CRT 2016 #44 · Communication to the City Council · Aug 1 2016

Overview of Inclusionary Housing Program And DRA Inclusionary Housing Study City of Cambridge Community Development Department City Council Housing Committee: May 18, 2016 1

Key Provisions of Current Inclusionary Zoning Ordinance • Adopted 1998 – end of rent control • Applies to projects of at least 10 units or 10,000 square feet • 15% of units affordable; typically 11.5% after application of density bonus • Density bonus: 30% increase in unit count and floor area • Affordability targeted to households at 65% AMI • Eligibility up to 80% AMI • Affordable units provided on-site • Permanent affordability through a long-term deed restriction 2

Affordable Inclusionary Units Created to Date • Over 920 affordable units created or under construction • Approximately 200 ownership and 720 rental • Over 815 units completed • Over 100 units under construction or permitted Interior, Aberdeen Lofts 6 affordable homeownership units 3

0 100 200 300 400 500 600 700 [phone removed] FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16 Inclusionary Housing Stock Growth FY00-FY16 Rental Ownership Total 4

0 20 40 60 80 100 120 140 160 180 200 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Inclusionary Housing Production FY2000 – FY2016 5

11% 44% 38% 7% Studios 1 Bedroom 2 Bedroom 3+ Bedroom Inclusionary Units Created to Date by Bedroom Size 6

0 20 40 60 80 100 120 140 160 180 200 FY 10/FY 11 FY12 FY13 FY14 FY15 FY16* Number of Households Leased in Affordable Inclusionary Units FY 2010 - FY2016 7

2016 INCOME LIMITS • Low Income Less than 50% AMI •Moderate Income 50% - 80% AMI •Middle Income 80% - 120% AMI HH Size 50% AMI HUD 80% AMI City 80% AMI (for IHP) 100% AMI 120% AMI 1 person $34,350 $51,150 $54,960 $68,700 $82,440 2 person $39,250 $58,450 $62,800 $78,500 $94,200 3 person $44,150 $65,750 $70,640 $88,300 $105,960 4 person $49,050 $73,050 $78,480 $98,100 $117,720 8

Final Report Cambridge Inclusionary Housing Study March 27, 2016 9

Study Approach •Review of Cambridge’s current inclusionary housing standards • Review of changes in Cambridge's socioeconomic profile, income diversity, and housing affordability since 1998 •Comparison to other inclusionary programs for best practices •Economic analysis of current and alternative set aside percentages on typical residential developments •Recommendations and policy options 10

Socio Economic Analysis • Housing costs (rental and ownership) have outstripped increases in income •Changes in income profile of community between 2000-2011 • Less than 50% AMI Stable • 50% - 80% AMI Declined • 80% - 100% AMI Declined • 100% -120% AMI Stable • More than 120% AMI Increased 11

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Less than 50% 50-80% AMI 80 - 100% AMI 100 - 120% AMI Over 120% 2000 2011 Changes in Distribution of Households by Income 2000-2011 12

Comparison with Other Inclusionary Programs • Cambridge’s inclusionary standards are predictable • Approximately half of the communities surveyed offer a density bonus; Cambridge’s bonus is higher than all but one • Set aside percentages range from 5% - 27%. Percentages above 20% are for off site units or targeted to higher income levels • Cambridge is highly successful in creating inclusionary units on site • Cambridge units are equal in quality, location, and size to market rate units 13

Prototype Tenure Units Prototype 1 Rental 300 Prototype 2 Rental 300 Prototype 3 Rental 100 Prototype 4 Rental 25 Prototype 5 Ownership 40 Prototype 6 Rental 6 Prototype 7 Ownership 6 Economic Analysis • Analyzed 7 prototypes (typical developments), ranging from 6-300 units. 14

Economic Analysis - Set Aside Scenarios and Target Incomes • Scenario 1 – 11.5% of units for low/moderate income (typical project under current IHP standards) • Scenario 2 – 15% of total built units for low/moderate income plus 5% of units for middle income • Scenario 3 – 20% of total built units for low/moderate income • Scenario 4 – 20 % of total built units for low/moderate income plus 5% of units at 100% of AMI Analyzed prototypes under 4 different inclusionary set aside scenarios 15

Study Recommendations Set Aside Percentages and Target Income Levels • 20% of total built units to be affordable • Rental: maintain eligibility of up to 80% AMI or expand eligibility to include 5% of units at 100% AMI • Ownership: increase eligibility up to 100% AMI 61 Bolton Street – homeownership, 20 units, 2 units 7 Cameron - rental, 37 units, 4 inclusionary 16

Study Recommendations Use of Density Bonuses • Maintain 30% density bonus • When warranted for specific projects, enact zoning ordinance changes allowing for additional affordable units beyond inclusionary standards 17

Study Recommendations Creation of Family-Sized Units • Create larger units • Set a percentage of three bedroom units or • Calculate set-aside percentage by square feet or per bedroom • Studio units • Disallow studio units or structure at lower cost than one bedroom units 18

Study Recommendations Threshold Project Size and Fees for Partial Units • Consider lowering the unit or square foot threshold for inclusionary units below 10 units or 10,000 square feet. • When calculation of inclusionary units results in a fractional unit, consider contribution equivalent to value of the fractional unit. 19

Study Recommendations Location of Affordable Units/Buildings with View Premiums • Consider flexibility to designate less premium units in exchange for an increase in affordable units • Accomplish by quantifiable standards or by mutual agreement 20

Study Recommendations • Residential versus commercial development Balance impacts on future commercial and residential land uses • Applicability of provisions Apply changes to new projects • 21

Next Steps • Community review and discussion of study and recommendations – underway •Meetings with community groups, business groups, developers underway •Affordable Housing Trust •Planning Board • City Council Housing Committee hearings May 18 - Hearing for community comments and questions May 31 - At a second meeting study consultant to give a presentation and answer questions Zoning Amendment to be drafted based on desired set of policy changes. 22