Newton housing prices have skyrocketed out of reach for many people, so the city is looking at updating its inclusionary zoning ordinance—which requires developers to set aside a certain percentage of units at affordable rates based on the area median income—to meet the demands of the time.

The median income for individuals in Newton is around $70,000. The median household income in Newton is around $160,900, according to the city website.

Newton reevaluates its inclusionary zoning ordinance every five years, and the last reevaluation was in 2019, before the COVID-19 pandemic upended the real estate market along with the rest of the economy.

Last year, the city hired a consulting firm and got input from developers, including nonprofit ones, in the area to see how the existing ordinance could be improved.

“We are recommending a slight change in affordability, to both rental and ownership projects,” Newton Planning Department Housing Program Manager Shaylyn Davis-Iannaco said at a recent Zoning and Planning Committee meeting.

For rentals, the department suggests removing the middle income tier—for tenants earning 110 percent of AMI or less—because those units tend to sit vacant, and vacant units cost developers money.

“Instead, we’re recommending just an ‘affordable tier,” Davis-Iannaco continued.

Under the suggested change, rental developments with seven to 20 units would have 15 percent of units set as affordable.

For developments with 21 to 99 units, 17.5 percent would be affordable.

For developments with 100 units or more, 18.5 percent would be affordable.

“And when I say ‘affordable,’ I mean at an average of 65 percent of AMI,” Davis-Iannaco explained. “So there could be some 65 percent [of AMI] units, some 50 percent units and some 80 percent units.”

For ownership developments, (condominiums, townhouses), the change is similar. The Planning Department is suggesting combining the first two AMI categories (seven to 16 units and 17 to 20 units) into one.

“So for seven-to-20 unit projects, we’re recommending 15 percent [of units] affordable at 80 percent of AMI and no middle income units for projects of those sizes,” Davis-Iannaco said.

For projects with 21 to 99 units, 10 percent would have to be set at 80 percent of AMI, and 7.5 percent of units would have to be 110 percent of AMI.

For projects with 100 units or more, 10 percent would have to be set at 80 percent of AMI, and 8.5 would have to be at 110 percent of AMI.

Currently, developers may, by right, pay a fee in lieu of creating affordable units if the overall project has seven to nine units. The Planning Department suggests expanding that threshold to apply to developments with seven to 19 units.

Councilor Pam Wright said she was concerned that, because there are so many small developments in Newton, removing requirements from smaller projects could have an impact on the city’s affordable housing stock.

Consultant Kyle Talente of RKG said his firm analyzed the possibility of lowering the minimum unit threshold for the inclusionary zoning (it’s currently at seven) based on the value of an income-controlled unit (currently at $650,000) and found that it would create an “undue financial hardship on those smaller projects.”

“Generally, the smaller the project the harder it is to accommodate income-controlled requirements,” he said. “When we did our first analysis five years ago, we saw that you’re able to step up the percentage requirement for larger projects, because they were able to absorb some of those costs.”

Talente explained that in order to make things financially feasible, the city would need to lower the dollar calculation value of an income-controlled unit as well as change the round-up policy (in which requirements with fractional unit requirements are rounded up, so an 8.5 affordable unit requirement would become a nine-unit requirement, for example) to a system where developers can pay a fee based on the fraction of the unit in question.

So if a developer is required to have 8.5 affordable units, they would be able to get by with eight and pay a fee to cover the remaining half unit.

The discussion is ongoing, and any move to change the inclusionary zoning ordinance will have to go to the entire City Council for a vote.

You can watch the entire discussion on NewTV’s YouTube channel.