Inclusionary Housing Developers

Developments that provide Affordable Dwelling Units (ADUs) under Section 12 of the December 12, 2019 zoning ordinance, must submit the required documentation to Housing Division.

Developers must submit the following documentation to begin the process of drafting an Affordable Housing Implementation Plan (AHIP).

• Project deed;
• Certification of Organization;
• Current project plans that include amenities (vehicle/bicycle parking, storage, etc.)
• An accurately completed Affordable Housing Acknowledgement (AHA) to be fully executed:
  
  • The identified “Developer” and address of business as it appears on the project deed and Secretary of State website

Vertical/Structural Building Permit

Prior to pulling a building permit (BP), developers must have a fully executed AHIP. Developers should provide notice, two- three months ahead of pulling the BP, allowing sufficient time to prepare and execute the AHIP. In absence of advance notice, the Housing Division may not be in position to review documents and materials and finalize an AHIP within a desired timeframe.

To complete an AHIP developers must provide:

• Finalized project plans
• Schedule of Units

Documents Required from Developers for Marketing Inclusionary Units Include:

• Tenant Fee Disclosure form
• Utility Form
• Language Access Plan
• Parking Plan
• Model Lease
• Rental and Screening Criteria

For projects under the December 12, 2019 Zoning Ordinance, Information regarding the Somerville Zoning Ordinance and the permitting process is available on the Somerville Zoning website. Refer to Section 12 "Development Benefits" for information regarding the process and requirements for the provision of Affordable Dwelling Units (ADUs).

Estimated Maximum Rents & Sales Pricing

Tables 1.a and 2.a show base rents and base sales prices for ADUs, respectively. Maximum rents and maximum sales prices are the base amounts provided, deducting applicable fees and utilities for which an occupant is responsible. Tables 1.b and 2.b show estimated maximum rents and sales pricing assuming fees and other applicable deductions.

Rents

Table 1.a: Estimated Base Rents Without Fees or Utility Deductions*

*Applicable tenant-paid fees and utilities are subtracted from base rents.

Table 1.b: Estimated Rents* with Assumed Fees** No Utilities Included***

*Final rents are based off actual project fees and applicable utility allowance deductions
**Rents described above assume $150 in applicable tenant-paid fees
***Rent figures include January 1, 2025 Somerville Housing Authority Utility Allowance Deductions for High Rise w/ electric heating, electric cooking and electric water heat. Allowances based off actual projects will apply.

Sales Prices

Table 2.a: Estimated Maximum Sales Pricing With Assumed Fees*

*Fees include condominium fees, homeowners insurance, estimated private mortgage insurance, taxes, parking

Table 2.b: Monthly Standard Fee Deductions for Max Sales Prices (FY 2025)

*Fees include condominium fees, homeowners insurance, estimated private mortgage insurance, taxes, parking

Fractional Buyout

The Housing Division has a monthly subscription to the Warren Group Data and is receiving information on all units sold in Somerville. Below are average market sales prices for residential condos in Somerville for FY ’25. These figures are to provide estimates for the Fractional Buyout for an ownership or rental ADU. The actual payment will be calculated at the time the payment is due.

The fractional buyout for an ownership or rental ADU is calculated as (A*B) where:
i. A is the amount of ADUs not provided (.2, .4, .6 or .8); and
ii. B is the difference between the average sales price of comparable market-rate units sold within the city of Somerville over the previous twelve (12) months and the sale price of an ADU in the ownership or rental price tier that would have been provided.

The Inclusionary Zoning Ordinance for projects permitted under the May 6, 2016 update is available here.

Rents

• Base rents for apartments with affordability set at Tier R1 and Tier R2 levels are based off “LOW” and HIGH” HOME RENTS, respectively. HOME RENTS are established by the Department of Housing & Urban Development (HUD) and updated on an annual basis. HOME RENTS are available on HUD Exchange.
• Base rents for apartments with affordability set at Tier R3 are 30% of a household’s income at the time of an income certification.
• Finalized rents account for deductions for tenant-paid fees and utilities. Utility deductions are based off the Somerville Housing Authority Utility Allowance chart.

Tier R1 (<50% AMI): Base rent is the “LOW” HOME RENT. The final rent is the “LOW” HOME RENT and deducts applicable fees and tenant-paid utilities.

Tier R2 (51%-80% AMI): Base rent is the “HIGH” HOME RENT. The final rent is the “HIGH” HOME RENT and deducts applicable fees and tenant-paid utilities.

Tier R3 (81%-110% AMI): Base rent is 30% of a household’s annual gross income at the time an income certification is completed. The final rent is 30% of a household’s income and deducts applicable fees and tenant-paid utilities. Below includes the ranges of annualized base rents for households comprised of one (1) through six (6) persons. These are the maximum rents, assuming no deductions for utilities (if the owner pays all utilities).

Tier R3 Monthly Gross Rent Ranges

Sales Pricing
The maximum sale price for an inclusionary unit shall be set at a level that allows a household at the designated Tier eighty (80) percent or one hundred ten (110) percent of Boston area median income, as the case may be, to pay no more than twenty-eight (28) percent of household income for housing costs. The maximum sales price shall be calculated as follows:

• Determine the maximum household size for an inclusionary unit based on one (1) person per bedroom (one (1) person in the case of a studio).
• Determine the maximum monthly income (MMI) for such household size, using income figures published annually by the U.S. Department of Housing and Urban Development (HUD) for households at eighty (80) percent and one hundred ten (110) percent of Boston area median income.
• Multiply MMI by twenty-eight (28) percent.
• Subtract the estimated cost of Private Mortgage Insurance (PMI), Real Estate Taxes (RET), Condominium Fees (CF), Homeowners Insurance (HI) if not included in the CF, and required parking fees (PF), if any, if not included in the CF, to arrive at a maximum monthly mortgage payment (MMP).
• Calculate a maximum mortgage loan (MML) based on the MMP, assuming a 30-year term and at the then current conventional interest rate.
• Multiple the MML by 1.03 to arrive at a Maximum Sales Price (MSP) based on a ninety-seven (97) percent MML.

Most Recent Initial Sales Pricing

Per Somerville’s Zoning Ordinance, the Housing Director has the authority to establish quality standards for three-bedroom Affordable Dwelling Units (ADUs). Current standards apply to all three-bedroom ADUs effective June 1, 2023.

Previous version:

• 3-BR Standards effective March 1 ,2022

Residential developments with thirty (30) or more units are required to provide 20% of the obligated ADUs as three-bedroom units, under Section 12.1.7 of the Somerville Zoning Ordinance.

Prior to the lease up or sale of Inclusionary units, Inclusionary Program staff will need to perform a walkthrough of the building. This is typically leading up to or during the marketing of the affordable units. It entails a showing of all Inclusionary units, the project's shared spaces and amenities, as well as various comparable market rate units.

For an idea of what to expect, please review our Walkthrough Checklist.