The Boston Planning Department is reviewing new, clearer guidelines for mitigation and community benefits payments required of developers in exchange for approvals. iStock illustration

Community benefits agreements are part of the price that real estate developers pay to do business in Boston.

They routinely include multi-million-dollar packages tied to the approval of major projects, including cash donations and other perks given to public and private organizations.

The current system is broken, according to public surveys and the consensus of a committee appointed by Mayor Michelle Wu in 2023. The process tends to be unpredictable and confusing, varying widely from project to project in form and dollar value. The group recommended the biggest changes in nearly three decades to how community benefits are negotiated and determined.

Dollars for Community Development in Dorchester?

Recent uncertainty about the pending recipient of a developer’s $750,000 payment tied to a Dorchester project illustrates the current system’s open-ended nature.

When the Boston Planning & Development Agency board approved a 1.6 million-square-foot project at 35-75 Morrissey Blvd. in late 2023, the nonprofit Dorchester Bay Economic Development Corp. was named as recipient of the payment as part of the community benefits package.

But within a month, a private neighborhood group, the Columbia-Savin Hill Civic Association, announced it would receive the donation instead. Civic Association President Bill Walczak and Don Walsh, co-chair of the civic association’s community benefits committee, spoke in favor of the project’s approval at the December board meeting.

Later in 2024, association leaders said they would appoint the Dorchester Bay EDC as fiscal agent for the donation and receive the developer’s payment from the nonprofit.

In an interview, Walczak said the group had discussions with the original Morrissey Boulevard developer, Center Court Partners, about receiving the donation.

It subsequently discussed an agreement in which Dorchester Bay EDC would act as fiscal agent and pass the money along to the civic association over three to five years. But a disagreement over the Dorchester Bay EDC’s fees to act as fiscal agent prompted the civic association to begin discussions with the Boys & Girls Club of Dorchester to act as fiscal agent instead, Walczak said.

“The Dorchester Bay EDC is a fine organization, but the Boys & Girls Club was offering us an opportunity for more of those dollars going to the community rather than charging us for oversight of the money,” Walczak said. “So that’s what we’re looking at.”

The civic association has discussed using the money to form a Main Street association activating a section of Dorchester Avenue, Walczak said.

Recipient of Donation Unclear

An assistant to Dorchester EDC CEO Kimberly Lyle said she was unavailable for a phone interview or to answer emailed questions about the payment.

In an email, Boys & Girls Club President Robert Scannell said the organization “is not included in the community benefits package for 75 Morrissey Boulevard.”

The developer now leading the Morrissey Boulevard project, Andrew Flynn of Boston-based Copper Mill, said the firm is committed to the community benefits package approved in 2023, but acknowledged uncertainty about the ultimate recipient of the $750,000 payment.

“We are working to understand that background a little bit,” Flynn said in an interview this week. “We are open-minded, or at least open-ears, to understanding that better and how those funds may be dispersed.”

In an email, BPDA spokeswoman Brittany Comak noted that the board approved the payment directly to the Dorchester EDC.

“Once a developer makes payment to an organization, that organization can choose to spend that money how they see fit, as long as it pertains to what is outlined in formalized legal agreements,” Comak wrote.

Such legal documents typically take the form of a cooperation agreement between the BPDA and the developer, which is signed after the board approval. No such agreement has been posted on the BPDA’s web site as of Banker & Tradesman’s publication deadline.

The developer of one major South Boston project agreed to endow a scholarship for $1 million administered by the South Boston Sports Hall of Fame to get approved. A Dorchester development’s $25,000 donation was allocated to security equipment for the Boston Police Department. iStock illustration

Widespread Confusion Mars Current Process

Confusion about community benefits and mitigation payments was the most important topic cited by respondents to Boston Planning Department surveys as part of the Article 80 modernization process. Article 80 of the Boston zoning code applies to developments that are at least 20,000 square feet or more than 15 housing units.

