EXECUTIVE SUMMARY
Scope of Work
The scope of this analysis is to determine the financial impact resulting from incorporating
inclusionary zoning requirements into the City of Nashua’s zoning ordinance. RKG Associates Inc.
(RKG) constructed a financial feasibility model to test specific scenarios chosen by the City of Nashua
and determined the relative impact in relation to developments constructed under the existing zoning
requirements (by-right). The importance of this analysis cannot be understated, as setting the
appropriate parameters for an ordinance is key to ensuring housing development accommodates
various income levels across the city while minimizing impact on existing development activity.
Process
The process undertaken was collaborative and included engaging City staff, local and regional
housing developers, local debt and equity investors, and other real estate professionals to understand
the market dynamics and performance indicators unique to Nashua. RKG utilized information gained
from market research and interviews to construct an adaptable financial model. The model enables
the City to test prototypical developments to understand the financial implications of creating an
inclusionary ordinance.
Summary Findings
The City of Nashua historically has found success in attracting
..new development has
targeted lower income
households and _ higher
income households, leaving
the ‘middle incomes’
without options in the city.
traditional suburban development patterns. Almost all the
city’s development over the past 20 years has been for single
family detached housing. The city has experienced very
little multifamily or non-residential development during
this time frame, except for a few 100% income-controlled
housing projects. Recent efforts to jumpstart reinvestment
and revitalization of Nashua’s downtown by attracting higher
income residents have been effective but rely upon the city
leadership providing zoning relief and providing substantial financial inducements. Further, these
projects have exclusively targeted the highest earners. As a result, new development has targeted
lower income households and higher income households, leaving the ‘middle incomes’ without
options in the city.
This analysis focused on understanding how an inclusionary zoning policy that targeted that middle
income cohort would impact the financial feasibility of new residential development. While the
results of the analysis are based upon a financial model driven by assumptions, the model utilizes
local-market relevant analysis to forecast the financial return to a developer and compares the change
in financial return between current market conditions and the adoption of a model inclusionary
zoning policy intended to create a true continuum of affordability in Nashua. The following section
highlights the findings.
