How Inclusionary Zoning Makes Housing More Expensive

by Gary M. Galles, The Los Angeles Times, Jan. 4, 2016 - This month the U.S. Supreme Court will decide whether to hear a legal challenge to San Jose's controversial inclusionary housing ordinance. Enacted in 2010 and upheld by California's top court in June, this zoning law requires housing developers of 20 or more units to sell 15% of them at prices far below their market value or pay a six-figure fee instead.

More than 170 California communities impose similar mandates and set-asides, but the net effect isn't more affordable housing for all. Rather it is a reduction in the construction of new homes, which pushes prices upward. ....This is hardly a solution to a housing affordability crisis. It's also an unconstitutional government taking of private property without just compensation, and a violation of several precedents specifically, which is why the San Jose case deserves consideration by the Supreme Court.. ...

An analogy reveals the foolishness of inclusionary zoning.

Suppose there was a law that if you opened a new supermarket you had to sell 15% of your groceries to low-income people at far-below market prices to improve their access to good nutrition. This would clearly be an unfair burden. Those wanting to open new supermarkets did nothing to cause the problem; on the contrary, they intended to increase food accessibility. Read more

Gary M. Galles is a professor of economics at Pepperdine University, a research fellow with the Independent Institute in Oakland and author of "Faulty Premises, Faulty Policies." Before the Council passes our own version of inclusionary zoning, I hope they will think long and hard about the effect of such a policy. If it is passed, I hope the State will ban it or the Supreme Court will strike it down.

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