Does inclusionary zoning build more affordable housing?

The cure-du-jour for skyrocketing housing prices, at least in Seattle City Hall, is something called inclusionary zoning, or IZ. It's in effect in more than 300 urban areas in the country. Typically IZ requires residential developers to include a percentage of affordable housing in new projects. Does it work? To many developers, the question has been: Does it backfire? They contend that the price of building low-cost housing in a project just drives up the prices on the 90 percent or so of the rest of the project; and that the requirements can inhibit developers from building more housing, thus limiting supply and driving up housing prices all over town. Such are the arguments bouncing off the walls in Mayor Greg Nickels' office, where he's trying to build a case for IZ. Update: To be precise, what the City allows is "incentive zoning," whereby a developer gets to exceed height and density restrictions in exchange for paying into an affordable housing fund or building affordable housing on site. The classic form of IZ, discussed below, is not legal in Washington state. Comes now a comprehensive study by the Furman Center for Real Estate and Urban Policy, which has looked at IZ programs in San Francisco, Boston, and Washington D.C. The good news for IZ advocates like the Mayor is that the sky is not falling. In San Francisco there was no evidence of rising prices or lower production of single-family houses. In suburban Boston there was some negative effect, but very small. The bad news for IZers is that not much affordable housing was produced. If IZ is not a menace, neither is it a panacea. Apparently the IZ skeptics are right in their contention that developers shy away from such projects, even with incentives. Set the requirement at, say, 10-unit projects, and developers will build nine. Or they will focus on the next town over, increasing sprawl. Denver, for instance has IZ, but the surrounding counties do not, and it's politically tough to get the suburbs to join in. Where you have a full county, such as Mongomery County in suburban D.C., the results have been more impressive, especially over time. The full report notes 15,252 affordable units built in the D.C. area (most in Montgomery County) since the program started in 1974. San Francisco area has numerous IZ jurisdictions, with 9,154 new units reported. But the report finds that other tools in San Francisco work better in generating lower-cost housing, notably density bonuses and exemptions for smaller projects.