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Using Tech to Build an Effective Inclusionary Housing Policy

Rajiv Desai | May 11, 2023

4 Minute Read

The housing crisis continues to leave millions of families struggling to find affordable, decent homes. As the gap between housing supply and demand widens, communities face the harsh reality of increasing rents and home prices, pushing more people into precarious living situations.

To address the crisis and ensure that everyone has access to affordable and inclusive communities, cities from LA to NYC are putting more emphasis on inclusionary housing policies. 

Inclusionary housing policies have the potential to transform the housing landscape, foster socioeconomic diversity, and create lasting opportunities for lower-income families. However, they need to be carefully planned and implemented if they’re going to make an impact.

With strained resources and so many moving parts to manage, agencies are increasingly turning to technology solutions to help implement these policies more effectively.

What is an Inclusionary Housing Policy?

An inclusionary housing policy is a local policy requiring developers to allocate a certain percentage of new residential units for affordable housing, ensuring that lower-income families have access to quality homes in diverse communities.

These policies typically mandate that 10-30% of new units are made available to lower-income residents. In Los Angeles, for instance, “housing developments on certain parcels identified in the Housing Element Sites Inventory or Rezoning Program must provide a 20 percent affordable housing set-aside for lower-income households.”

To offset the cost of providing affordable units, many programs offer developers incentives such as tax abatements, parking reductions, or the right to build at higher densities. Inclusionary housing policies can vary from one jurisdiction to another, depending on state laws and local conditions.

Text Based Image: Case Study: How one country's modern approach to affordable housing preservation addresses a severe housing crisis. Click to get the guide.

Key Features of Effective Inclusionary Housing Policies:

Designing an inclusionary housing policy is a complex endeavor, but an effective program has some common characteristics:

  1. Clear and Measurable Objectives: Establish well-defined goals for your policy, such as a target percentage of affordable units or a specific number of new units for lower-income residents.
  2. Flexibility: Cities often have to juggle multiple goals, such as economic development, environmental protection, and affordable housing provisions. You can offer developers a mix of options that suit your jurisdiction’s needs, such as providing affordable units on-site, paying in-lieu fees, or developing off-site units, to ensure that the policy adapts to local circumstances and market conditions.
  3. Incentives for Developers: Provide incentives that offset the cost of including affordable housing, making the policy more appealing and financially viable for developers. These incentives need to be sufficient enough to entice developers, while low enough to avoid excessively draining public resources.
  4. Monitoring and Enforcement: Implement mechanisms to monitor compliance and enforce the policy, ensuring that the intended benefits are realized and maintained over time. Beyond stats like affordable units created, you need to monitor externalities like increased traffic from reduced parking requirements, or increased gentrification that displaces existing residents in low-income neighborhoods.
  5. Collaboration and Stakeholder Engagement: Foster partnerships with community organizations, developers, and other stakeholders to promote shared ownership and success of the policy.

Building More Effective Inclusionary Housing Policies with Software

Finding the right affordable housing software can make it faster and easier to build and implement an inclusionary housing policy. Essential features like these will make it easier for local governments and housing agencies to develop, manage, and monitor inclusionary housing programs:

Rental Registry

A comprehensive and up-to-date inventory of rental units in a community can help build and implement an inclusionary housing policy by allowing planners and policymakers to track the availability of affordable units.  

A rental registry enables you to monitor the impact of inclusionary housing policies on the local rental market, identify areas of need, and ensure that a sufficient number of affordable units are being created as part of new developments.

Online Payment Processing

Self-service payment processing capabilities provide a convenient way to accept, process, and track the flow of payments, such as fees, fines, and taxes.

For instance, if developers opt to contribute financially to affordable housing funds instead of including affordable units on-site, an integrated payment system facilitates the collection of in-lieu fees from them.

This helps ensure a steady stream of funding for affordable housing initiatives and makes it easier for local governments to allocate resources towards implementing inclusionary housing policies.

Case Management

A streamlined case management solution can help local governments process and track various aspects of inclusionary housing policies, such as managing affordable unit allocations, monitoring compliance with affordability requirements, and handling requests for exemptions or modifications.

Robust case management solutions can improve the efficiency and effectiveness of policy implementation, ensuring that affordable units are being created and maintained as intended.

Document Management

A robust document management system can support the implementation of inclusionary housing policies by maintaining a comprehensive repository of all relevant documentation, such as developer agreements, income eligibility certifications, and monitoring reports.

This not only helps ensure compliance with the policy but also enables planners and policymakers to evaluate the success of the policy over time and make any necessary adjustments based on data-driven insights.

Reporting & Analytics

Real-time access to data and analytics can make a huge impact on the implementation of inclusionary housing policies. By providing housing program administrators with the ability to analyze key metrics, such as the number of affordable units created, income levels of residents, and overall impact on the local housing market, they can make more informed decisions and adjust policies as needed to better serve their communities.

Additionally, reporting and analytics tools can help identify trends and patterns, enabling more proactive responses to potential challenges and ensuring the long-term success of inclusionary housing initiatives.

Inclusionary Housing: Building vs Preservation

While building affordable housing plays a critical role in addressing the housing crisis, it’s more cost-effective to preserve existing affordable housing. New construction costs are typically between $40,000 and $71,000 more per unit than purchasing and rehabilitating existing buildings.

On top of creating a strong inclusionary housing policy, agencies should focus on preserving the current stock of affordable homes. This way, we not only ensure long-term affordability for residents, but also maximize the impact of limited resources, creating a comprehensive approach to housing affordability.

Housing preservation can get complicated as well though, and new technology proves incredibly useful for making it easier. Solutions like a preservation database provide better data visibility and insights to help make these programs more efficient and effective, as seen with the preservation database we deployed for LA County.

For a more in-depth look at how a preservation database can address the affordable housing crisis, take a look at this case study, covering the solutions we provided for a large US county.

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