Consultants from Arcadia reviewed a second tranche of recommendations to Newton City
ds inclusionary zoning (IZ) policy and answered committee questions about affordability tiers, payment-in-lieu calculations and how to treat small projects.

Why it matters: The IZ ordinance determines how many affordable units a new development must provide, the depth of those units
ffordability and whether small projects can pay money instead of building on-site units. Changes affect housing availability, the city
ds housing trust revenue and how development is financed in Newton.

What consultants presented and recommended
- Tier simplification: Arcadia recommended removing the existing "tier 2" (units targeted at 80
110% AMI) and consolidating requirements around a primary tier targeted at or below 80% of AMI (average 65% AMI where a blend is used). The change reduces complexity and avoids creating units that are not financially viable in current market conditions.

- Bonus density: The consultants tested the bonus-density math and found the current bonus structure (market-rate units granted per affordable unit) is unlikely to be used in current market conditions because the valuation gap requires developers to provide more market units to justify one affordable unit. Recommendation: leave the bonus-density section as written now, to avoid destabilizing the market and revisit later if market conditions change.

- Cash-in-lieu methodology (TDC): The city
ds current TDC (total development cost) method produced a $650,000 cash-in-lieu figure; consultants recommended keeping the TDC approach and the $650,000 figure for now rather than changing to a value-gap or construction-cost approach. They argued that raising the cash amount now could push more developers to change their project sizes and reduce building activity; keeping the current number preserves options and matches market expectations.

- Small projects (4'0 units): The consultants recommended allowing projects below a negotiated threshold to make a cash payment rather than deliver on-site units, because delivering and administering single affordable units in very small market-rate projects imposes disproportionate administrative and operating burdens. The consultants presented numerical examples (a 15-unit project, partial-payment formulas and the difference between rounding up to a whole unit versus paying a share of a unit) to illustrate the relative cost implications.

- Off-site development and unusual net benefit: Arcadia recommended clarifying off-site options by defining what constitutes an "unusual net benefit" to the city (examples: additional set-aside, deeper affordability, proximity to transit) and constraining off-site units to defined geographies or proximity to the original project (for example, the same neighborhood or a half-mile radius).

- Elder housing with services: Consultants noted the financial gap between providing units at low AMI thresholds and paying for embedded medical/support services is large and likely to grow. They recommended allowing cash-in-lieu for these specialized projects and directing those funds to the housing trust for strategic use, while noting the trust will need capacity to deploy the funds to produce service-rich projects.

Committee questions and concerns
- Councilors pressed staff and consultants on geographic equity (avoid concentrating affordable units in certain neighborhoods) and on the risk that cash payments may not be translated into actual units without strong trust governance. Several councilors favored keeping on-site units where feasible; others argued the housing trust can leverage cash to produce larger, more efficient projects.

- Councilors asked about condo vs. rental projects for smaller developments and requested data showing the recent size distribution (how many small projects are condos vs. rentals) so the committee can judge whether a cash-in-lieu option for 4'0 units would push projects to avoid IZ obligations by remaining under thresholds.

Decision and next steps
- The committee held items 44/24 and 45/24 for further work and asked planning staff and the consultants to return with a consolidated draft ordinance that addresses: precise set-aside percentages after tier consolidation, the July TDC update and whether to allow cash-in-lieu for projects in specified small-size bands (with specific numerical examples), and stronger language tying cash for specialized units (elder housing with services) to housing-trust deployment rules or restricted trust buckets.

Ending: Staff and Arcadia will produce a combined set of recommended ordinance amendments and data on recent small-project types; the committee will consider the consolidated draft and legal review before scheduling a public hearing.