Unlike every other North American city of comparable size, Boston officials negotiate community benefits with developers on a project-by-project basis.

A survey found that 96 percent of developers and 91 percent of public respondents think the current system is inconsistent. Even City Hall staff have conflicting definitions of mitigation, which includes formula-based fees for items such as affordable housing and job training, versus the more vague “community benefits” category.

And the size and nature of community benefits varies widely.

In receiving approval for its 1.7 million-square-foot redevelopment of the former Boston Edison power plant, Hilco Redevelopment Partners agreed to pay $10 million to the MBTA for public transit upgrades, $1.75 million for public park and playground improvements and $1 million to endow a scholarship administered by the South Boston Sports Hall of Fame.

Local nonprofits and even municipal agencies receive cash donations: A $25,000 donation by Dot Block developer Samuels & Associates was allocated to security equipment for the Boston Police Department.

Developers have promised to set aside retail storefronts for local businesses at reduced rents. Other payments go directly to the Boston Planning Department, which solicits applications and doles out the money afterwards. The 362-unit Dot Block housing development, for example, agreed to contribute $352,500 to a community benefits fund managed by the Boston Planning Department.

Lack of Guidelines a ‘Consistent Challenge’

After meeting privately over the past year-and-a-half, the Wu administration steering committee charged with proposing Article 80 reforms recommended the biggest changes since 1996 to what it describes as Boston’s “uniquely cumbersome” process for reviewing developments. The committee included Boston’s new chief of planning, Kairos Shen, along with two developers and representatives of neighborhood groups, labor unions and the construction industry.

Samuels & Associates CEO Steve Samuels, one of those two developers, said the lack of clear guidelines and consistent standards are a “consistent challenge” during the permitting process.

“Every member of the Article 80 Task Force was united in their focus on creating a more predictable and transparent process that fosters alignment amongst the stakeholders. We have done our best to accomplish this in a way that is fair and reasonable, while maintaining necessary flexibility on a project by project basis,” Samuels said in a prepared statement.

The committee was unable to put a finger on the average size of community benefits packages dating back to 2014, primarily because 79 percent of the items were in-kind contributions without a listed dollar amount. Of the monetary donations, typical values ranged from $50,000 to $400,000.

New Definitions, Formula-Based Approach

In place of the current grab-bag approach, the committee recommended new definitions of mitigation and community benefits and how they’re negotiated.

A formula-based approach would apply to most projects’ mitigation payments, although large and complex projects still would be subject to negotiations. The Planning Department will define which projects fall into each category before the final version of Article 80 modernization is submitted to the BPDA board.

Clearer lines would be drawn between mitigation and community benefits. The former would be used to offset negative impacts of a project and defined by categories including transportation, housing, historic preservation and open space/public realm improvements. Community benefits would be related to planning goals in the same four categories.

A public comment period on the proposal concluded in December, and revisions are expected in the coming months.

The region’s commercial developers group applauded the potential adoption of clearer standards.

Steve Adams

“NAIOP hopes that the Planning Department can clarify if guardrails will be established to ensure that both mitigation and community benefits are calibrated to broader project impacts and neighborhood needs, as opposed to the current system where benefits like team sponsorships, etc. are utilized to gain what is perceived by city staffers as necessary community support,” NAIOP Massachusetts CEO Tamara Small wrote in a comment letter.

Harvard University representatives urged the city to retain some flexibility in negotiating mitigation for large projects. Adding even more requirements to what exist already, a university representative wrote, could make new development impossible.

The university is preparing to seek approval for phase B of its Enterprise Research Campus in Allston, totaling over 1 million square feet of office, lab and residential buildings.

“While construction costs remain high, and projects already struggle to bear the costs of increases in Inclusionary Zoning obligations, Development Impact Project payments, and sustainability requirements, among other regulatory changes, it will be challenging to impose additional mitigation payments and public benefits expectations without rendering large projects unfinanceable,” Planning & Design Senior Manager Will Donham and Director of Government and Community Relations Mark Handley wrote.