The New Orleans City Council voted unanimously on October 1 to cut the fee developers pay to opt out of the city’s affordable housing set-aside requirement from $304,810 per unit to $10,000, a 97 percent reduction that follows six years in which the mandate produced no affordable apartment complexes at all. The Mandatory Inclusionary Zoning framework remains on the books, but the economics of avoiding it have changed fundamentally.
Adopted in 2019 and effective the following year, the policy applies in the Central Business District, the French Quarter, and other designated high-density zones. Any development over ten units must reserve 5 or 10 percent of its apartments for households at 60 percent of area median income, or pay the fee for each unit not provided. At roughly $305,000 per forgone unit, a 100-unit project facing a ten-unit set-aside confronted a $3 million line item. Developers responded by building smaller.
Kirk Williamson, who owns Chester Development, shelved a larger apartment project on Martin Luther King Jr. Boulevard rather than absorb the requirement. We actually had a project on MLK that we didn’t move forward on because they were going to require set-asides, Williamson said, adding that the pattern extends well beyond his own firm. Most people I’ve talked to, other builders out there, are building fourplexes maximum in the city of New Orleans. Staying under the ten-unit threshold became the standard workaround, pushing production toward small-format projects that fall outside the policy entirely.
The results bear that out. Since passage, the mandate has yielded no affordable apartment complexes. The voluntary compliance track produced 21 units. The 239 fully affordable units delivered over the same period came through federal subsidy programs operating independently of the inclusionary requirement. The rollback rests on a November 2025 market analysis by HR&A Advisors, procured by the City Planning Commission, which found development in the affected zones largely infeasible without subsidy. HR&A is the same firm that advised the Council when the policy was drafted, and it warned in 2019 that a mandatory requirement without sufficient offsetting incentives could reduce affordability by rendering projects infeasible and constraining new supply.
Council Member Lesli Harris framed the change as a suspension rather than a retreat. We are preserving the structure of the Mandatory Inclusionary Zoning program, so that higher fees in lieu and more robust requirements can be reinstated when the City’s real estate market is stronger and more able to bear them, she said. The Council also referred a broader set of recommended changes to the City Planning Commission for review, following public comment urging a fuller examination before further amendments. Fees collected under the reduced rate will continue flowing to the Housing Trust Fund.
For developers underwriting multifamily projects in the CBD, the Warehouse District, and the Quarter, the practical effect is immediate. A requirement that functioned as a hard stop on projects above ten units now carries a cost most pro formas can absorb. Whether that unlocks the mid-size apartment construction the policy inadvertently suppressed, or simply allows developers to pay a nominal fee and build nothing affordable, is the question the next development cycle will answer.
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