The City Manager is requested to confer with the Community Development Department to develop a timeline for the next Inclusionary Housing Study, explore remedies to address the lack of housing starts and provide for consideration draft amendments to the Inclusionary Housing Ordinance, and explore other incentives to encourage developers to include affordable units beyond the requirement voluntarily

O-5 FIRST IN COUNCIL May 5, 2025 City of Cambridge COUNCILLOR TONER COUNCILLOR NOLAN WHEREAS: The Commonwealth of Massachusetts faces a critical housing shortage, with an estimated deficit of 200,000 housing units by 2030, driving high costs that disproportionately burden low- and middle-income households, exacerbate homelessness, and hinder economic growth; and WHEREAS: The City of Cambridge established an Inclusionary Zoning Ordinance (Section 11.200 of Article 11.000 in 1998) requiring developers to include affordable units of new residential buildings with 10 or more units; and WHEREAS: In April 2017, based on a 2016 Inclusionary Housing Study, the City amended the Inclusionary Zoning Ordinance to increase the required ratio of affordable housing to 20% of residential floor area in new residential buildings; and WHEREAS: The 2017 amendment also established a requirement for the City to review and update the Inclusionary Housing requirement after five (5) years to consider changes in demographic characteristics and residential development activity, housing trends, vacancy rates, production statistics, prices for dwelling units, affordability, and the relationship between Inclusionary Housing Projects and all housing in Cambridge; and WHEREAS: The MBTA Communities Act (Section 3A of MGL c. 40A), enacted in 2021, mandates that the City of Cambridge, as a rapid transit community, zone for multifamily housing as-of-right to accommodate 25% of its 2020 housing stock (approximately 13,477 units) in designated districts, to increase housing supply near transit and address the statewide housing crisis; and WHEREAS: The MBTA Communities Act, through its implementing guidelines issued by the Executive Office of Housing and Livable Communities (EOHLC), limits municipalities’ ability to impose inclusionary housing requirements exceeding 10% of units in MBTA-compliant multifamily zoning districts, to ensure that such requirements do not unduly burden development or undermine the as-of-right zoning mandate intended to maximize housing production; and WHEREAS: Cambridge’s Inclusionary Housing Ordinance currently requires 20% of units in developments of 10 or more units to be set aside as affordable, a requirement that exceeds the MBTA Communities Act’s threshold and potentially deterring housing production critical to meeting state mandates; and WHEREAS: Other peer cities have reduced or proposed reducing inclusionary housing requirements to stimulate housing production, including Denver, Colorado and San Francisco, California; and

WHEREAS: Cambridge added only very few inclusionary units in the last three years, underscoring the ordinance’s limited effectiveness in producing affordable housing amidst ongoing housing production challenges; and WHEREAS: The high cost of compliance with the 20% inclusionary requirement, combined with rising construction costs, interest rates, and land values, risks rendering many housing projects economically infeasible, thereby limiting the City’s ability to address the housing shortage and comply with production; and WHEREAS: The City Council has received information on two separate projects of 291 units combined which are in the final stages of permitting and are stalled due to financial infeasibility; and WHEREAS: Given changes in Cambridge’s residential development sector—including the high cost of capital, increases in construction labor and material costs, land costs, other development requirements, and other larger macroeconomic challenges and uncertainties, the development of new residential buildings has become significantly more challenging in recent years, making it advisable that a new Inclusionary Housing Study be undertaken and the immediate relief be provided to support current projects in planning and discussion; now therefore be it ORDERED: That the City Manager be and hereby is requested to confer with the Community Development Department to develop a timeline for the next Inclusionary Housing Study; and be it further ORDERED: The City Manager be and hereby is requested to confer with the Community Development Department and explore remedies to address the lack of housing starts and provide for consideration draft amendments to the Inclusionary Housing Ordinance, based on a review of the affordable housing requirement, and provide guidance on what inclusionary requirements will allow the city to reach housing production goals and be in compliance with the MBTA community act, that any changes would be on an emergency basis, for a maximum period of three years, subject to an economic feasibility study required by the MBTA Communities Act; and be it further ORDERED: That the City Manager be and hereby is requested to explore other incentives, such as tax abatements, density bonuses or expedited permitting, to encourage developers to include affordable units beyond the requirement voluntarily, particularly in zones with no existing density bonus; and be it further ORDERED That the City Manager be and hereby is requested to report back to the City Council on the progress of these directives within 30 days.