 CDD has paid the consulting firm RKG to address the economics of inclusionary housing. And has written a report that it is asking City Council to support. Key Takeaways:
It is important to note at the outset that 20% inclusionary does work well in some cities, and Portland Maine is one of these. We also know that in some Cambridge projects , for example 55 Wyman, 20% inclusionary also was seen by their developers, DND to "pencil out." The project is too large for this location, but that is a separate matter.  source: https://www.portlandmaine.gov/housing-dashboard-0 RKG Associates and their Report. Cambridge’s new RKG Associates report is useful for one purpose: it tests how selected inclusionary-housing rules affect hypothetical development projects under assumed market conditions. But it leaves out far too many factors and is not a viable assessment of the City’s housing situation, the new C-1 MFHO framework, or the effects of adding housing across Cambridge. [2][3] That distinction matters. RKG’s central finding is that interest rates, construction costs, building type, and broader market conditions weigh more heavily on project feasibility than any one inclusionary rule. They maintain that no single policy change is a game changer and reducing the affordable set-aside from 20% to 10% makes only a limited difference in the model.. Even the largest modeled tool, a temporary property-tax abatement, does not make every situation work. In short, their findings do not establish that inclusionary housing caused the slowdown or that weakening it will produce the homes Cambridge needs. [2] CDD appears to have followed a very narrow assignment CDD’s June 2025 scope called for a legal and socioeconomic case for the Inclusionary Housing Ordinance, a financial-feasibility analysis, development prototypes, interviews with real-estate and construction professionals, and recommendations. It also said the study should compare Cambridge’s policy with similar programs in comparable communities. The scope did not set out a community-engagement process or require a broad review of environmental, transportation, infrastructure, public-health, or urban-design effects. [1] That was an assignment choice by CDD. The report’s limits are not only a matter of what RKG did; they also reflect what CDD asked RKG to deliver. CDD’s own scoping memo recognized that parking costs, building decarbonization, university land holdings, and open-space priorities affect development conditions. [1] Yet the final study did not evaluate those factors as citywide impacts of the policy choices, nor were they asked to address impacts on other city priorities such as environmental, infrastructure, transit, neighborhood, and preservation impacts of new housing. [2] The RKG interview pool illustrates the gap. RKG reports one-on-one interviews with 17 for-profit and nonprofit residential developers, realtors, and other housing-industry stakeholders in March and April 2026. [2] Those interviews can inform a pro forma. They cannot stand in for residents, tenants, affordable-housing applicants, architects, civil and transportation engineers, transit providers, environmental and climate specialists, historians, social-policy researchers, or university housing staff. The latter’s experiences and expertise should have been part of a study meant to guide citywide housing policy. Parking and Rental vs Condos are part of the model; Environment, Transportation, Infrastructure, Family Housing Needs are not It would be inaccurate to say parking was wholly absent. RKG modeled the cost of surface, above-ground, and below-ground parking, including zero-parking scenarios. It also included some design, engineering, environmental, utility, insurance, and property-tax costs in its financial assumptions. [2] But pricing a parking space is not the same as assessing parking need and policy. The report also does not measure how new development affects curb demand, traffic, cycling, delivery, transit capacity, emissions, or access for people with disabilities. Nor does the study assess whether water, sewer, electric service, schools, public safety, parks, and other infrastructure can support projected growth, or what those improvements would cost and who would pay. It does not assess building emissions, embodied carbon, heat, flood resilience, or open-space impacts as outcomes of the choices under review. [2] And while it notes that condos provide greater return than rentals, no where does it mention the large number of rentals that students and young professionals are especially interested in, particularly if they are more affordable than present day ones. CDD should have commissioned that broader work before presenting changes to the Inclusionary Housing Ordinance as a complete answer to Cambridge’s housing challenges. A project can look more feasible in a spreadsheet while shifting costs onto public infrastructure, transit, the climate, or neighboring residents. Cambridge needs the full ledger. Does a citywide zoning change needs a citywide solution? Rather than following Cambridge’s new citywide MFHO zoning ordinance geography, RKG divided Cambridge into five analytical “submarkets” to model differences in rents, sale prices, and land costs which together serve as market-analysis areas. [2]. The RKG report includes five submarket designations
