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A proposal to create Smart Growth Zoning Districts, known under the state designation 40R, would encourage dense residential and mixed-use zoning in areas that already are highly developed, like downtown North Adams. By adopting 40R, the city could be eligible for more than $4 million total in incentive payments from the commonwealth.

A new zoning tool that has sparked contentious debate in other municipalities could help North Adams bulk up its downtown housing by incentivizing developers to build more residential units in dense but underused parts of the city.

The proposal to create Smart Growth Zoning Districts, known under the state designation 40R, would encourage dense residential and mixed-use zoning in areas that already are highly developed, like the city’s downtown. By adopting 40R, the city could be eligible for more than $4 million total in incentive payments from the commonwealth, according to the Office of Community Development. The state would pay North Adams $600,000 initially, followed by $3,000 for each residential unit created.

According to estimates from the Office of Community Development and the state government, the city could see as many as 563 more units built in the proposed districts than currently are allowed under existing zoning.

The city kicked off the process to consider the new zoning overlays Tuesday, when the Office of Community Development and the Berkshire Regional Planning Commission presented to a city council subcommittee.

There will be a public hearing on the issue Dec. 2. To implement 40R, the City Council and the state Department of Housing and Community Development would have to sign off.

The proposed districts would allow developers to access a simplified 120-day approval process, while still giving the city control over aspects of the development such as design standards and landscaping. Each new subdistrict would overlay existing zoning rather than replace it, which City Councilor Ben Lamb said would give developers a menu of options.

“It creates stackable incentive packages,” Lamb said. “Over time, we can build up a robust catalog for developers.”

But, the proposed zoning modification has faced fierce opposition in other Massachusetts municipalities, including in the town of Adams, which approved the change last month. Residents there had expressed concerns over 40R’s mandate that 20 percent of all housing units built must be “affordable housing.”

Mark Maloy, of the Berkshire Regional Planning Commission, stressed that affordable housing means housing for any household that makes less than 80 percent of the region’s median income. Maloy said that, given a median income of just over $80,000, based on a median household size of about two people, the income cap would be $64,720.

“Teachers, municipal employees, many college employees, manufacturers, recent college graduates all qualify based on that income range,” Maloy said.

The highest allowable rent for those affordable units would be $1,618, which, Maloy pointed out, is higher than the market rates for the city, according to data from Zillow.

City councilors expressed cautious optimism that the zoning change could help downtown North Adams recover from its decadeslong “swan song,” as council member Jason LaForest put it.

“We know that the number one economic driver in a downtown is housing,” he said. “If there’s any pooh-poohing about the notion of putting affordable housing downtown, it’s a very myopic understanding of the notion of affordable housing.”

The Office of Community Development has proposed two subdistricts, a Mill District and a Downtown District, which, together, would encompass several landmark North Adams locations, including the Windsor Mill, the former site of St. Francis Church, and portions of Eagle and Main streets.

Pittsfield, Great Barrington and Lee all have adopted 40R districts since 2008.