Cambridge Looks to Adjust Affordable Housing Regulations

Cambridge City Manager Richard Rossi

CAMBRIDGE, MA—Nearly 20 years ago, Cambridge ‘s inclusionary housing provisions were seen as cutting edge. Today, intense demand and price escalation may require the city to make changes to its policy. Earlier this week, Cambridge City Manager Richard Rossi recommended to the City Council that the city’s inclusionary housing policy be adjusted. His recommendation came after reviewing the findings and recommendations of the Cambridge Inclusionary Housing Study recently completed by David Paul Rosen & Associates. The current inclusionary provisions include a set-aside ratio of 15% for affordable housing and allow for up to a 30% increase in total units through the city’s inclusionary density bonus. Rossi told council members in a memo that the bonus allows additional market units for each affordable unit and helps offset the development costs of creating permanently affordable housing units. “This important provision was deliberately included to help ensure success and yield an outcome where approximately 11.5% of total units would be affordable in a typical development eligible for the density bonus,” Rossi stated. “Recognizing the impact of a significant increase in affordable housing set-asides, and being aware of other mitigation, community benefits, and public policy goals we want to address through new development, I would suggest that the City Council consider an increase in the inclusionary standards to be in the range of 17% to 20% of the total of newly-built units.” Rossi stated in his memo to the council.” Rossi cautioned the council to be mindful of “projects begun in good faith under the current provisions and consider how changes might be put into place in a way that does not disrupt developments in process.” In fact, one of the policy options and recommendations from the Cambridge Inclusionary Housing Study was to apply any changes to the inclusionary housing provisions only to new developments. Since the inclusionary housing policy was put in place in 1998, more than 890 affordable units have been or are now being created without the need for capital subsidy funds from the City of Cambridge. Among some of the key recommendations from the Cambridge Inclusionary Housing Study were: • increasing the set-aside ratio for affordable units up to a net of 20% of total units built in a residential project; • for affordable inclusionary rental housing, either maintaining the current income eligibility limit of 80% of AMI for the recommended inclusionary set-aside (i.e. up to 20% under 80% AMI), or making up to 15% of units affordable to households earning less than 80% AMI and up to 5% of units affordable to households earning less than 100% AMI; • for affordable inclusionary ownership housing, increasing the eligibility limit to 100% of AMI and increasing affordability targets above 65% of AMI; • maintaining the 30% allowed increase in density for an inclusionary housing project; • considering a higher set-aside ratio in unique cases through zoning ordinance changes where warranted; • considering specifying that a portion of affordable units created must be 3-bedroom units, and/or that inclusionary housing set-aside ratios can be applied on a per-bedroom or per-square-foot basis; • disallowing the provision of affordable studio units, or creating a pricing structure in which studio units can be offered at a lower cost than one-bedroom units; • considering lowering the unit and/or square footage threshold for triggering the inclusionary housing provisions; • for projects which result in at least one inclusionary unit and a fractional unit, permitting an in-lieu-of contribution for the fractional affordable unit rather than rounding the number of affordable units up or down; • allowing the option to select inclusionary units that are less premium in a development in exchange for increasing the total number of affordable units; • and considering the impacts of the changes to the inclusionary housing provisions on the competitiveness of residential versus commercial development and land uses.