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Chris Elmendorf

@CSElmendorf

Important new paper on effects of inclusionary zoning. tl, dr: the *typical* IZ policy in CA:

causes 31% decrease in housing production;

shifts production to lower-income areas; &

produces BMR units at per-unit cost PAID BY RENTERS of ~$775k 1/6

3:40 PM · Jul 18, 2026

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Chris Elmendorf

@CSElmendorf

Jul 18

This paper represents a major advance relative to prior work on IZ b/c (1) it leverages a plausibly exogenous source of variation in IZ policies (a court decision and subsequent legislative fix), and (2) it observes a large set of IZ policies & quantifies their stringency. 2/

The measure of stringency isn't perfect -- it doesn't account for vacancy / admin costs of renting "BMR" units when the allowable rent is near or above market rents -- but it's pretty good and could easily be adopted by state policymakers to constrain local IZ. 3/

The paper also estimates the cost of producing a BMR unit in California through IZ versus LIHTC: - IZ: about $775k - LIHTC: about $440k The IZ cost is borne by renters. The LIHTC cost is borne by income taxpayers. LIHTC is progressive; IZ is regressive. /4

Here's hoping CA progressives will follow the lead of Oregon's Dems & DSAers & push the state to ban unfunded IZ. /5

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Chris Elmendorf

@CSElmendorf

Mar 18

Progressives in the Pacific Northwest are lapping their CA sibs in the race for good housing policy. The latest: An Oregon ban on unfunded inclusionary zoning, with Democratic Socialists leading the charge! 1/3

link to paper: bpb-us-e2.wpmucdn.com/sites.uci.edu/ /end

How does the paper show the $775K additional cost per unit is borne entirely by renters? Don't landlords bear some of that cost?

It's the estimated increase in market rents caused by the typical IZ policy, divided by the number of IZ units that that policy delivers.

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Public Sector Energy guy

@guy_public

Jul 18

Papers and science are irrelevant to the left-NIMBYs. I wish they were persuadable but all evidence suggests they are not.

Look at Oregon. Or NYC. Left nimbys may not be persuadable but some leftists are

classic 'perfect being the enemy of the good' I get the instinct to say that developments must include affordable units, but we're doing major surgery not first aid. The housing shortage has been decades in the making. Unfunded IZ is simply short sighted

Also, filtering from market rate housing is in effect affordable housing policy. So if we just build a lot of market rate housing, it inevitably leads to lower rents.

Real question: what value comes from these studies? I don’t doubt it’s true. But the California politicians on the NIMBY side are motivated by the vibes of their backers, not by this data that’s putting a finer point on a concept the wonks have already known for a long time.

Considering standard zoning, uniformity clauses and general tax code, IZ for SF1 sounds like a joke when mixed-use development produces the least units per development type

what is inclusionary zoning and what do these results suggest about it

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Phil BuildTheFutureNow

@PhilSustainable

Jul 19

The whole point of inclusionary zoning is to deter new homes and raise rents and home prices higher. That’s why existing homeowners want it- it raises their home values faster, and reduces the number of new homes in town

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Irrational Waterfalls

@KaleckiWasRight

Jul 19

I love that we can see other social housing systems having far more generally affordable homes because of a much larger social housing stock and rent control, and there's no critical analysis of a housing system like this one that's largely commodified and financialized. Also,

English translation for the peasants?

I'm puzzled about finding 2. I would expect reduction in construction to come from projects on the margin of profitability. Hard to imagine these are more likely to be in higher-income areas (vs. lower-income ones).