Cambridge’s Community Development Department released a report it commissioned on the city’s inclusionary development policy. The key finding made by David Paul Rosen and Associates (DRA) was that the city could increase the percentage of units in new developments that must be affordable from 15 percent to 20 percent without impacting development in Cambridge.
The current rate was set when the policy was first adopted in 1998, but it’s effectively 11.5 percent because of projects that get density bonuses, according to covering memo by Assistant City Manager for Community Development Iran Farooq.
Since instituting the policy, however, the city has changed demographically and economically and the study was commissioned to determine if the policy was still working as intended and how to bring it in line with the realities of the housing market.
According to Farooq’s memo, the number of moderate and lower-middle income households have declined since 2000 while the number of households with incomes that are 120 percent of the area median income has increased, with no appreciable change in the number of households earning 50 percent of AMI or less. However, market rents and sale prices have grown faster than incomes, resulting in declining affordability and a growing cost burden.
However, according to the memo, “DRA found that despite market pressues, the city has been succesful in maintaining the overall ratio of affordable housing . . . at roughly 15 percent of the total housing stock” with 891 units of affordable housing created through inclusionary zoning.
According to the report, the city can’t rest on its laurels: “As currently configured, the Inclusionary Housing Program cannot on its own maintain the existing proportion of affordable housing. Overall, the analyses demonstrate that there is room for Cambridge to increase its inclusionary standard without rendering housing development economically problematic. The higher the inclusionary housing standard and the deeper the affordability, the greater the impact on the feasability of residential development.”
DRA recommended that instead of targeting 80 percent AMI, Cambridge could target development for households making 65 percent of AMI and increase the number of affordable units being created. They also recommended keeping the density bonus and reducing the size a project needs to be to have inclusionary units. Another recommendation was that the inclusionary program could allow affordable units to be excluded from floors with view premiums in exchange for more units overall.
The report was actually somewhat disappointing. It narrowly focused on the inclusionary development policy while passing over Cambridge’s zoning and land use policies. The city’s parking requirements, height limits, minimum lot sizes, open space requirements and the like are a death of a thousand cuts to private development of middle and low-income housing, especially the petite bourgeois incremental development vital to healthy urban evolution. All of those things increase soft development costs, reduce the variety of projects and prices and increase the complexity of building.
The report also used percentages of AMI in a confusing and even contradictory way. Sometimes AMI was used the way the rest of the world uses it, where if the AMI is $100,000 a year, a person making 80 percent of AMI is making $80,000 a year and sometimes they meant the opposite, so that they would be making $20,000 a year. This is not a good practice for a consulting firm, especially when very important policy recommendations are involved.