 Above map from RKG of differing Cambridge submarkets Among RKG’s findings are the following: Rents are highest submarkets 4 and 5 — reflecting proximity and access to Harvard, MIT, and downtown Boston. Submarket 1 (North Cambridge & Cambridge Highlands) rents are considerably less than 3, 4 and 5 (central Cambridge). Submarket 1also is seen to face substantial financial challenges in every scenario modeled, including better performing prototypes elsewhere and conditions here have not triggered inclusionary requirements. Alas Cambridge is not able to follow these notable neighborhood variables in terms of policies without possibly changing the MFHO itself. Stated another way, while the RKG report addresses core differences in our various neighborhoods in terms of housing conditions, because Cambridge instead changed its zoning for citywide approach the serious subarea impacts in the RKG report are deemed irrelevant. [3] Family-sized homes are a housing need, not just an investment return assumption For rental prototypes, RKG modeled a mix of 10% studios, 80% one-bedrooms, and 10% two-bedrooms. It did not model a larger family-friendly two- and three-bedroom rental mix. RKG tested removing that three-bedroom requirement and found only a small modeled financial gain: roughly 0.10 to 0.30 percentage points in internal rate of return and 0.04 points in return on cost. [2] What they never addressed is the city’s goal to make housing more affordable to middle income families. RKG also was not required to address the problem of housing lost in the MFHO as more affordable housing units are being demolished. In short this is a sensitivity test about investor returns, not a study of what Cambridge households need or whether the modeled mix meets demand from families, multigenerational households, or people who need an additional room. [2] CDD did not include eliminating the three-bedroom requirement among the options it identified as having the most potential so this RKG decision is strange. [3] Cambridge instead should protect, promote, and track the supply of two- and three-bedroom affordable homes rather than let a small, modeled return gain settle the question. The RKG report also does not answer whether by-right new zoning in the Citywide Multifamily Housing Ordinance (MFHO) is necessary to making our housing policy work. The fact that RKG does not address this issue at all suggests that it is relatively inconsequential and should be dropped. Nor does RKG greater environmental challenges in areas with greater flooding risk, or equity and at risk areas where higher heat island impacts are likely. RKG also does not compare design outcomes before and after the MFHO Amendments, evaluate impacts of the public review process, or measure completed homes against the promises made for the new zoning. [2] By-right rules might reduce some of the delay and developer uncertainty, but they also increase neighborhood uncertainty and change where and how the public experiences these changes. If new as-of-right buildings are producing weaker design this is not a positive change for neighbors, neighborhoods, or for the city. Universities and office demand belong in the analysis RKG recognizes Harvard and MIT as employment and institutional anchors that influence rental demand. But it does not separately analyze student housing, campus bed capacity, recent university expansions, off-campus student renters, or whether universities should house more students in dormitories. [2] Nor does the public scope they were give by CDD require a review of university plans or a consultation with university housing officials and nearby residents. [1] The same could be said for our large employers. In some other progressive cities large employers are asked to help address new housing needs. The RKG study also does not test how increased office vacancies (some 30% in Kendall Square now), changes in hiring, or shifts in the number of workers and students affect our housing demand. [2] The City should address and publish consistent data on office occupancy, jobs, enrollment, campus beds, and off-campus renting before treating demand as fixed. The point is not that offices or universities can entirely eliminate the need for new housing. It is that Cambridge should model actual demand, including the institutions that occupy so much land and shape so much of the local rental market. It should also ask what role university-built dormitories could play in meeting student housing needs. A real peer-city comparison is still missing The full RKG report also does not appear to discuss San Francisco—or Portland, Vancouver, Chicago, or Minneapolis. [2] San Francisco appears in CDD’s October memo, which also gives short summaries of Boston, Chelsea, and Malden. [3] That is context, not the broad peer-city analysis promised in CDD’s June scope. [1] CDD should instead provide a transparent comparison that explains why each peer was selected and compares actual outcomes as well as ordinance language. Portland, Maine could offer a closer regional point of reference; Chicago and Minneapolis could broaden the North American comparison; Vancouver, British Columbia could raise useful questions but needs careful adjustment for its different government, tax, and housing-funding systems. The study should compare affordability requirements, on-site and off-site delivery, fees, public subsidies, parking rules, transit access, university housing, construction costs, and family-sized production. A list of cities without comparable data is not enough. Payments in lieu could weaken mixed-income housing RKG tested allowing a developer to pay a fee instead of providing up to 50% of the required affordable floor area on site. [2] CDD itself notes the trade-off: fewer affordable homes would be built alongside market-rate homes, although the Trust might use the money to support all-affordable housing later. CDD also warns that land and funding opportunities limit how quickly the Trust can turn fees into homes. [3] That delay matters. On-site inclusionary homes put households with different incomes in the same development and neighborhood. A fee may eventually fund valuable affordable housing, but it can also move those homes elsewhere and later. That creates a real risk of less integrated housing; it does not mean every fee automatically produces segregation. Before endorsing buyouts, the City should publish where the money would go, how soon it would produce homes, how fees would be set and updated, and how many