A Case Study in What Not to Do: Mandate Affordable Housing, Get Less Housing

New Orleans wanted more affordable housing. Its mandatory inclusionary zoning policy helped make larger apartment projects harder to build.

The city adopted the policy in 2020, requiring developers to provide affordable units in exchange for certain incentives or pay a fee for each required unit they did not build on site. In the Core mandatory inclusionary zone, a 100-unit project could face a fee of about $3 million.

The policy treated affordability as a box developers could be required to check. But housing is built with land, labor, materials, insurance, and financing, all of which cost money. When government adds a large new cost to a project, someone has to absorb it. Often, the project simply does not happen.

That is what New Orleans developer Kirk Williamson says happened to a proposed apartment project near Martin Luther King Jr. Boulevard. He decided not to move forward. He also said builders he knew were limiting projects to fourplexes to avoid the mandate.

That response makes economic sense. If a rule makes a larger project more expensive than the market can support, developers build less, build smaller, or invest somewhere else. The result is fewer homes competing for renters, which puts upward pressure on prices across the market.

The 2025 review found the policy had produced no apartment complexes since its adoption. The voluntary option produced 21 affordable units. Another 239 “100% affordable” units were built with federal subsidies. Those subsidized homes serve a purpose, but they are not evidence that the mandate generated new apartment construction.

The City Council has now cut the fee from $304,810 to $10,000 while keeping the program in place. That rollback recognizes what should have been clear from the start: affordability requirements cannot be set apart from the costs and risks of building.

Adding costs and restricting supply is a poor way to make housing less expensive. If New Orleans wants more homes and more choices, it should make it easier to build: reduce unnecessary barriers, let new supply compete for renters, and target assistance to people who need help paying for housing.

The lesson is straightforward. When government makes building housing less worthwhile, builders respond by building less. New Orleans wanted affordable apartments. Its policy helped push a developer away from building them. That is a case study in what not to do.