Gov. Charlie Baker addresses reporters at a State House press conference on June 19, 2020. Photo by Chris Van Buskirk | State House News Service/File

Gov. Charlie Baker and Lt. Gov. Karyn Polito unveiled a COVID-19 economic recovery package to generate economic growth amidst the COVID-19 pandemic Friday morning. The legislation includes a long-stalled zoning reform that could set the stage for more housing construction in the state’s suburbs, most of which have successfully resisted any significant housing development in recent years.

The $275 million package, designed to promote equity across the commonwealth, is an update to the administration’s Act Enabling Partnerships for Growth, the economic development legislation originally filed on March 4.

The original legislation was the product of a nearly year-long economic development planning process last year, and the now $275 million proposal represents a targeted package of investments across three core areas: housing, community development, and business competitiveness.

The legislation also includes An Act to Promote Housing Choices, which would reduce the threshold for town meetings and city councils to approve housing-related zoning changes from the current two-thirds down to a simple majority. Many housing developments require zoning changes to be built thanks to a thicket of regulations suburbs have built up over the years.

“Why should we prevent our communities from producing more housing, particularly multifamily housing in downtowns and near transit?” Secretary of Housing Economic Development Mike Kennealy said in a State House press conference Friday.

Baker and Kennealy said the COVID-19 crisis demonstrates the need for more housing to be built immediately. High housing costs have forced several families and unrelated people to crowd together in Chelsea and other working-class communities to be able to make rent, but at the same time created ideal conditions to transmit the infection.

“We’ve been working for two years to make it easier for communities to build housing,” Baker said, including the passage of millions of dollars in state bonding capacity already dedicated to housing construction. “We have a ton of dry powder but it’s so hard to get housing projects approved, especially in the many communities we want to see the most construction in.”

Baker cited Salem’s challenges in getting housing projects passed due to the state law requiring supermajority votes on all zoning changes.

“Over the course of the last several years, between five and 10 times [Mayor Kim Driscoll] has come before the city council with a variety of projects … and she inevitably gets a 7-4 vote” instead of the 8-3 vote required, he said.

To address the new realities brought on by COVID-19, while continuing to address the opportunities and challenges already identified in the Partnerships for Growth economic development plan, this package proposes to:

• Amend the scope of several proposed programs, to target funding towards specific communities including those hardest hit by COVID-19
• Reallocate funding among proposed authorizations, to better address the significant economic impacts of COVID-19 and to help provide a path for recovery, particularly for those most devastated by the pandemic
• Establish new tools to promote equity and drive economic growth in communities and among businesses facing barriers to entry in areas like state contracting

To do so, the administration said is proposing allocating an additional $15 million for neighborhood stabilization (for a total of $40 million) to invest in blighted and distressed homes. This funding, paired with collaboration and engagement with community organizations and municipalities, will bring safe, affordable housing units back on the market.

Women, minority, veteran, and immigrant small business owners face disproportionate challenges to accessing capital to grow their enterprises. During the COVID-19 pandemic, gaps worsened for businesses that have not been able to take advantage of federal programs. To allow the state to invest in more small businesses overall, especially those owned by underrepresented populations, and to leverage greater federal and private investment dollars, the administration is recommending increasing funding for community development financial institutions, or CDFIs, by $25 million (for a total of $35 million), a record increase in this program. These grants to small business lenders allow CDFIs to serve entrepreneurs in underserved populations with financial services, technical assistance, and credit building opportunities.

To help address the disproportionate challenges to accessing early stage business financing, the Administration is asking the Legislature to triple funding for grants to support microbusinesses from a total of $5 million to $15 million. The Massachusetts Growth Capital Corporation recently launched a pilot program called Biz-M-Power, which offers one-to-one matching grants and technical assistance to microbusinesses with fewer than 20 employees who have successfully crowdsourced up to $10,000 in seed capital.