Mandatory requirements may apply to a specific site, area, or across a zone or an entire local authority area. They might also be limited to a specific type of development (residential, or commercial, or both). Thresholds often apply to the scale of development that is required to make the affordable housing contribution, with projects involving ten or more dwellings a common benchmark. However, thresholds can encourage perverse outcomes, such as the construction of projects comprising only nine dwellings in order to avoid the affordable requirement.
‘Inclusionary zoning’, is the most common form of mandatory requirement in the USA. In short, inclusionary zoning means that a proportion of all identified development above a specified threshold and within a specified zone must contribute to affordable housing, usually as a fixed amount of housing units provided on-site or as a cash contribution in lieu. Another approach is the imposition of ‘impact fees’ or equivalent, which link the affordable housing contribution to the impact of the development on housing needs within the local area. A connection or ‘nexus’ between the development and the affordable housing impact must be demonstrated to use this approach. In most cases, bonuses or concessions are available to offset the cost of the mandatory contribution.