The risks of inclusion

Is inclusionary zoning a good fit for Chico? The Chico City Council seems to think so, having made a commitment, in its newly updated general-plan housing element, to develop an inclusionary-zoning ordinance. But it acted hastily and without substantive discussion, so it’s fair to ask whether it made a good decision.

The purposes of inclusionary-zoning ordinances are to increase the supply of lower-cost houses, reduce sprawl by upping densities, and create economically diverse neighborhoods. Ordinarily they require that a minimum percentage of units within a residential development be affordable to households at a particular income level, generally defined as a percentage of the median income of the area. Developers usually are given incentives (fee waivers, tax abatements, etc.) for building the units, and the dwellings come with a provision that, for 10 or 20 years or longer, owners can sell them only at prescribed below-market-value prices.

As you can see, inclusionary zoning is complicated. It takes many forms, and not all would be suitable for Chico. Indeed, the town may not even need this zoning, at least not now, when housing prices are dropping and few new residences are being constructed. Historically, inclusionary zoning has been most effective in communities with high-cost or escalating housing markets or where exclusionary zoning—that is, zoning that compels construction of large, expensive houses—has been prevalent, such as in California’s coastal communities. That’s not the case in Chico.

What’s needed most of all in Chico is more low-cost rental housing. The city has had some success in this regard, having constructed several low-income projects, often in conjunction with the Community Housing Improvement Program, such as Jarvis Gardens and Murphy Commons. More need to be built, and this is where the city should put its focus, at least in the near term.

We’re not saying the city shouldn’t draw up an inclusionary-zoning ordinance. If and when the housing market picks up, it could be an effective tool for ensuring a balanced mix of housing types throughout the city. But it also could have unintended negative consequences, beginning with high implementation costs for the city. It also could put an unfair burden on developers, limit owners’ equity and resale opportunities, and, when all is said and done, do nothing to solve the underlying causes of high housing prices.

Obviously, this matter needs further discussion. We understand the council needed to make a decision on the housing element in order to meet a looming state deadline, but in retrospect it would have been better to stick with the original action plan, which was to “explore” establishing an inclusionary-zoning ordinance, not actually commit to writing one.