Evaluation of In-Lieu Fees and Offsite Construction as Incentives for Affordable Housing Production

Douglas R. Porter
Elizabeth B. Davison

As with the articles in this issue, this introduction reflects the views of the authors and does not necessarily reflect the views of the U.S. Department of Housing and Urban Development.

Communities are beginning to offer options of in-lieu payments and offsite construction of affordable housing units required by inclusionary housing programs. An examination of experience with these options in Boulder, Colorado; Montgomery County, Maryland; and Pasadena, California, analyzed patterns of affordable housing production through the use of these options and explored reactions by program administrators, developers, and housing advocates. The findings indicate that the options can be effective in producing affordable units in satisfactory locations, while enabling developers to mitigate costs of supplying affordable units in high-cost neighborhoods. The programs that established specific in-lieu fees (periodically updated) appeared to avoid the controversies engendered by site-by-site determination of appropriate fees, especially for highrise construction.