2021 Leg Session, Exclusives, Housing, Uncategorized, Zoning

O’Toole: Inclusionary zoning bill will make housing less affordable

The Colorado legislature is considering a bill to allow cities to require developers to provide “affordable housing” in their developments. This is called “inclusionary zoning.” Such requirements have three effects.

First, developers respond to the higher costs by building fewer units of housing. Second, to pay for the units they have to sell or rent at below-market rates, they raise prices on the market-rate units. Third, existing home sellers or landlords, seeing that new units are going for higher prices, raise their prices as well. Voila! Inclusionary zoning makes housing less affordable. But don’t believe me: a study by economists from San Jose State University proves it using real-world data.

Why would the legislature consider an affordable-housing bill that makes housing less affordable? “Denver tried growth,” says a member of Denver’s city council. “Supply hasn’t created affordability in Denver.” She means that the city promoted the construction of four-to five-story transit-oriented developments. Such developments cost two to four times as much, per square foot, as single-family homes. That won’t make housing more affordable.

In other words, Denver didn’t try growth (which would have meant eliminating the region’s urban-growth boundary). It tried compact development. The numbers show that denser development is less affordable development just as the numbers show that inclusionary zoning makes development less affordable.

Politicians want to look like they are doing something even if they are doing the wrong thing. As a result, they take policies that make housing less affordable and couch them in affordability language so they can sucker people into supporting such policies. I have no idea whether Colorado politicians even know they are doing this, but someone must know.

The real goal is compact, i.e., higher-density development, not affordability. The two are incompatible. It is time for people to realize this.

Randal O’Toole is a land-use and transportation policy analyst, a senior fellow at the Cato Institute in Washington, DC and director of  transportation policy at the Independence Institute. A version of this originally appeared in TheAntiplanner.

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