Cambridge Council to Consider Lowering Inclusionary Housing Requirement

The Cambridge City Council is weighing loosening its inclusionary housing requirement as the city faces two lawsuits regarding the policy and a rising concern that the requirement is preventing large developments from moving forward.

Cambridge has long had an inclusionary zoning requirement, which mandates that developments of a certain size set aside a portion of their units for affordable housing. Cambridge first enacted the policy in 1998, requiring roughly 11 percent of developments with more than 10 units to be set aside.

The city has gradually increased the requirement, raising it to 15 percent in 2016 and to the current 20 percent in 2017.

But developers have criticized the requirement for placing an outsized financial burden on property owners and developers — sparking two lawsuits from independent developers who alleged the current inclusionary requirement unconstitutionally infringes on their property rights.

Developer and zoning attorney Patrick W. Barrett III filed suit against the city in December, arguing that the inclusionary requirement placed an undue burden on his Columbia St. development. The Old North Development sued the city on similar grounds in September, and both suits remain active.

And last week, staff from the city’s Community Development Department recommended four potential changes to make new residential development more financially feasible, with one measure including lowering the inclusionary housing requirement.

Along with proposing to lower the inclusionary requirement, the CDD also offered a list of measures to spur development, focused on improving benefits for developers — including providing tax abatements and allowing developers to put funds into the Affordable Housing Trust rather than allocating affordable units.

The CDD did not specify how much the inclusionary requirement should be reduced, but released their recommendations alongside a report from RKG Associates, a consulting firm hired by the city a year ago.

CDD staff ultimately left setting a new inclusionary requirement to the Council, but cautioned that reducing the requirement too far could risk undermining the inclusionary policy’s broader goals.

“Setting the IHO percentage too low could have an impact on the goals of maintaining socioeconomic diversity and sustaining inclusive housing growth over time,” they wrote.

RKG’s report found that lowering the inclusionary requirement from 20 to 10 percent would have a “limited impact,” and that other tested changes are even less effective.

“No single option is a panacea that dramatically changes the current environment for development,” they wrote.

RKG found that maintaining the city’s current income diversity through inclusionary housing alone would require a set-aside of roughly 34 percent, substantially more than the City’s current 20 percent requirement.

In a letter to the council, City Manager Yi-An Huang ’05 wrote that Cambridge is facing its weakest construction environment in decades, as rising interest rates and construction costs contribute to projects being shelved or delayed. And despite the city’s efforts to spur housing development through zoning measures, the economics of developing residential properties has resulted in the loss of hundreds of potential housing units.

“Inclusionary housing has been one of the greatest producers of affordable housing for Cambridge, but the economic environment has shifted tremendously,” he wrote.

“If we want to see the cost of housing ultimately come down, we need to build housing and it will need to make economic sense to do so,” he added.

City Councilor Patricia M. “Patty” Nolan ’80 said that the Council should move promptly to consider options outlined by city staff as it weighs how to encourage new housing construction.

“Let’s very quickly discuss the various options in front of us in order to make some difference,” she said. “It’s going to be very interesting to see which ones we decide are ones that are worth pursuing. But I am definitely wanting that conversation to happen so that we can get it moving.”

The CDD’s report also echoed RKG’s conclusion — noting that achieving the city’s affordable housing goals depends on ensuring that new projects can remain financially feasible.

“The IHO only works to create affordable units and maintain socioeconomic diversity if the market is able to produce new housing with IHO units,” they wrote. “While the RKG report shows that the City does not have the ability to make every project feasible, doing nothing risks making a difficult situation worse.”

—Staff writer Maya Fu can be reached at [email protected].

—Staff writer Risha Sinha can be reached at [email protected]