On July 1, 2021, Mayor LaToya Cantrell announced the start of the New Orleans’ Mandatory Inclusionary Zoning Housing Policy, a landmark change to the City’s zoning code that requires developers to build affordable housing units in neighborhoods with some of the highest housing costs in the city. With the policy taking effect, New Orleans becomes one of the first cities in the Southeast to implement a mandatory inclusionary housing program.

New Orleans’ Mandatory Inclusionary Zoning Housing Policy

In February 2020, we published an article regarding a package of inclusionary zoning rules passed by the City Council in 2019 to require developers of certain types of projects to build lower-cost units as part of any larger multifamily residential development:

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On July 1, 2021, the City of New Orleans published maps establishing Mandatory Inclusionary Zoning Sub-Districts where these rules will apply.

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This makes effective the requirements in the original rules that developers building developments (including new construction, substantial improvement, expansion, mixed-uses, or changes in uses) with 10 or more rental or for-sale units make either 5% or 10% of those units available to people who earn 60% of the area median income (approximately $42,060 for a family of four) or less by pricing the units to be affordable to households with incomes equal to or below 50% of AMI. Based on 2021 HUD income limits, the maximum rent for a two-bedroom unit would be $946.50 per month.     

These units must remain affordable for 99 years. The affordable units must be comparable to the market rate units in terms of location, area, bedroom mix, amenity access and exterior finishes. The minimum lot area per dwelling unit for these sub-districts has been modified to provide at least a 30% density bonus for projects that must comply with the affordable housing requirements, and these developments may also be allowed a 10-30% parking requirement reduction and other financial incentives such as payments in lieu of taxes and restoration tax abatements (including renewals).   

The rules also provide for an optional fee-in-lieu that developers can pay in order to avoid complying with the affordable housing requirements. The fee is set forth in the Code of Ordinances and is currently set at $304,810 per affordable unit not provided. Violations of the inclusionary zoning ordinances may result in a fine of $500 per offense/day of violation, disconnection of electrical service and/or liens against the property.

Filed under: Commercial Real Estate, Development, Zoning and Land Use, Industry News, Residential Real Estate
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