The developer seeking to replace the Walgreens near Porter Square with a six-story, 71-unit apartment building is suing Cambridge, arguing the city is unconstitutionally withholding a building permit until it agrees to permanently set aside 20% of the development as affordable housing.
Old North Development, led by developers Adam Siegel and Brendan Seaver, filed the lawsuit through its affiliate OND 1740 Investors LLC on Aug. 27 in Middlesex Superior Court, becoming the second developer since December to challenge Cambridge’s inclusionary housing requirement.
The proposed 61,300-square-foot mixed-use building would replace the Walgreens and the storefronts that housed longtime Cambridge businesses Simon’s Coffee Shop and Keezer’s Classic Clothing.
At the center of the lawsuit is Cambridge’s Inclusionary Housing Ordinance, which was adopted in 1998 and amended in 2017 to require developments with 10 or more units to make 20% of their residential floor area permanently affordable to income-eligible households. For the 1740 Mass. Ave. project, that would mean 14 of its 71 apartments.
OND argues the city cannot impose the requirement because the proposed building already complies with Cambridge’s zoning rules “as of right.” “The Project is fully as-of-right and does not require any zoning relief, special permit, variance, or other discretionary approval from the City,” the lawsuit says.
The developer argues affordable housing requirements can be imposed in exchange for additional development rights, but says no such exchange is taking place here. “OND is receiving no additional development rights or other benefit from the City in exchange for the required dedication of 20% of its residential floor area to affordable housing,” the lawsuit says.
Cambridge developer and zoning attorney Patrick Barrett made a similar argument when his company, Columbia St. LLC, sued Cambridge in Land Court in December. Columbia St. LLC is challenging the same 20% requirement, arguing Cambridge cannot condition a building permit on permanently setting aside part of an otherwise zoning-compliant development for affordable housing.
That case remains pending, and the Massachusetts Attorney General’s Office has joined Cambridge in defending the requirement, citing the potential implications for inclusionary housing rules in communities across the state.
Cambridge has told OND it will not issue the permit until it signs and records a permanent affordable housing covenant restricting rents and tenant eligibility for the 14 units, according to the lawsuit. OND argues conditioning the permit on that agreement amounts to an unconstitutional taking of private property without compensation under the U.S. and Massachusetts constitutions.
Cambridge spokesperson Jeremy Warnick said the city was recently made aware of OND’s complaint and is reviewing it.
“Given that we recently were made aware of the complaint, we have been focused on thoroughly reviewing the matter at this time,” Warnick said in an email. “Unfortunately, we are unable to provide further information at this time.”
OND says the stalled project is costing it about $23,600 each week, including roughly $6,000 in interest on its current loan, $1,600 in insurance and property taxes and $16,000 in other carrying costs and obligations to investors.
The timing has also created a financing catch-22. Before issuing the building permit, Cambridge is requiring OND to obtain an agreement from Cambridge Savings Bank, which loaned them money to buy the property, ensuring the permanent affordable housing requirements would remain in place even if the bank foreclosed on the property.
The bank has declined to sign that agreement while its current loan remains in place, saying the requirements could reduce the property’s value if the development ultimately falls through.
“Should furthering the contemplated project prove to be unfeasible, having a subordination to any restriction could certainly have a negative effect on the bridge loan’s underlying collateral value,” Cambridge Savings Bank Vice President Justin Doyle wrote in an Aug. 20 email included with the lawsuit.
The bank said it would consider signing the agreement once the project obtains construction financing. But OND says it cannot obtain that financing without a building permit, which Cambridge will not issue until OND obtains the bank’s agreement.
Old North Development principal Adam Siegel said the lawsuit was a “last resort” after the developers began raising concerns with the city late last year and spent months trying to resolve them.
“We remain fully committed to a fair outcome here,” Siegel said in an email. “We’re going to keep working with the City to negotiate a sensible off-ramp to the litigation, and the case is simply about keeping the project on schedule while we do.”
The lawsuit separately challenges the roughly $450,000 building permit fee Cambridge would charge for the project. The city calculates building permit fees based on construction costs, charging $20 for every $1,000.
OND argues the fee far exceeds the city’s cost of reviewing and inspecting the project and therefore functions as an unauthorized tax rather than a legitimate fee. The lawsuit estimates comparable private review and inspection would cost between $40,000 and $60,000. Cambridge’s own fiscal 2026 budget projects $31 million in building permit revenue, including more than $10.2 million directed to affordable housing.
“The City cannot use its building permit fee as a revenue-generating tax,” OND argues in the lawsuit.
OND is asking the court to refund any portion of the fee found unlawful but says it would be willing to pay the full amount in the meantime. “OND is prepared to pay the Permit Fee under protest so that the Project may proceed without further delay,” the lawsuit says.
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