Bravo to Mayor Michelle Wu and her team for thinking boldly about ways the city can get housing development unstuck.

But a policy fix her administration is contemplating, as reported in Scott Van Voorhis’ column this week, suggests that politicians and policymakers need to take a hard look at just how much affordable housing and other public benefits they’re demanding from developers.

Traditionally, affordable housing set-asides have been thought of as a tool to make sure fancy new buildings have at least a modicum of racial and class integration – an obvious social good. But increasingly, they’ve become seen as a tool to build a lot of the moderate- and lower-priced new housing we desperately need in Massachusetts.

Wu has been cleverer than her Somerville and Cambridge counterparts, reaching the same 20 percent set-aside through a five percentage-point increase in the share of units a developer must subsidize in most of the city and another three percentage points’ worth of apartments to be set aside for people who hold Section 8 rental vouchers.

The net effect was similar: It’s put most developers off building new housing outside of high-priced products where unusually wealthy renters cross-subsidize affordable units.

When interest rates were very low for much of the 2010s, or near-zero as they were during the pandemic, the money a developer needed to borrow to put up a building cost them very little. That meant there was extra money in the project’s budget that could be spent by cutting rents to undercut the competition.

In Massachusetts, since we choked off that competition with bad zoning, that extra cash partly turned into extra profit, for fickle investors, for the person selling the land being developed, for construction companies. And politicians forced it to be spent on subsidizing rents in a larger share of a new building’s units, sometimes after giving the developer some cash from the local affordable housing trust fund to soften the blow.

But when the interest rates a developer had to pay quadrupled last year, that building suddenly had to gross a lot more money if a developer hoped to keep the rest of their budget the same – including what they were spending to meet affordable housing requirements.

The answer is simple, you cry. Just make bankers, landowners, construction workers and architects take a smaller cut!

Developers have been trying exactly that with very little success, as evidenced by the huge drops in new, market-rate developments that have broken ground since the Federal Reserve began its anti-inflation rate-hike campaign last year.

It seems that reality has gotten through to Boston City Hall, with sizable tax breaks being floated to help developers close the gap in their budgets jointly created by likely future of high interest rates and ultra-high affordable housing requirements – it’s not like it’s politically feasible for an avowed progressive like Wu to unwind those affordability mandates even if she wanted to.

But Wu’s tax break idea also raises the question of whether sky-high affordable housing mandates are really the best way to generate lots of new, lower-priced housing, given the budgetary implications. The classic example of these kinds of tax breaks, New York City’s former 421-a program, cost $1.77 billion annually.

Can the city afford something like that? If the answer is no, it leads to depressing math: Twenty percent of zero units built is still zero, and a housing shortage that keeps getting worse.

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