ABSTRACT
This chapter discusses the economics of inclusionary zoning ordinances and then examines evidence in California to look at the track record of its performance. It estimates the size of the tax in California cities and discusses how that affects the supply of both market-rate units and price-controlled units. The chapter looks at inclusionary zoning in Los Angeles County, Orange County, and the San Francisco Bay Area, and found that the programs are extremely costly and lead to few affordable units being built. Economics clearly predicts that the quantity of construction will be lower after the adoption of inclusionary zoning and we can see evidence of this from various sources. Having restrictive price controls through inclusionary zoning might be an effective way to promote exclusionary zoning while using the rhetoric of affordability.
