INC WSIO NARY ZONING ANALYSIS 1 6
Number _ of Inclusionary
Scenario Tenure Unit T Location Units e
1 Ownershi Single Fam Suburban 100% Surface 10 10%
2a Rental Multifam Amh 100% Surface 2 10%
2b Rental Multifam Downtown Podium 2 10%
Ownershi Townhome Suburban 100% Surface 1
Rental Multifam Amherst/Exit1 | 100% Surface 12 20%
b Rental Multifam Downtown Podium 12 20%
a Rental Multifam Amherst/Exit1 | 100% Surface 20%
b Rental Multifam Downtown Podium 20%
Source: of Nashua, and RKG Associates Inc.
Comparative Scenarios
The financial analysis conducted by RKG provides key insights regarding the relative impact on
development finance resulting from the creation of an IZ ordinance. RKG modeled each of the eight
scenarios by calibrating the model with market-tested assumptions. For each development program,
RKG Associates analyzed four different scenarios. These scenarios include:
CURRENT MARKET/BASELINE SCENARIO
First scenario uses the current market conditions assumptions collected during the analysis to ensure
the model is properly calibrated with accurate assumptions. The baseline scenario provides an
assessment of how a project would perform (financially) based on market averages for acquisition,
construction, operation, and reversion.
TARGET RETURN SCENARIO
The second scenario adjusts the land acquisition cost to have the proposed development program
achieve the target IRR return levels (20% for ownership development and 15% for rental projects).
Within real estate development, the only true cost/revenue variable is the cost of the land. Vertical
construction costs, debt/equity requirements, and operational revenues are established by the market.
For example, rents cannot be inflated for market rate units to offset the rent/price losses of income-
controlled units. Thus, this scenario adjusts the land costs to reach the return threshold for the
proposed development.
INCLUSIONARY POLICY SCENARIO
The third scenario measures the financial impact of the model inclusionary zoning policy (detailed
earlier) on the target return scenario. This analysis was done to understand the fiscal impact of this
proposed policy on a project that met the minimum return threshold. Instances where this scenario
returned a lower IRR indicate the policy creates a financial disincentive, while instances where this
scenario has a higher IRR than the target return scenario indicates the policy creates a positive
financial impact.
INCLUSIONARY/BONUS DENSITY SCENARIO
The final scenario calculates how many additional market rate units (the bonus density) would be
needed above the baseline unit count for the inclusionary zoning scenario to meet the minimum return
threshold. In other words, RKG calculated how much bonus density would need to be granted for an
