What Other Cities Learned
Portland tried unfunded inclusionary zoning. It failed. Then they funded it — and construction came back. Oregon's legislature has passed a bill to make unfunded IZ illegal. Philadelphia's MIN would not survive that standard.
Portland: The Before-and-After Story
Portland enacted an inclusionary zoning mandate in 2017 requiring 20+ unit projects to set aside affordable units — without adequate public funding to offset the cost. The results mirrored Philadelphia’s experience under MIN.
- ×Multifamily permits fell 40% from 2016 peak
- ×Share of projects just under threshold doubled to ~50%
- ×Investment fled to suburbs (Tigard, Vancouver waterfront)
- ×Condo program: 3 total condos in 9 years
- ✓Tax exemption expanded citywide, quintupled outside downtown
- ✓~$220K subsidy per unit — cheaper than standalone affordable buildings ($250K)
- ✓Threshold gaming returned to normal
- ✓1,967 affordable units created through 2024; ~300/year projected
Affordable units are cheaper when they hitch a ride
Portland’s fully funded program produces below-market housing at approximately $220,000 per unit in public subsidy — compared to ~$250,000 per unit for 100%-affordable buildings. When affordable units are integrated into market-rate projects, the financing and construction infrastructure is already in place. The public contribution closes the gap between market and affordable rents rather than funding an entire project from scratch.
Oregon SB 1521: The Legislature Has Spoken
On March 4, 2026, the Oregon Legislature passed SB 1521 through both chambers — the first state legislation in the United States to explicitly prohibit unfunded inclusionary zoning. The bill is awaiting Governor Kotek’s signature.
“Senate Bill 1521 is the Oregon legislature's attempt to ensure that any inclusionary zoning program cost-effectively empowers communities to build both market-rate and affordable homes.”— Sen. Khanh Pham (D-Portland)
| Provision | Detail |
|---|---|
| Scope | Five-county Portland metro area (Multnomah, Washington, Clackamas, Columbia, Yamhill) |
| Core requirement | Jurisdictions with inclusionary zoning programs must fully offset the cost of their mandates through tax breaks, fee waivers, or grants. |
| Rental compliance | 2028 |
| Full compliance | 2029 |
| Enforcement | Non-compliant IZ regulations become unenforceable on operative dates. |
| Flexibility | Cities can design varied affordability targets within buildings, set lower price targets, and use multiple funding mechanisms — as long as costs and benefits are roughly in balance. |
Philadelphia's MIN would be illegal under Oregon law
Philadelphia's MIN overlay — 20% at 40% AMI with no public subsidy — would be illegal under Oregon law. If Oregon can require funding, Philadelphia can too. Philadelphia’s MIN requires 20% of units at 40% AMI — a deeper affordability target than any of Portland’s options — with no public subsidy whatsoever. Oregon concluded that this approach does not work.
Other Cities’ Experiences
Baltimore: From 34 Units in 14 Years to Auto-Calibrating Reform
Baltimore’s original inclusionary housing law (2007–2022) required affordable units but included a waiver if the city couldn’t fund the gap. The city never had the money. Result: 34 affordable units in 14 years, while $38 million in annual tax subsidies for market-rate development produced zero affordable units.
In July 2024, Baltimore reformed its law with a fundamentally different design. The new program requires 5% of units at 50% AMI plus 5% at 60% AMI for projects of 20+ units — a lower bar than Philadelphia’s MIN. The key innovation is an annual tax credit that automatically matches the actual forgone rent revenue for each project. This means the subsidy adjusts to market conditions without requiring legislative action — if rents rise, the credit increases; if they fall, it decreases. The 30-year deed restriction is shorter than MIN’s 50 years but paired with real funding.
Shoreline, WA: Funded IZ Near Light Rail
Shoreline requires 20% affordable units at 70–80% AMI for all multifamily development near its two new light rail stations, funded by a 20-year property tax exemption. Four 7-story buildings are completed or under construction — demonstrating that mandatory IZ can work near transit when properly funded. Even this program has projects on hold due to interest rates — a reminder that funding is necessary but not always sufficient.
Chicago: Partial Reform, Partial Results
Chicago’s Affordable Requirements Ordinance requires 20% at 60% AMI for projects of 7+ units that receive city benefits. The program offers a fee-in-lieu option ($175K/unit downtown, $50K in low-income areas) and a tax abatement (full exemption for 3 years, then phased reduction over 30 years).
The tax abatement moves Chicago closer to funded IZ, but Sightline Institute assessed it as “further from full funding” than Portland or Baltimore — the abatement doesn’t fully close the gap. Since 2007, the ARO has produced 2,798 affordable units, concentrated in the wealthiest neighborhoods where the fee is easiest to absorb. The lesson: partial funding produces partial results. The fee-in-lieu generates revenue but few on-site units where they’re needed most.
Policy Comparison
How Philadelphia’s two programs compare to peer city approaches. The emerging consensus: inclusionary zoning works when funded, and fails when not.
| Dimension | Portland (reformed) | Baltimore (reformed) | Shoreline | Philadelphia MIN | Philadelphia MIHB |
|---|---|---|---|---|---|
| Approach | Mandatory + funded | Mandatory + auto-calibrated | Mandatory + funded | Mandatory + unfunded | Voluntary + funded |
| Set-aside | 10–20% | 5% + 5% | 20% | 20% | 10% |
| AMI target | 60–80% | 50% + 60% | 70–80% | 40% | 50% or 60% |
| Public subsidy | ~$220K/unit tax exemption | Tax credit matching costs | 20yr tax exemption | None ($0) | Density bonus + fee option |
| Fee-in-lieu | Available | Not applicable | Not available | Banned | Available (primary option) |
| Trigger | 20+ units | 20+ units | All multifamily | 10+ units | Any size (voluntary) |
| Duration | 99 years | 30 years | 99 years | 50 years | 50 years |
| Threshold gaming | Was 50%, now normal | N/A | N/A | None (freeze) | N/A |
| Revenue to city | Tax revenue forgone | Tax revenue forgone | Tax revenue forgone | $0 | $36.3M to HTF |
| Housing effect | Production restarted | Too early to tell | Building near rail | −37 pp DiD collapse | Incentivizes density |
Sources: Sightline Institute (2024, 2025, 2026); City of Portland PHB; Baltimore City Council; City of Shoreline; City of Chicago; City of Philadelphia DPD annual Mixed Income Housing Programs Reports.
The Emerging National Standard
The evidence from Portland, Baltimore, Shoreline, Chicago, and now Oregon state law points to a clear consensus: inclusionary zoning produces affordable housing when it is funded, and suppresses housing production when it is not. Philadelphia’s own data confirms this — MIHB (voluntary, funded) has produced 300 affordable units and $36.3M in revenue, while MIN (mandatory, unfunded) has delivered 18 units and $0.
Oregon’s legislature has passed a bill to prohibit unfunded IZ. Florida requires full cost offsets. Portland reformed its program and construction restarted. The path forward for Philadelphia is clear.