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City reports MBTA‑communities compliance and economic analysis finding inclusionary zoning affects feasibility in current market
Summary
City staff reported that Worcester is compliant with the MBTA Communities law and presented a third‑party economic feasibility analysis showing that inclusionary zoning requirements, combined with current construction and financing costs, reduce expected returns for many housing project types.
City staff reported that Worcester is compliant with the MBTA Communities law (section 3A of Massachusetts General Laws Chapter 40A) and presented an economic feasibility analysis that assessed how the city’s inclusionary zoning interacts with market conditions.
Peter Dunn summarized the MBTA communities submittal and said that Worcester’s zoning already permits multifamily housing by right in many places, which helped secure compliance without zoning changes. Because Worcester’s inclusionary zoning requires levels of affordability that exceed 10% at 80% AMI in some options, the city commissioned an independent economic feasibility analysis by the Central Massachusetts Regional Planning Commission to confirm whether inclusionary requirements would inhibit housing production.
The analysis modeled a range of project types and sizes — including 12‑unit, 25‑unit, 50‑unit, 100‑unit and 200‑unit rental scenarios and a 20‑unit condo scenario — and tested compliance options (payment‑in‑lieu, 10% at 60% AMI and 15% at 80% AMI). The consultant found that for the majority of the housing types analyzed, financial returns were below typical market expectations under current cost and financing conditions. Dunn emphasized this is not proof that inclusionary zoning alone causes infeasibility; rather, it is one of several variables — others include rising construction costs and higher capital costs — that are depressing project feasibility in Worcester’s market.
Staff and the state review (executive office of housing and livable communities) recommended continuing to monitor market conditions and to use subsidies and incentives — including tax increment exemptions or other gap‑closing tools — where necessary to bridge financing shortfalls and stimulate housing production. Dunn noted the city has over 1,400 units that have been permitted or proposed but stalled for economic reasons.
The committee accepted the informational communication; members voiced support for continuing to use tools to close feasibility gaps. On the informational communication the committee recorded: Councilor Pacillo — yes; Councilor Toomey — yes; Chairperson Councilor Meryl Carlson — yes.
Staff said the feasibility analysis will inform future discussions about zoning, incentives and required affordable unit percentages as the city seeks to advance housing production while remaining compliant with state MBTA communities requirements.
