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Encouraging Private Developers to Lend a Hand for Affordable Housing

The housing crisis in Cambridge has gone from bad to worse -- and the City continues its struggle to find solutions. The petition filed by the Cambridge Residents for Growth Management would build incentives into the zoning code that reward private developers who choose to lend a hand in efforts to create affordable housing for poor and working people in Cambridge.

The petition does not encourage affordable housing through mandates. (Indeed, such a mandate would likely be unconstitutional.) Rather, developers are given opportunities to build slightly denser developments -- and thereby get additional value out of their property -- if they agree to set aside a portion of the bonused density for affordable housing. The most significant density bonus is an as-of-right bonus of twenty-five percent Floor Area Ratio (FAR)* above the permitted ratio for the zoning district. Such bonus allows a developer to build larger buildings -- a reward whose value is apparent when marketing to a space-starved public.

As any developer will point out, an increase in the FAR alone will not necessarily permit a project to take advantage of this density bonus. If the builder cannot also construct more units than the lot size would otherwise permit, or create additional parking spaces to accommodate these buildings, such FAR bonus means little. The petition seeks to give the developer some flexibility in planning how he or she might build the denser development -- including the accommodation of an affordable unit. Where a developer can make a showing of need to the Planning Board, she may be granted relief from certain related dimensional requirements to permit full development of the parcel. At all times after issuance of such special permit, the developer must uphold the affordable housing requirements -- including the set aside of at least fifty percent of the bonused area as affordable units.

When a developer agrees to set aside residential units as affordable, these units become subject to standard affordability guidelines administered by the City's Community Development Department. These affordable housing standards are straightforward and predictable. The first two affordable units created on a project will be for low-income persons -- that is, for persons earning less than eighty percent of the median income in greater Boston. The third unit will be for very-low income persons earning less than sixty percent of the area median income. The fourth unit will be dedicated to a moderate income earning at or less than the median income. Additional affordable units will follow this formula.

In addition, the petition establishes a linkage program for construction in non-residential districts. Under this provision, developments in these areas are subject to a linkage payment based on the square footage of the total project. These payments flow directly to the City's Affordable Housing Trust, which finances the rehabilitation of distressed properties as affordable housing, as well as assists developers of affordable housing by writing down costs and otherwise creating favorable financing for private and non-profit developers of affordable housing.

Because start-up companies and other small businesses are often too cash-poor to make such payments, they are exempt from linkage payments. Further, a developer who includes affordable residential units as a portion of the project receives a credit of the fair market value of the housing subsidy toward its linkage payment.

*FAR (floor area ratio): the size of the building compared to the size of the property. In an area where the FAR is 1.0, a 10,000 sq foot property (approx acre) could have a 10,000 sq ft building. The developer can build a 4-story building, 2500 sq ft per story, or 2-story with 5000 sq ft per story. It could also be a 10-story building with 1000 sq feet per story. If the FAR is 4.0, the same acre parcel could have a 40,000 sq ft building. Parking area within the building does not count, nor does service space, elevator shafts, and HVAC systems

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