Inclusionary Housing

Inclusionary housing (sometimes referred to as “Inclusionary zoning”) relies on private developers to create affordable housing. It requires a percent of units in new housing developments to be set aside for households who earn less than the area median income.

As of December 21, 2023, the City of Salem adopted an inclusionary housing ordinance - see Recent Updates section below for more information. This ordinance supersedes the previous expectation held by the City of Salem Planning Board a minimum of 10% of residential units be affordable to households earning less than 60% of the Area Median Income.

Market-Rate Projects that Include Affordable Units

Recent Updates:

September 2023 | The City is currently working with the Metropolitan Planning Council (MAPC) on an updated inclusionary housing ordinance, building on the work that was done in 2019. As part of that effort, MAPC updated the financial feasibility analysis to ensure the City is pursuing the most affordability possible while not dampening development.

MAPC staff appeared at the September 12, 2023, meeting of the Affordable Housing Trust Fund Board to provide an update on their findings. The presentation is available here.

October 2023 | An Inclusionary Housing Ordinance has been filed with City Council for its October 26, 2023, meeting. The package is available here. At that meeting, it is expected that Council will refer the matter to a Joint Public Hearing (JPH) with the Planning Board to discuss the ordinance and solicit public comment. The JPH, once scheduled, will be noticed for two weeks as is typical for all proposed zoning ordinances.

November 2023 | Council held a Joint Public Hearing (JPH) with the Planning Board on November 20, 2023. A recording is available here. The JPH was closed that evening and the matter referred to the Planning Board for its recommendation, to be discussed at a Special Meeting on Monday, December 4, 2023. The materials for that meeting, including agenda with Zoom link, are available here.

December 2023 | The Planning Board issued its positive recommendation to Council on the Ordinance at its December 4, 2023, Special Meeting - the text is here. The recommendation was received by Council and the ordinance succeeded with a 10-0 vote for first passage on Thursday, December 7, 2023. The Council held a Special Meeting on December 21, 2023, for a second passage vote, which was successful. The text of the adopted ordinance, now in effect, is here.

September 2025 | The Inclusionary Housing Ordinance was revised as part of the effort to eliminate parking minimums for multifamily housing. Through the cost savings unlocked by that reform, it was determined that all eligible projects could support an affordability expectation of 10% of units affordable at 60% AMI. This was part of set of ordinance amendments signed by Mayor Dominick Pangallo on September 29, 2025.

Inclusionary Zoning Basics

1. Requires a percent of units in new housing be affordable for income-eligible households.

2. Relies on private developers to create Affordable Housing with no public subsidy.

3. Must carefully balance elements of the policy to minimize costs, otherwise there’s a risk of increasing rents or dampening development.

Housing is Expensive to Build

Click to expand. Total housing development costs, per square foot, Massachusetts Urban Projects, 2011-2015. — *Click to expand.* Total housing development costs, per square foot, Massachusetts Urban Projects, 2011-2015.

The cost to build an affordable home exceeds the cost the developer is allowed to rent or sell it for. For that reason, developers need something to help offset costs of building this type of home.

A critical component of the technical assistance provided by Metropolitan Area Planning Council for the Affordable Housing Trust Fund was to develop a financial feasibility model to test the market implications of various inclusionary zoning scenarios.

The model is based on a pro-forma analysis that is typically used by a developer to understand whether a real estate project is financially feasible. A development proforma takes into account several project specific variables. The variable assumptions are based on housing market data from the Warren Group and the US Census Bureau and through qualitative data collected via focus groups and interviews with Salem residents and local housing experts which lenders, developers, and land use board members.

The updated feasibility model, being completed as part of 2023 inclusionary housing ordinance, will be shared here when available.

An inclusionary housing ordinance was proposed in 2019; however, it failed. Click here to view the history.

Learn more about Inclusionary Zoning, or contact Elena Eimert, at eeimert@salem.com, or 978-619-5685.