Inclusionary Zoning Flops in Portland
16th February 2018
As the price of housing continues to rise in many cities, one popular progressive policy idea to address it is inclusionary zoning. Inclusionary zoning requires that a certain percentage of units in a building be priced at below market, targeted at people who earn some fraction of the area median income. Often this set aside is required in exchange for density bonuses or other things the developer might want.
Portland passed one of these, and according to a report in the Portland Mercury, construction fell off a cliff.
Markets work the way markets work even when you don’t want them to.
Whenever government interferes with the action of a market, participants in that market take action that seems best in their own self-interest: either working around the government restrictions (a ‘black market’) if they can do so profitably, or deserting the market if they can’t work around the constraints. (Organized crime depends on such market constraints for their profits; their business model is working around government constraints on markets, and they are pretty good at it.)
Politicians never seem to learn that they can’t just pass a law and have everyone do what the politicians want them to do in the way that politicians want them to do it.