According to Forbes, Chicago’s mandatory inclusionary zoning scheme called the Affordable Requirements Ordinance has suppressed housing supply dramatically over 20 years. The city granted permits for just 1.36 units per 1,000 residents compared to 4.71 in other cities. Developers can opt out by paying fees that get funneled to non-profits building expensive units slowly. The study author Joshua Bandoch found that every time the program failed in 2003, 2007, and 2015, Chicago’s response was to tighten restrictions rather than remove them. Seattle has seen similar negative outcomes where the mandate became “one of several factors that have negatively impacted development feasibility since 2019.”
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The economic reality
Here’s the thing that politicians keep missing: when you force developers to include below-market units or pay hefty fees, those costs don’t just disappear. They get passed along to everyone else in the form of higher rents. And if the math doesn’t work—if people can’t pay those higher rents—projects simply don’t get built at all. It’s basic supply and demand, but apparently that’s not assumed knowledge among local officials.
The political addiction
Bandoch nailed it when he said these programs are enticing because they’re subtle and hidden. People don’t see the projects that never get built because the numbers didn’t pencil out. They do see the occasional ribbon-cutting ceremony for the few affordable units that do get built with what the author calls “extorted funds.” Politicians get their photo ops and can claim they’re doing something about housing, even when the evidence shows they’re making the problem worse.
The vicious cycle
What’s really concerning is how predictable the failure has become. When these mandates don’t work, the response isn’t to question the approach—it’s to double down. More requirements, higher fees, tighter restrictions. It’s like watching someone try to fix a leaky pipe by turning up the water pressure. The author saw this exact pattern play out in Seattle, and Chicago’s history shows the same stubborn refusal to learn from failure.
The bigger picture
Basically, we’re stuck in a housing discourse that’s long on blame and short on economic sense. We keep trying to use the rich to subsidize the poor through development mandates, but all we’re really doing is making housing more expensive for everyone while suppressing the supply we desperately need. Until we start treating housing like the market it actually is—rather than some morality play about greedy developers—we’re just going to keep digging ourselves deeper into this affordability crisis.
