How a Cambridge developer's lawsuit could unravel an affordable housing policy

A lawsuit filed last month by a longtime Cambridge developer could upend the way Massachusetts builds affordable housing.

Lawyers for Patrick Barrett are suing the city in the state's Land Court over its requirement that 20% of the space in major housing developments include affordable units, a policy known as “inclusionary zoning.”

The suit argues the city's rule is unconstitutional on the grounds that they infringe upon people's property rights under the Fifth Amendment.

Barrett, who lived in Central Square until last year and has developed both residential and commercial properties in Cambridge for 20 years, said in an interview the policy makes it too expensive for him to take on new housing projects. He's being represented by the law firm for the right-leaning think tank Pioneer Institute.

He said he's tried to appeal to city officials about his problems with the affordable housing policy. A list of complaints were sent in a memo to the city last June and published in an online community newsletter.

While Barrett agrees that inclusionary zoning is a "great tool" to ensure residents of different incomes live together, he said his financial woes and a lack of response from the city pushed him to file the suit.

“I have to build at a loss,” Barrett said, lamenting the rising costs of labor, materials and high interest rates. He added he cannot recoup these costs from residents.

“Eventually, you just throw your hands up and say it doesn’t work,” he said.

It’s not just Cambridge that could be affected if Barrett wins his suit. More than 141 communities in Massachusetts implement some form of the policy, according to Pioneer Institute. Most cities demand owners clear a lower bar than Cambridge, requiring between 10 and 15% affordable housing space in new residential buildings.

Inclusionary zoning policies are often championed for creating thousands of affordable units at no cost to cities and towns. Supporters argue that without them, middle-class households will struggle to live where they work.

In Cambridge, a unit is considered affordable if its housing costs equal less than 30% of a household's gross income. The policy only applies to complexes with 10 or more units.

Emily Haber, president and CEO of the Mass. Association of Community Development Corporations, said the policy helps create "much needed" affordable housing options in the state. Her trade group supports dozens of nonprofits that promote community development.

“We want to make sure there are places where schoolteachers, nurses and others who work in our communities can also live," she said.

Barrett said he feels it's unfortunate that a consequence of his lawsuit could be a ban on inclusionary zoning in Massachusetts or beyond.

“I don't like necessarily the outcome that I win and inclusionary zoning is gone forever,” said Barrett. "Although I do think that, as it’s been implemented, it is not equitable, and it is a violation of the Constitution.”

Barrett said the five buildings he owns on Columbia Street in Cambridge need critical repairs. He said the inclusionary zoning rule has prevented him from redeveloping them into a massive condominium building. He’d have to sell a portion of the nearly 90,000-square-foot space for $3.6 million, he said, instead of the $15 million he’d make on those units in the open market.

The lawsuit said the policy violates the "Takings Clause" of the Fifth Amendment, which prohibits the government from forcing people to give up property rights
for public use without meeting certain conditions.

Paul Johnson, one of Barrett's attorneys, said that's why "any sort of inclusionary zoning at all violates the Constitution.”

“The ordinance requires property owners to surrender fundamental property rights protected by the U.S. and Massachusetts Constitutions,” he said.

Barrett and his lawyers argue the city would need to prove he makes the problem of affordable housing worse — or compensate him for his losses — to take his property.

“The idea is you can’t require somebody to fix a problem they didn’t create,” Johnson said. “We all agree there's a shortage of affordable housing. The question is, though, 'Is this project making it worse?' ”

Jeremy Warnick, a spokesman for the city, said that while he could not comment on Barrett's specific complaints while the lawsuit plays out, the city rejects the idea that the ordinance violates federal or state law. The city filed its response to the lawsuit on Jan. 26.

The ordinance is “valid under both federal and state constitutions,” he said, adding it is designed to meet “the city’s goal of maintaining a healthy socioeconomic diversity.”

In Cambridge, over nearly 30 years, the ordinance helped create 1,603 affordable units. Just 200 of them were created since 2017, when the city increased the percentage of affordable housing units to 20%.

Barrett, who also serves on Central Square Business Improvement District board, said that’s not enough affordable units to justify the cost the policy creates for builders. He said he believes the policy is backfiring, blocking promising housing projects that would ease supply issues, increase competition and eventually bring down rents.

“It doesn't actually address the housing shortage,” Barrett said. “It’s the same thing as rent control.”

Housing growth in Cambridge has slowed down in recent years. According to the city’s open data portal, from 2016 to 2021, the city permitted an average of 852 new residential units annually. Over the last five years, that number is nearly halved.

It's unclear if the economy, fallout from the pandemic or zoning laws are to blame.

The lawsuit said it’s Cambridge’s job to find out.

The city's original ordinance called for a comprehensive report analyzing the city’s policies and housing needs every three years, but the city hasn’t published one since 2019. Former Mayor Denise Simmons called that lapse “unfortunate” at a City Council meeting in May.

In June, City Councilor Paul Toner said he didn’t think the city could “justify holding [inclusionary zoning] at 20% until we get a study done.”

In its response to the lawsuit, the city argues three studies on the policy in 1997, 1998 and 2016, as well as an ongoing study, will show inclusionary zoning is working.

Still, some affordable housing advocates are worried. Haber, with the Mass. Association of Community Development Corporations, said affordability is a moral issue — not just a legal one.

“There are going to be too many people who are left out and cannot afford to live in these communities,” Haber said. “ We want diverse communities. That's what we believe in Massachusetts.”