Second Developer Sues Cambridge Over 20 Percent Affordable Housing Requirement

Cambridge is facing its second lawsuit from a developer challenging its inclusionary housing requirement, which mandates that residential developments of a certain size devote a portion of their floor area to income-restricted units.

The developer behind a proposed mixed-use building near Porter Square filed a lawsuit against Cambridge on Aug. 27, alleging that the city has refused to issue a building permit unless the development complies with the inclusionary requirement.

The suit argues that the six-story, 71-unit development complies with the city’s existing zoning requirements and can be built as of right. But the inclusionary policy would require 20 percent of the project’s residential floor area — equivalent to 14 of its 71 apartments — to be permanently income-restricted. The city has not issued a building permit for the project.

Old North Development, the company behind the project, seeks an injunction that would compel Cambridge to issue the permit and allow the development to forgo the affordable housing requirement. In the suit, OND argued that the city cannot require the developer to include affordable units without providing an incentive in return.

The suit alleges that, by refusing to grant the permit, the city is enacting a “coercive affordable housing covenant designed to manufacture the legal fiction of a ‘voluntary’ bargain — all in exchange for absolutely nothing.”

Cambridge adopted its inclusionary housing requirement in 1998 and amended it in 2017 to require developments with 10 or more units to devote 20 percent of their residential floor area to permanently affordable units. The ordinance also applies to developments creating more than 10,000 square feet of residential space.

OND argues that the city’s effort to block its project runs counter to its goal of expanding the housing supply.

“The Project adds 71 residential units of housing to a City in the midst of a declared housing shortage, so a hypothetical denial of the Project would set back, not advance, the City’s stated interest in housing supply,” they wrote.

The proposed development would replace the Walgreens and storefronts that housed longtime Cambridge businesses Simon’s Coffee Shop and Keezer’s Classic Clothing.

The suit separately challenges a roughly $450,000 building permit fee that Cambridge would charge the project. Cambridge calculates building permit fees based on construction costs, charging $20 for every $1,000 in estimated costs.

OND argues that the fee should only cover the city’s costs of reviewing and inspecting the project and that any amount charged beyond those costs amounts to an unlawful tax.

“As applied to the Project, the building permit fee, to the extent it exceeds the cost of the permitting and inspection services provided, is an unlawful tax that the City lacks authority to impose,” they wrote.

The suit raises arguments similar to those in a December lawsuit brought by Columbia St. LLC, a company controlled by developer and zoning attorney Patrick W. Barrett III. Barrett’s suit similarly challenges Cambridge’s 20 percent affordable housing requirement, arguing that the policy forces property owners to give up constitutionally protected property rights.

Barrett’s case also argues that the city cannot make approval of a building permit contingent on permanently reserving part of a project for income-restricted housing when the development otherwise complies with zoning rules.

The Massachusetts Attorney General’s Office stepped in to defend Cambridge’s requirement in February, attributing the move to the suit’s potential consequences for affordable housing policies across the state.

In a statement, city spokesperson Jeremy H. Warnick wrote that Cambridge is reviewing the lawsuit and has not yet determined how it will respond.

“Given that we recently were made aware of the complaint, we have been focused on thoroughly reviewing the matter and evaluating next steps at this time,” he wrote.

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