HIP Tool: Incentive Zoning

Incentive zoning is a broad regulatory framework for encouraging and stimulating development that provides a desired public benefit as established in adopted planning goals. An incentive zoning system is implemented on top of an existing base of development regulations and works by offering developers regulatory allowances in exchange for public benefits. It can incorporate one or several incentives including density bonusesflexible development regulationsparking reductionsfee waivers or reductions and permitting priority. Common public benefits achieved through incentive programs include affordable housing, historic preservation, open space and recreation, and increased environmental protection. Jurisdictions should craft incentive zoning policies that best reflect the needs of their residents, paying close attention to details relating to program management and monitoring.


Background

Incentives for affordable housing in residential developments is a response to high housing costs and the improbability of building lower-cost market-rate housing in many areas due to high land prices, and is an affordability strategy designed to secure a public benefit from growth. RCW 36.70A.540 provides cities and counties the authority to enact incentive zoning programs to encourage affordable housing. Incentive zoning provides a menu of incentives and public benefits, which the local code must delineate explicitly. Inclusionary zoning is a form of incentive zoning that mandates the inclusion of affordable housing, where the cost is offset by a density bonus or other incentive. The helpful links section below notes statutes encouraging incentive zoning for other planning goals.

Incentive zoning programs may be triggered by the location of a project within a specific zone or by the type of project. Incentive zoning may be applied in ownership and rental developments, single-family and multi-family zones, and can be tied to specific geographic areas. For jurisdictions implementing incentive zoning programs to encourage affordable housing, an incentive zoning policy may include opportunities for on-site affordable units or an in-lieu fee for construction of off-site affordable units. Both for- and non-profit developers may take advantage of incentive zoning.

The right incentive levels will encourage development and public benefit: they should not interfere with other planning goals or discourage development by complicating the process. Several communities have experienced a trial-and-error process before finding the best balance of incentives and benefits. Note, too, that incentive programs that function well in strong real estate markets may need adjustment for weaker market conditions, and vice versa. Finally, policy makers will want to weigh both the short-term and the long-term consequences of regulatory allowances and the urgency for the kinds of development they need.

For more information on specific incentives, see density bonuses, flexible development regulations, parking reductions, inclusionary zoning, and fee waivers or reductions.

Tool Profile

Focus Areas

  • Urban Centers
  • Transit Oriented Development
  • Expensive Housing Markets
  • Innovative Single Family Techniques

Project Types

  • Single Family
  • Multifamily
  • Ownership
  • Rental
  • Market Rate

Affordability Level

  • 80% to 120% AMI
  • Less than 80% AMI

Housing Goal

  • Affordability
  • Diversity