Who’s to pay for affordable housing?

Martha’s Vinyard and Nantucket residents are advocating for a new levy on home sales to pay for affordable housing. State lawmakers are now debating this proposal for the islands.

Lawmakers, developers, and housing advocates have been debating variations on this kind of policy for some time. Pioneer’s research shows that over half of communities in eastern Mass have zoning policies that either mandate or encourage developers of include affordable units in new developments, or pay a fee in lieu of building the affordable units. As of 2004, 11 cities and towns in eastern Mass required that a certain percent of new houses in ANY development be designated as affordable.

Some developers and real estate experts question the legality of such policies, known as inclusionary zoning. A coalition of planners, municipal officials, and housing advocates known as the Zoning Reform Working Group would like to pass legislation that explicitly authorizes communities to pass such laws.

On the one hand, inclusionary zoning policies can provide deep integration of affordable housing with market-rate houses in the neighborhoods. In addition, with limited public funds (federal, state and local) available for development of affordable housing, these policies provide a creative mechanism for building it. On the other hand, such policies can drive up the cost of building market-rate housing. Moreover, in a slow housing market, the requirement to include below-market rate houses can make residential projects uneconomic altogether, reducing development of needed market-rate houses.

While housing prices remain sky-high in Massachusetts, expect debate over such policies for some time. What are the best ways to ensure there are homes affordable for households at all income levels, on the islands and everywhere else?