As anti-growth sentiment increases across the country, two laudable goals—affordable housing and environmental protection—are coming into conflict. This tension is most evident in California. Nine of the ten least affordable communities in the country are in California. California also has one of the most complicated and expensive environmental regulatory processes for development. This results in builders being unable to produce housing to keep up with demand, and an increase in the cost of those units that are available. “Smart Growth” is often proffered as the answer to this dilemma: by promoting more compact development, mixed-use and mixed-income neighborhoods, and creating jobs near housing and transportation, housing production will be available to meet the demand at affordable costs. While these principles may serve as a valuable planning guide, they are not a panacea. In this respect, local governments have used inclusionary housing programs as one tool to respond to this escalation of housing costs and probably will continue to do so.