Unfunded inclusionary zoning would do more harm than good in legislation to legalize apartments near the state's transit investments. But there's a way forward!

To dig out of the state's deep shortage of homes and control the crisis of high prices and rents, Washington legislators have passed a slew of bills in the past two years to boost housing production, including the re-legalization of accessory dwellings, middle housing, and co-living homes. But for two years running, the legislature has reached an impasse on a remaining zoning reform that's critical for curbing sprawl, cutting pollution, and making Washington communities affordable for all incomes: legalizing apartments near transit.

Known as transit-oriented development, or TOD, allowing lots more homes in apartment buildings where employment and transportation choices are abundant would make the most of public investments in transit and give people of all incomes more affordable options to live closer to their jobs, schools, and other neighborhood amenities. This in turn brings compounding benefits for local economies, the environment, and housing equity.

TOD has the potential to yield the high quantity of new homes needed to remedy the state's massive housing shortage. It can help reverse the historic pattern of exclusion in land use that's walled off our cities' middle income and low-wage community members. It's the most effective way to create low-carbon cities and towns. And it's an essential formula for preventing sprawling development into Washington's farmland and forests.

TOD is also popular. Statewide polling by Sightline in 2023 found that 82 percent of Washington voters---east, west, rural, urban, and suburban---support allowing more kinds of housing, including taller apartment buildings, near frequent bus and rail stops.

Getting past the TOD impasse

But while reforms have opened up formerly sacrosanct single-detached zoning to middle housing throughout most of Cascadia, only British Columbia has passed strong TOD legislation. It's the same story in the rest of North America: middle housing wins have been piling up, but only Massachusetts and Colorado have managed to get TOD bills through.

Middle housing reforms have passed with the support of unusual multisector bipartisan bedfellows, but those coalitions tend to scatter when it comes to legalizing large-scale apartment buildings. In particular, left and center legislators often deadlock over the question of whether statewide zoning changes to allow apartments should be coupled with statewide mandates for inclusionary zoning (IZ), the requirement that new apartment buildings offer a share of homes at reduced rents that are affordable to residents with incomes below a certain threshold.

Most lawmakers and advocates agree on the goal of creating mixed-income neighborhoods in transit-rich, job-rich cities that provide affordable housing options with good access to transit. And the intent of IZ is to attain that goal. Unfortunately, the IZ as proposed in Washington's 2023 and 2024 TOD bills would go against the broadly shared vision of connected transit communities with housing choices for people of all incomes---it would do more harm than good.

The inherent problem with unfunded IZ is that its cost impedes the production of housing. It's a preventative tax on housing when what we need for affordability is far more housing. Sometimes, when market conditions are just right, that tradeoff can be worth it---if it yields some affordable homes and doesn't reduce the overall supply by much. But in many cases, IZ backfires entirely, thwarting the construction of both market-rate homes and income-restricted homes.

The IZ in Washington's TOD bills was a formula for serious statewide backfire, especially in communities already struggling to attract homebuilding. Moreover, because the legislation targets IZ in TOD areas and not elsewhere, the extra burden of IZ would drive new housing construction away from transit. F...