”

  Fixed that for you. The relevant alternative, in this country, at this time, to “markets” without select public intervention is markets with public interventions. Not entirely different non-market systems.

  “To the extent we introduce programs that interfere with the market's functioning, we increase inefficiency. “

  If you define “interfere” as making things worse, sure, but that is circular. I would say that when we introduce programs that overcome market failures, we increase efficiency. Of course that is circular to.

  So why not just debate the costs and benefits of the particular intervention, instead of using market rhetoric? I know that when I oppose, say, parking minimum regulations, it is based on specific research on the negatives of those regs, not on general ideological grounds.

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• CrossingBrooklynFerry on January 13, 2016 at 1:28pm

  Kevin

  You missed my point. School quality drives, in considerable degree, differences in prices across geography, and also drives differences in outcomes for students. The presence of all kinds of non market effects, from fixed costs to run a school system, to student impacts of diversity, mean that one cannot judge a particular housing outcome to be optimal. I said nothing about the cost of new starts.

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• CrossingBrooklynFerry on January 13, 2016 at 1:29pm

  ” That's why home prices increased at a faster rate in California cities with inclusionary zoning regs compared to cities without, “

  What methodology was used to avoid reversing causality (IE IZ was popular in cities with conditions leading to price increases?)

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• asffa on January 13, 2016 at 1:31pm

  Crickey7
  
  The other problem is getting people to believe the tactic they're using is the way of helping the most people most efficiently. You can get more housing built for less in a different area than you can one in the “most desirable”
  
  Does anybody reasonably think that buying poor people a very few expensive condominiums at great expense that said individuals can't actually afford to stay to live is an efficient way of relieving homelessness and poverty?
  
  (I guess they do because it's the commonly chosen technique, but I really have my doubts.)

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• asffa on January 13, 2016 at 1:33pm

  Kevins - New construction puts expenses on the school system and the county governments, etc. not on the construction crews, but the costs are still real impacts from construction.

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• Crickey7 on January 13, 2016 at 1:34pm

  If you exclude units from the open market, that is what most people would call interference. They are no longer available as they otherwise would be; instead, they are allocated in a fashion that operates completely outside the market. You're distorting the market, albeit in a minor way given the numbers involved. If the program were bigger, the effect on the housing would not be insignificant.

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• Kevins on January 13, 2016 at 3:00pm

  asffa, my statement was the quality of public schools don't make new home construction costs higher. Taxes and regulations do.

  WRT your statement, no. Additional children attending public schools weigh on school budgets not new homes, which in fact add to property tax revenue. What politicians do with additional revenue is another story.

  CrossingBrooklynFerry, in the analysis of California cities, the sample controlled for location, school district boundaries, amenities, time and year homes were sold, etc.

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• ustreeter on January 13, 2016 at 4:00pm

  [Deleted for violating the comment policy.]

  IZ is bad policy and doesn’t help the poor. Shoving poor people into high income places helps nobody. What happens when they get a raise? What happens when they realize they can’t afford anything else in that neighborhood (food? bars? entertainment?) What happens when they realize that it’s not a community at all?

  Policies like this help one group of people: middle/upper class white people who feel guilty about gentrification. And nobody else. We need more housing, more transit in this city. Not more subsidies and more expensive housing for the middle class.

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• Kevins on January 13, 2016 at 4:09pm

  ustreeter, IZ also helps economic-illiterate politicians who make big promises about affordable housing on the campaign trail but have no solutions besides IZ, which doesn't work.

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• CrossingBrooklynFerry on January 13, 2016 at 4:20pm

  “Shoving poor people into high income places helps nobody. “

  Again, what is a high income place - most of these place already have some poor people.

  “What happens when they get a raise?”

  They could get a rent increase, with whatever degree of gradual increase policy calls for.

  ” What happens when they realize they can't afford anything else in that neighborhood (food? bars? entertainment?)”

  These neighborhoods do not have a regular grocery store like a Giant or Safeway? Which places in DC are these?

  ” What happens when they realize that it's not a community at all?”

  Some people manage to talk to people in other income groups than their own. I am not surprised that someone who considers that impossible, is not enthused for retaining income diversity.

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• drumz on January 13, 2016 at 4:34pm

  IZ is bad policy and doesn't help the poor.

  Maybe not. It does help the many people who get to live in the new IZ units (whether they're poor or middle class).

  Meanwhile, the city benefits from more residents it may not have gained (or lost) otherwise. The neighborhood benefits because its either more diverse than it was before or it maintains the diversity it had. Developers benefit because they can build a bigger building without going through a long and expensive zoning fight. People who were going to move into the building without worrying about the income limits are totally unaffected.

  What happens when they get a raise?

  This is like when people say that they'd turn down a promotion because it moves them up a tax bracket. If they get a big enough raise that it kicks them out of the program they should have either never signed up in the first place or they can simply enjoy the raise they got and move. This time with more money than they had before.

  What happens when they realize they can't afford anything else in that neighborhood (food? bars? entertainment?)

  I can answer this. Nothing. Who cares? Honestly. If your main concern is for places to go out instead of finding a place to live, then you probably at a place in life where you don't have to try to find the cheapest housing available.

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• JimT on January 14, 2016 at 8:05am

  I agree that this is not the best way to help the working class. Since this is a de-facto tax on developers who build extra density, the government could constitutionally impose an actual tax of the same magnitude, and the give the money to the same people who would otherwise get the unit, and let them decide whether they want to spend the money on these units or on something else. Perhaps that would be less convenient to politicians or advocated of the policy—everyone loves transparency in budgeting except when the funds are spent on projects they favor that would otherwise not be funded.

  Equivalently, the policy could allow the beneficiaries to sublease the units to the highest bidder, and use the money as they see fit.

  Rather than help the working class, these policies are intended to help the society at large, because otherwise too many poor people will be concentrated, and too many poor and working class people will be concentrated together and their children not afforded an equal opportunity to benefit from our wealthy society. Yes, of course those children benefit and that is part of the goal. But there are good reasons to assume that if we just gave these people the money, many would spend it on something other than the greater costs of integrating themselves in with higher incomes. That might make them happier, but it would not be as good for society.

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• charlie on January 14, 2016 at 8:09am

  How long does a affordable covenant run with an IZ unit?

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• Meh on January 15, 2016 at 1:03am

  Keep the policy as is, this is really stumbling into territory where you want more and more, then developers become reluctant to build. Things are going well know with this policy finally. Additionally, it defeats the original purpose of having housing for middle income people, NOT low income people to live in the city. Something inbetween subsidized housing and market rate. This basically eliminates that gap and brings it back to low income housing, and prices many middle income people out of the market. Yes, that's why this change is awful. Keep the policy as is, and don't lower the 60-80% income cap. It's good as it is. We don't need more low income people in this city. As it stands they represent the largest group of people who are structurally unemployed and do not fit the labor market as is. But the people who fit the current IZ system DO fit the labor market, and are needed. The middle is ill served in DC outside of IZ.

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• Neva Faulkner on August 12, 2016 at 9:26am

  This program is bias and i'm tempted to file a class action law suit against it! They don't send out communication to people who have registered for alerts on upcoming lotteries.

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