Nashua Planning & Economic Development Committee: Inclusionary Zoning Discussion (August 27, 2025)

The Planning and Economic Development Committee met on August 27, 2025, at 7:18 PM in the Aldermanic Chamber, with technical difficulties resolved, to discuss proposed inclusionary zoning (IZ) policies as part of the city's land use code recode. Consultants Russ Preston (Principal Group) and Kyle Talente (RKG Associates) presented financial feasibility analyses and policy recommendations. The committee offered feedback on key elements, including set-aside percentages, AMI targets, density bonuses, off-site units, and payment in lieu options, but took no formal votes.

Discussion Items

• Presentation by Kyle Talente (RKG Associates):

  • Presented a financial feasibility model for inclusionary zoning, analyzing required density bonuses for different set-asides (10%, 15%, 20%) and AMI thresholds (80%, 70%, 60%, 50%) to achieve market-rate returns.
  • Recommended a 10-unit minimum threshold before IZ requirements apply, off-site units with a half-mile proximity requirement within city limits, development standards ensuring equal quality and size between affordable and market-rate units, annual compliance monitoring, and a payment in lieu option.
  • Proposed rental set-aside tiers: 10% (10–49 units, split 7.5% at 80% AMI, 2.5% at 60% AMI), 15% (50–100 units), and 20% (100+ units) in the downtown overlay; lower percentages (5%, 7.5%, 10%) for the rest of the city. For ownership, recommended 80% and 100% AMI tiers.
  • Compared two payment in lieu approaches: value gap (e.g., $125,000 per unit in downtown) vs. construction cost (e.g., $250,000+), noting the value gap is financially neutral for developers but insufficient to build a new unit, while construction cost provides full funding but significantly impacts developer returns.

• Committee Questions and Feedback:

  • Alderman Clemens raised concerns about payment in lieu, arguing that if developers opt in for density bonuses, they should build affordable units on-site rather than cash out, and suggested requiring a special permit for opt-out with hardship justification. He also questioned off-site unit timing and requested concrete timelines.
  • Alderman Kelly asked about the value gap calculation (10-year hold period), annual updates to market conditions, and potential for off-site builds to concentrate affordable units; she expressed concern about payment in lieu paralleling sidewalk in-lieu failures.
  • Alderman Thibodeau inquired about unit size/quality parity, noting different business models and the need for flexibility in unit assignment over time.
  • Alderman Gobaya emphasized the importance of developer feedback and noted that the committee is still learning; he suggested future work sessions to review the full draft code.
  • Alderman Clemens and others noted that state law prevents mandatory IZ, so the policy is opt-in via density bonuses.
  • Chair Alderman Mora summarized feedback as needing regulation on opt-out criteria, off-site timing, and payment in lieu triggers, but Alderman Kelly cautioned that the committee is not unanimous and the feedback is not a formal directive.

• Next Steps:

  • Consultants will incorporate feedback and return with updated proposals, possibly in September.
  • A virtual public office hours session is scheduled for September 10, 2025, from 5–7 PM via the Recode website.
  • The full recode document, including IZ, will be presented as one piece of legislation for first reading, with further committee work sessions anticipated.

Key Outcomes

• No votes or formal decisions were made. The committee provided informal feedback to guide revisions to the inclusionary zoning proposal.
• The consultants will refine the policy, including provisions for off-site unit timing, annual market adjustments, and special permit requirements for payment in lieu.
• The next meeting on the recode is expected to address site standards and other remaining topics.