Pivotal Worcester Inclusionary Zoning Vote: Everything You Need To Know

WORCESTER, MA — It's been nearly a year since former Worcester city manager Ed Augustus Jr. sent city councilors a proposed inclusionary zoning ordinance. On Tuesday, councilors will likely vote to make it law.

But over the last 10 months — Augustus' proposal first went to councilors in May 2022 — the proposal has been subject to edits, public comments and other suggestions, both by affordable housing advocates that want higher requirements for property developers, and by business-friendly groups like the Worcester Regional Chamber of Commerce that don't want to squeeze developers.

Here's a primer on inclusionary zoning (IZ), what's at stake and what might happen this week.

What is inclusionary zoning?

The word "zoning" might make your brain shut down, but the concept of IZ is simple: IZ laws require developers to set aside a share of units in a given development as affordable for people earning less than the local median income.

If developer X wants to build a 100-unit development, an IZ ordinance would require them to (for example) set aside 10 units as affordable in order to get permission to start construction.

From there, it gets a little more complicated because you start getting into concepts like area-median income and different levels of affordability.

Area Median Income (AMI)

AMI is a key component of IZ. Each year, the federal Department of Housing and Urban Development determines what the AMI is in every place across the country, including Worcester. Under IZ, apartments rent at rates that are affordable for people earning less than the local AMI.

Here's an example: Let's say the local AMI is $50,000 and the local IZ ordinance requires a developer set aside units as affordable for people earning 60% of the local AMI. That means someone earning $30,000 (60% of $50,000) could reasonably afford the cost of rent.

What's Worcester's proposal?

There are two versions of IZ on the table. The one with higher goals for property developers is backed by a group called the Worcester Together Affordable Housing Coalition (WTAHC). The other is the version sent to councilors last year by Augustus, often referred to as the "city's proposal."

The key difference between the proposals: the level of affordability. The WTAHC proposal would require new developments to include some units affordable for people earning 60% of AMI. The city's proposal would allow developers to avoid building any 60% AMI units while still following the law.

Steve Teasdale, the executive director of the Main South Community Development Corporation, has told councilors that the coalition's proposal has fewer overall affordable units in exchange for the 60% AMI requirement. Why? There's an element of "classism" in newer developments aimed at keeping low-income people out: developers may want to avoid 60% AMI units even if offered incentives because new buildings are packed with amenities to attract wealthier renters, he has said.

Here are the main differences:

The WTAHC began its advocacy around the IZ ordinance asking for a flat 60% AMI rule — no 80% AMI option included. But the coalition amended that last year to the 5%-5% split seen above.

*Payments go to the city's Affordable Housing Trust Fund, a pot of money developers can tap into to build affordable units.

**District 1 Councilor Sean Rose has proposed including a requirement for accessible units as an amendment to the city's proposal.

What are the arguments?

Affordability versus development, basically.

Worcester has historically been pretty affordable, but rents have soared recently, just like almost every other city of modest size in the nation. Look no further than recent developments in Worcester with "market rate" units: the relatively new 145 Front St. building features 515 square-foot studios for over $1,600 per month. The Edge at Union Station — designed for local college students — is renting two-bedroom apartments for over $1,400 per-bedroom. Not for the whole unit, just for a bedroom in the unit. Farther out, units in historically inexpensive neighborhoods have even jumped. How about $2,400 per month for a two-bedroom on Grafton Hill?

So the coalition's argument is that developers building new buildings in Worcester need to provide affordable units so people who earn less can afford to live here. Almost every new development receives some type of public assistance, be it a property tax break from the city or a direct subsidy from the state via programs like the Housing Development Incentive Program.

Affordable apartments don't return as much revenue as full-strength, market-rate units. Business groups fear that if the government requires developers to include less profitable units, they might not build the building at all. City officials are also concerned that, even if a developer wants to build under a stricter IZ ordinance, a bank won't lend them the money if the numbers don't add up.

And so if developers don't or can't build, there will be fewer apartments on the market, and that will keep rents high, city officials and business groups have argued. The real crisis, they say, is the housing supply shortage.

"We can't regulate our way out of the affordability crisis," Chief Development Officer Peter Dunn said at a recent council meeting.

Dunn has also said state officials frown on IZ policies because they also fear such laws will slowdown housing production. That state has tried to boost housing product through a variety of efforts, including a new law requiring up-zoning in communities that have or are close to MBTA stops.

There are some 3,000 new rental units planned or under construction just in the downtown and Canal District areas. Many factors, like a banking crisis or recession, could slow development in Worcester apart from IZ.

Will it pass?

The ordinance will most likely pass in some form, but it faces a higher bar than most council votes.

The ordinance requires a super majority of eight votes out of 11 councilors. Each councilor largely favors passing the ordinance, but in different ways.

At-large Councilors Thu Nguyen and Khrystian King, and District 5 Councilor Etel Haxhiaj and District 4 Councilor Sarai Rivera favor the coalition's proposal. Other councilors favor the proposal originally suggested by Augustus. Mayor Joseph Petty, perhaps the most powerful voice among councilors, has already backed the city's IZ proposal.

Getting an IZ ordinance on the books — one that could be strengthened in the future — might be preferable to the affordable housing coalition than having nothing at all.

Has anyone else looked at this?

Yes: The first real vote on the IZ proposal happened in November when the Worcester Planning Board recommended the city council go with the coalition's 5%-5% split compromise.

The proposal has also been brewing in the city council's Economic Development Subcommittee for months. That committee voted 2-1 earlier this month to recommend the 5%-5% split. That committee's chairman, District 1 Councilor Sean Rose, was the sole "no" vote. At that meeting, he asked the city to set aside $1 million from the city's federal ARPA allotment in rental assistance as a tradeoff.

There's also a recent study by researchers at the Harvard Mossavar-Rahmani Center for Business & Government on IZ, specifically in Massachusetts. The 41-page report has a lot of criticism for IZ, but also says that the policies do not necessarily slow down housing production.

When, where?

The city council meeting begins at 6:30 p.m. Tuesday. The WTAHC is planning a rally around 6 p.m. outside City Hall before the meeting starts.