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A 10-point plan to increase Boston’s affordable housing stock quickly — and inexpensively

Published in Development, Other

The Boston Globe

July 27, 2021

By Bruce A. Percelay

City leaders and the development community should work together to stimulate the production of affordable housing.

As Boston’s mayoral candidates begin to reveal their ideas about how to deal with the city’s affordable housing crisis, a range of new approaches is being circulated. While many of the new ideas submitted may have long-term impacts, there are a series of solutions that do not require large-scale programs or initiatives to help address the lack of affordable housing. Sometimes the most elegant solutions are the simplest.

Conversion of large rental units

There are 60,000 4-to-5 bedroom apartments in Boston, according to the 2019 American Community Survey.These larger units are often occupied by students or become high density issues for the neighborhoods. If the city were to allow landlords to reconfigure large units and, for example, convert a 4-bedroom into two 2-bedrooms, it could create a substantial number of new units.

▪ Tax incentives for affordable development

The city could provide a 10-year property tax abatement on the development of middle-market apartments, as New York has done for decades through its 421a program on new residential construction. The units would have to fall within a specific affordability range relative to area median income and could have a meaningful impact on stimulating new construction in areas that have previously focused solely on higher-priced development.

▪ Basement unit conversions

Boston could almost immediately create 8,000 apartments in older and lower-priced buildings around the city if basement conversions were easier from a zoning perspective. While the city has removed the restrictions against the creation of basement units, it also needs to relax zoning and variance hurdles that make the conversion of basement units a time-consuming and complicated process. There are few policy changes that could generate more units, more quickly and economically, than this.

▪ Labor union cooperation

Some of the trade unions like the Carpenters offer a reduced residential rate on wood frame projects outside of the downtown core. If there could be a cooperative agreement whereby all the trade unions could provide a favorable labor rate for middle-market projects, it could increase the production of workforce housing at a time when building materials are escalating and production costs are discouraging new supply.

▪ Reassess affordable housing requirements in luxury buildings

When a luxury housing developer is asked to provide up to 18 percent of its units as affordable, it creates an economic cost that might be better allocated to the production of middle-market housing. The same holds true for affordable requirements relative to luxury condominiums, where a select few in effect hit the housing lottery. If developers have the option to make substantial cash payments in lieu of giving a limited number of people a housing windfall, they could fund new projects that benefit more people.

▪ Streamline the permitting process

The current permitting process in Boston is so cumbersome that it gives housing developers the incentive to focus their efforts elsewhere. Building in Watertown, for example, is dramatically easier than building in Brighton, yet the two are geographically connected. The city needs to reassess how buildings get approved to encourage, rather than discourage, the creation of new affordable supply.

▪ Create a master plan for each neighborhood

Cities and towns around Boston have master plans that give predictability to the development process. In Boston every development is a negotiation, creating a significant hurdle for developers when acquiring land for development. If the city created a comprehensive master plan that zoned each and every parcel, it could better determine what our city will look like in the future, better choreograph the mix between different property types, streamline the development process, and stimulate the production of affordable housing.

▪ Accelerate the disposition of city-owned surplus properties

The city of Boston owns approximately 1,000 surplus properties, many of which are in areas that are not experiencing development. The city should conduct an aggressive disposition plan to sell vacant parcels at a nominal fee in exchange for the creation of middle-market/affordable housing.

▪ Redirect community mitigation payments

On some large new developments there is a process that requires developers to make mitigation payments to the neighborhood as compensation for presumed impacts of higher traffic, more competition for street parking, and more density. If these payments were specifically earmarked toward a fund to create more affordable housing in these neighborhoods, the money could be better targeted to solve bigger problems, rather than spending it in ways that may have less impact.

▪ Expand the Additional Dwelling Unit program

The city established a program designed to allow owner-occupants to build additional dwelling units, otherwise known as “in-law apartments,” with the intent of increasing housing supply. These units can be produced cost effectively within underutilized lots and existing structures but require complex zoning and construction knowledge to complete. The city should extend the ADU program beyond owner occupied housing, so that investors who are better positioned to undertake significant construction projects, are allowed to participate.

Teachers, firefighters, nurses, and other essential workers make Boston function, but many find it financially impossible to live here. The lack of adequate housing for the people who are the backbone of the city is a problem that impacts all of us. City leaders and the development community should work together and get creative about ways to stimulate the production of affordable housing. The good news is that solutions exist, but they will require all stakeholders to think outside of the box.

Bruce A. Percelay is chairman of The Mount Vernon Company, a Boston-based apartment development firm.

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