on-site affordable homes would be lost under each scenario. “Cost neutral” needs a full accounting Affordable homes are not automatically cost-neutral or cost effective. Restricted rents reduce revenue, while construction, utilities, insurance, maintenance, taxes, and replacement reserves still have to be paid. RKG’s operating-cost assumptions are based in part on developer interviews; the report says interviewees estimated annual operating expenses of $12,000–$14,000 per unit and considered expenses similar for market-rate and inclusionary units. [2] That is an input to a pro forma, not proof that every project has the same costs or that public funding gaps disappear. The City should show, project by project, which federal, state, local, and private funding sources are available, which have been lost or reduced, and what gap remains. It should also show actual utility costs and energy assumptions. Likewise, renters generally do not receive the property-tax bill directly, and property taxes remain a building expense. The City should disclose those arrangements and address them in financial assessments. RKG proposed several ways of changing Inclusionary Requirements RKG did not choose a single new set-aside rate. It recommended considering a reduction from Cambridge’s current 20%, and tested rates of 17.5%, 15%, 12.5% and 10%. Its conclusion was that lower rates could improve some project returns but were not a game-changing solution. RKG also suggested:
But there are problems with RKG’s answers based in part on the incomplete questions they were asked to explore. A smaller floor area set aside in smaller projects would mean that the majority of new neighborhood units would not have families in them if this meant only studios or 1 bedroom units are added. Smaller affordable units would have the same negative impact.Fees rather than on-site affordable housing as noted above would promote greater housing segregation. Another factor RKG addresses is the cost of steel versus wood construction but questions remain. One national cost model using 2018 prices found steel-framed buildings among the least expensive options above four stories. Another comparison of six-story designs found wood about 12% cheaper than steel—showing how much costs depend on the design, location, labor, insurance, and other project details. [5]At the same time, eight stories does show up as a cost transition in one study, but the increase was tied mainly to elevators, building systems, and foundations. CDD revised RKG’s outcome suggestions—and changed the geography CDD did not endorse many RKG options, and those it did chose to support are problematic. Its memo identifies three options as having the greatest potential: lower the affordable set-aside, permit partial in-lieu payments, and offer temporary property-tax abatements. The problem with the latter is that any tax abatement (even temporary) will likely mean even higher taxes for current residents and commercial property owners. CDD’s later recommendation menu also includes a revolving-loan program, but it did not endorse RKG’s proposed $50,000-per-inclusionary-unit subsidy; the memo says the Housing Trust had opposed that approach and suggests exploring loans or medium-term equity instead. [2][3] CDD’s staff proposal also differs from a simple citywide reduction. It recommends temporary changes, with review after four years, targeted outside C-1 and toward mixed-use corridors and areas of higher growth. The memo discusses additional relief for projects of six stories or more and greater relief for some projects over eight stories. This would mean that the corridor sites most likely to be able to host taller buildings (and more inclusionary units) would now be able to have many fewer inclusionary units. At the same time CDD notes that to change the program substantially would make only small improvements to financial performance; it also rejects making inclusionary units smaller, citing minimal financial effect and the goal of equivalence between affordable and market-rate homes. [2][3] Below is the CDD chart of their recommendations  Responses to this proposal Jane Peteron at Cambridge Day has written an overview of this proposal contacting various civic group leaders for their comments. [6] Justin Saif of ABC and Suzanne Blier of CCC both offered skepticism of the proposal but their approaches are quite different. ABC supports city tax payers providing for profit developers with the funding to add affordable units. Since some developers are making 10s of millions of dollars on their projects and are not paying any of the costs of needed infrastructure CCC does not support this. We also wonder why it is that CDD's and RKG's expansive analysis comes to citizens and councillors so late, just days prior to the vote at Council on this critical subject. This too speaks to how non-serious the city is to addressing the importance of housing and other subjects in Cambridge. What CCC asks the City to do next
Based on the gaps in the scope and study [1][2][3], CCC asks CDD and the City Council to:
RKG’s report can help answer some narrow questions about project economics. Cambridge needs the rest of the evidence before it trades away affordable homes, family-sized units, or public oversight in the name of feasibility. Sources [1] CDD, June 30, 2025 memo outlining the proposed Inclusionary Housing Study scope (PDF) [2] RKG Associates, Cambridge Inclusionary Housing Analysis (2026, PDF) [3] CDD, Inclusionary Housing Study and CDD Recommendations on the Inclusionary Housing Ordinance (October 2026, PDF) [4] Cambridge RFP #30535 solicitation listing (COMMBUYS) [5] https://lewis.ucla.edu/2024/09/04/78-building-height-and-construction-costs-with-anthony-orlando/?utm_source=chatgpt.com [6] “Community, developers have mixed response to new inclusionary options”. by Jane Peterson (10.2.26) Cambridge Day
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