Board Of Aldermen

INC WSIO NARY ZONING ANALYSIS 2 2

25-UNIT MULTIFAMILY (PODIUM) RENTAL DEVELOPMENT

The impact of requiring podium parking on small rental housing developments is substantial. The
Current Market/Baseline Scenario yields 11.70% IRR assuming a $50,000 land value per unit. The net
present value difference to the surface parking assumption is nearly $340,000 due to the much higher
costs of podium parking instead of surface spaces. As a result, the land value per unit would need to
be $19,587 per unit to meet the proposed return threshold.

INC WSIO NARY ZONING ANALYSIS 2 1

Table 9. 25-Unit Multifamily (Stick) Rental Development

No _Inclusionary

Inclusionary 80%

Inclusionary 80%
AMI W/ Adjusted
Land Value and

Adjusted Land | AMI W/ Adjusted | Bonus Market

No Inclusionary Value Land Value Units
Location Amherst/Exit 1 Amherst/Exit 1 Amherst/Exit 1 Amherst/Exit 1

INC WSIO NARY ZONING ANALYSIS 2 0

Table 8. 10-Unit Ownership Development

Inclusionary 80%

Inclusionary AMI W/ Adjusted
No Inclusionary | 80% AMI W/ | Land Value and
Adjusted Land | Adjusted Land | Bonus Market
No Inclusionary | Value Value Units

Location Suburban Suburban Suburban Suburban

Unit Style Single Family Single Family Single Family Single Family

Unit Type Owner Owner Owner Owner

Construction Type Fee Simple Fee Simple Fee Simple Fee Simple

Construction Cost $165 $165 $165 $165

INC WSIO NARY ZONING ANALYSIS 1 9

full value from the affordable unit, which has a similar cost to that of a market unit, results in a
financial loss.

The Inclusionary/Bonus Density Scenario reveals that a 1:1 bonus density would result in having an
IRR that met the proposed minimum return threshold. The table reveals that adding one market rate
unit would nearly achieve the expected financial return (IRR of 14.93% and NPV of -$11,689.

INC WSIO NARY ZONING ANALYSIS 1 8

10-UNIT SINGLE FAMILY OWNERSHIP DEVELOPMENT

inclusionary zoning project to not adversely impact the return of the developer or the inherent value
of the land. This effort was done to understand the feasibility of a non-financial incentive (additional
units) could be applied to minimize impact to the local real estate market and return expectations.

Interpreting Results

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.

INC WSIO NARY ZONING ANALYSIS 1 5

the inclusion of income-controlled housing units). This incentive works well in cases where a
community is focused on building lower cost housing without providing substantial cash incentives
to developers. In other words, the density bonus provides a developer with an incentive to create units
at deeper levels of affordability, in exchange for the ability to build more market rate units.

Smaller scale developers utilize traditional bank financing as the main source of funding. Local banks
typically act as partners with smaller scale developers and provide funding to projects which meet
their lending standards and risk profiles. Lending at the small scale is very much relationship based.