inclusionary zoning balancing affordability and financial feasibility

Inclusionary Zoning: Balancing Affordability and Financial Feasibility

A Developer’s Perspective

October 20, 2016

Background – Capstone Communities LLC• Developer of market rate and affordable housing• Portfolio of market rate buildings in Cambridge, Somerville, and

Arlington

Background – Capstone Communities LLC• Developer of market rate and affordable housing• Portfolio of affordable/mixed income buildings in Cambridge and

Brockton

Case StudiesSomerville Property #1# Units 5 7NSF 10,629 10,824 MKT $/SF 642$ 675$ Gross Sales Price 6,824,607 7,306,200 Affordable Payment -$ $481,593Net Sales Proceeds 6,824,607 6,824,607

Somerville Property #2# Units 5 6NSF 9,465 9,465 MKT $/SF 640$ 675$ Gross Sales Price 6,059,385 6,388,875 Affordable Payment -$ $329,490Net Sales Proceeds 6,059,385 6,059,385

Why Developers Avoid Inclusionary Zoning? • Perceived marketing stigma• Financial viability • Absorption delays• Partially relinquish control over buyer/resident selection• Compliance and paperwork• Affordable buyer/resident financial stability• Complex and ambiguous inclusionary zoning provisions• Government involvement of private development/operations

Recommendations• Online calculators to provide comparison scenarios• Simple and clear inclusionary guidelines along with buyer/resident selection criteria• Provide streamlined compliance procedures• Developer information sessions/webinars• Provide data to dispel stigmas• Unambiguous lease-up/sale timelines to which municipalities must adhere• Municipal backstop financial support (condo fees/special assessment/rent

payments)• Ensure all municipal departments are coordinated (assessor, etc.)• Reward developers that elect to increase total number of units which may trigger

inclusionary requirements (density bonus, expedited permitting, allocate subsidy, etc.)