Incentive zoning is a land-use regulation strategy that allows property owners to receive certain benefits or exemptions from zoning restrictions in exchange for meeting certain public goals or objectives. It essentially provides an economic incentive for property owners to undertake certain activities that benefit the community.
An example of incentive zoning is when a city offers a property owner the opportunity to build a taller building than what is permitted under the zoning regulations if the property owner agrees to include a public parking garage in the development. This allows the city to address a public need for parking while also allowing the property owner to benefit from the additional floors in the building.
It is important to note that incentive zoning must be carefully structured to avoid being considered illegal contract zoning. Illegal contract zoning occurs when a property owner is granted a zoning exemption in exchange for a payment or other private benefit that is not related to a public benefit. In contrast, incentive zoning sets a predetermined price or benefit that is tied to a specific public benefit or objective, such as the provision of affordable housing or public green space.
[Last updated in March of 2023 by the Wex Definitions Team]