This document discusses strategies for linking economic development and social equity through zoning best practices. It advocates for using a points-based performance system for determining community benefits from new development projects. Such a system would involve conducting a community needs analysis, establishing a menu of benefits that developers could choose from to meet identified needs, and awarding points toward incentives like increased density based on the benefits provided in the areas of highest need. The goals are to make the process more predictable for developers while still providing flexibility, and ensure benefits are delivered where they can have the most impact on equity.

1. Linking Economic
Development
& Social Equity. . .
. . . THROUGH BETTER ZONING

2. The New Code
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3. A Neighborhood Plan
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4. Community Support
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9. Zoning Best Practices
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10. Zoning Best Practices
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1. Use Based
2. Performance Based
3. Special District
4. Form Based
2015 Somerville
Zoning Ordinance

11. A Predictable Code
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12. A Predictable Code
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13. A Predictable Code
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14. A Map Based on a Plan
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15. Meeting Expectations for Equity
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• Affordable Housing
• Diversity of Housing Types
• Job Training
• Small Independent Businesses
• Open Space
• Traffic
• Environmental Impact Mitigation
• more . . .

16. One Predictable Form of Equity
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INCLUSIONARY ZONING
1. Density at which
Inclusionary Zoning triggers (# of DU)
2. Percentage required (12.5%, 15%, etc)
3. Income categories provided for
(Extremely Low, Very Low, Low, Moderate)
4. Rate of unit generation for each income category

17. The Method
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Plan . . . . . . . .

18. The Method
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Negotiate . . . . . . . .

19. The Results
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20. What is at Stake?
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21. There Has To Be A Better Way
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22. 09/25/2015
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Somerville is Trying

23. 09/25/2015
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24. A Developer’s Perspective
 Real Estate is a Business
 Large investments in land, buildings, and regulatory entitlement
 Must pay a return for investors, commensurate with risk
 Must make more than you pay your workers, taxes, insurance, debts, etc.
 Competition
 Profit commensurate with creating a valuable good/service for a low cost
 Limits to transparency—If I show the city my pro forma, my competitors see it too
 Real Estate is Very Risky
 Uncertainty about future markets, costs, & regulation
 You may lose all your money
 Must generate a “risk-adjusted” return (10-20%+/-)

25. Predictability and Flexibility
 Predictability
 Reducing risk is very important
 Any thing that I can make more predictable helps reduce risk, improve profits—and
lower necessary risk adjusted returns
 Permitting can be a major source of risk: 3 months or 3 years? Every month we may
be spending $10k-100k’s (holding costs, consultant services, permitting fees)
 Discretionary review is amongst the highest risks in development
 Flexibility
 Flexibility is not the opposite of predictability
 Flexibility is important because real estate markets are constantly changing
 My originally intended use may no longer work, can I change? Bigger building?
Smaller building? Etc.
 Take particular care of use regulations, you might be zoning out the things you want

26. The Pro Forma
 Caveat: the development pro forma could easily be a whole session on it’s
own
 Essentially:
 The pro forma is a model of the expenses and revenues of a project, conducted
prior to starting a project, to understand if it is financially viable
 We make many assumptions, grounded in experience, about expected costs,
revenues, and risks
 If we are wrong about the assumptions—costs more than expected, or revenues
less—the overall profitability suffers, potentially causing the project to fail
 Where community benefits fit in:
 Money spent on “community benefits” comes from bottom line project viability
 Depending on the overall profitability of the project, it may be able to bear some
amount of community benefits, particularly if it improves the value
 Large projects are typically much more able than small infill projects.

27. Thoughts on Community Benefits
 Some philosophical problems I have with the CB approach:
 Implication that new development is per se bad
 Must be ameliorated with community benefits
 Relatedly, assumption that our existing city/town is what we want, and therefore
change is more likely to be bad than good
 Private developers, typically operating before zoning, built that vast majority of the
places that we love
 Places the costs of fixing problems on new arrivals
 Often fixing existing problems
 Where are my (higher) property taxes going?
 Free-rider problem—existing property owners who are not reinvesting benefit
 Reduces the attractiveness of reinvestment, and puts drag on increasing tax base
 Having all effected properties contribute would be fairer

28. COMMUNITY
BENEFITS
TOOLS
FAIR AND EFFECTIVE

29. Perception:
ECONOMIC
DEVELOPMENT
local
government
community
developer

30. COMMUNITY
REQUESTS
Trip Reduction and Traffic
Management
– Bicycle facilities;
– Dedicated shuttles;
– Car-sharing;
– Transit passes;
– Shared parking; and
– Pricing parking separately from housing units (i.e.
unbundling parking)
Affordable and Workforce
Housing
– Housing affordable to households earning up to 80
percent of adjusted median income (AMI) and work force
housing; and
– Located near transit, services and existing job centers
Community Physical
Improvements
– Reconnecting the street grid;
– Quality pedestrian, biking, and Green connections;
– Community gathering and green open spaces;
– Recreational open space; and
– Neighborhood-serving retail and services
Social and Cultural Facilities
– Arts and cultural facilities and uses such as providing
public art and/or gallery space within building; and
– Child-care, senior, or youth facilities as part of the
project
Historic Preservation
– Preservation of historic structures or adaptive reuse to
conserve exterior features

31. WHAT IS WANTED
VS. NEEDED?
More units or increased FAR
Reduced requirements
Access/easement agreement
Streamlined process
“essential nexus”
raw nexus test requires (1) a legitimate state
interest or purpose; (2) a connection between that
interest and the land use exaction chosen to
address it; and (3) a minimal connection between
the impacts of the proposed development and the
land use exaction

32. STATUS QUO
Ad hoc & site specific
Negotiated agreements
Exactions/contributions/
“horse trading”!

33. SITE-SPECIFIC COMMUNITY
BENEFITS AGREEMENTS (CBAS)
Community benefits tools maximize returns on local government investment in
development.
Community benefits programs can transform regions through stronger, more
equitable economies.
Community benefits help generate public support for economic development
projects.
Delivering community benefits is smart business.
CBAs hold developers accountable for their promises to local governments and
residents.
Public input results in better projects that benefit the whole community and attract
local customers.
Community benefits are part of a smart growth agenda.
Time is money, and projects with CBAs often enjoy a faster, smoother entitlement
process.

34. FEE-IN-LIEU
Impact fees
Value capture

35. BENEFIT DISTRICTS
CBDs differ from Business Improvement Districts (BID) in that they are easier to create
and dissolve, emphasize mixed-use districts, and require the participation of all property
owners including those which are public or tax-exempt. CBDs do not require renewal,
and involve the creation of a nonprofit board to guide and implement the Management
Plan, which is the locally defined revitalization strategy. This bill does not replace the
existing BID statute and represents another option for communities to pursue.
MA House Bill 144 & Senate Bill 1070

36. POINTS-BASED
PERFORMANCE
Community needs analysis
Benefits located where most required
Menu of incentives clearly established
Predictability for development community with flexibility

37. POINTS-BASED
PERFORMANCE