A Cambridge developer is challenging the constitutionality of the city’s 28-year-old inclusionary zoning policy, which requires a 20 percent affordable component in housing developments. iStock photo
Local political circles appear to be solidly convinced of the merits of inclusionary zoning policies, which require private developers to include income-restricted units when building multifamily housing.
Opponents in the real estate industry argue that such policies have boomeranged to stifle development and new housing supply in recent years. Some local political leaders, feeling pressure to take bold steps to address Massachusetts’ stubborn housing affordability crisis, are considering even higher affordability requirements.
Ultimately, courts may settle the debate, studying not the complex and constantly shifting market equations that influence housing costs, but ruling on a simple question of private property rights.
“Inclusionary zoning is a failed policy,” said attorney Paul Johnson of the Pioneer New England Legal Foundation. “It just isn’t accomplishing the goal that the city of Cambridge wanted to accomplish, because the end result if very few things are getting built.”
Johnson represents developer Patrick Barrett III, who seeks to build an 89,500 square-foot condominium building near Inman Square.
Massachusetts Land Court Judge Sarah Turano-Flores is hearing arguments in the challenge of the city’s 28-year-old inclusionary zoning ordinance.
Opponents of inclusionary development also have filed legal challenges in California and Pennsylvania, seeking to reclaim property rights for their clients in the wake of a 2024 U.S. Supreme Court decision.
In Sheetz v. County of El Dorado, justices ruled unanimously that a $23,420 traffic impact fee imposed by the California county for construction of a home violated the Constitution’s takings clause, which entitles property owners to compensation for government seizures.
Attorneys for the Pioneer New England Legal Foundation argue that inclusionary zoning policies, by restricting rents or sales prices on a percentage of units, amount to an unconstitutional property taking.
“Our view is that the [Cambridge] inclusionary zoning ordinance represents a taking of certain property rights of the owner, and they have to provide compensation,” Johnson said.
Debating the IZ Track Record
Since 1998, Cambridge’s inclusionary zoning ordinance has sought to guarantee that a percentage of new housing construction is set aside for lower-income households. It currently applies to projects with 10 or more units.
Like the rest of Greater Boston, Cambridge real estate prices have spiraled in recent decades, while construction starts have dropped since the pandemic.
Cambridge increased the minimum affordable housing component from 15 to 20 percent of a housing project’s net floor area in 2017. In the years immediately following the change, building permits rose slightly to nearly 1,000 in 2018 and 2019, before cratering during COVID. Activity bottomed out in 2023, with just 327 permits issued, before rebounding to 607 in 2024.
In a reply memorandum filed last week, attorneys representing the city noted that Cambridge commissioned three studies in 1997, 1998 and 2016 on the rationale for inclusionary zoning. The studies illustrated the “essential nexus” and “rough proportionality” standards of Supreme Court rulings upholding regulations on real estate development, the reply stated.
Approximately 1,600 housing units have been created since 1998 in Cambridge under the inclusionary policy.
Barrett’s case centers on a potential 89,500 square-foot condo project on Columbia Street with an estimated cost of $57 million, including land acquisition.
The project would replace five buildings containing 20 apartments with an 89,500 square-foot condo building.
Diminished income from the affordability restrictions on 20 percent of the condos totals $11.4 million, which entitles Barrett to compensation, the complaint states.
What Makes a Good Policy?
When inclusionary zoning policies were first emerging in cities such as Cambridge and Boston, a how-to guide issued by Massachusetts Housing Partnership advised local officials to consider five key issues: local housing demand, land availability and cost, current development pipeline, housing development opportunities without zoning restrictions, and whether inclusionary zoning would impede development. Such questions should be addressed by “nexus studies” that would help policies withstand legal challenges.
But local officials don’t always heed studies that warn of negative effects, said Barrett, the Cambridge developer.
“The political time we’re living in is terrible. Nobody is going to be anxious to [reduce the affordability requirements],” he said.
Before Boston raised its inclusionary zoning requirement from 13 to 20 percent in 2024, a consultants’ study warned that it would make construction of for-sale condominium projects financially unfeasible in Dorchester, Hyde Park, Jamaica Plain, Mattapan, Roxbury and West Roxbury. The policy, known as “IDP” in city jargon, took effect in October 2024 at a time when inflation and higher interest rates also were making projects harder to finance.
A 2023 study by the Harvard Kennedy School struck some middle ground, emphasizing the need for policies to be tailored to local market conditions or even specific neighborhoods. It focused on the track record of inclusionary policies in Revere and Lynn, a pair of Gateway Cities that saw an uptick in housing development in the previous decade.
Developers and municipal officials told researchers that a strong existing real estate market is necessary for inclusionary zoning to succeed. It recommended offering incentives to developers, such as density bonuses or lower parking requirements. Excessively complex policies created loopholes or prevented smaller developers from entering the market, the report stated.
“Parking and density bonuses were the two biggest carrots that communities successfully implemented to push alignment with the [inclusionary zoning],” said Brian Iammartino, one of the report’s authors and principal at development firm btcRE. “We strongly encouraged the cities to think about the tradeoffs.”
The report also was skeptical of policies driven by decisions in surrounding communities.
“It’s a common thing: Let’s look at what other towns and cities are doing. But you have to think about what’s really appropriate here,” Iammartino said.
Steve Adams
But officials in some local communities are considering even more stringent requirements for affordability, as major housing development proposals emerge.
Waltham, Salem Developments Trigger Another Look
In Salem, inclusionary zoning is expected to be a key issue during discussions of one of the largest projects in the city’s history: a redevelopment of the Shetland Park business campus that could include 1,200 apartments.
Developer and owner Prime Group has offered to exceed Salem’s inclusionary zoning rule, which requires 10 percent of units to be reserved for households earning a maximum 60 percent of area median income. Saratoga Springs, New York-based Prime Group sweetened the pot by offering an additional 10 percent of the units to be made available for households earning 80 percent of AMI, but some councilors indicated they would push for more concessions.
Waltham city councilors recently discussed updating the city’s inclusionary policy, which was enacted in 2019, and requires a 20 percent affordable component at large projects. Developer BXP is seeking to rezone three office parks in the city for major multifamily projects.
“Affordable housing is a crisis in our city and we need to have a strong policy,” Waltham City Councilor Cathyann Harris said last week during a presentation by BXP executives.
