With the commercial real estate industry still staggering, the Romney Administration faces a major challenge to its efforts to create jobs and good economic development in Massachusetts. Massachusetts continues to be a very difficult place in which to develop real estate. Not only must developers run a complex gauntlet of local and state permitting requirements, but they often face challenges from neighboring property owners who can tie up a project for years.
In this environment, it is hardly surprising that many of our most innovative and potentially valuable developments stagnate or are abandoned. It’s a big part of the reason why Boston’s Seaport District remains awash in parking lots instead of hotels, housing and other new construction projects. It’s also a major reason why IKEA, which just opened its first store in New Haven, Conn., last month, hasn’t been able to site a store in the Boston metropolitan area over the past decade.
While proposed developments need to have thorough public scrutiny, it seems fair to ask whether scrutinizing projects to death is ultimately a good thing for Massachusetts. We recently completed a three-year odyssey on a project in the Blackstone Valley that underscores the need for reform. The proposed project was a state of the art distribution facility, through which would pass all of a national retailer’s inventory for its New England stores. The facility was slated to cost in excess of $10 million, generating significant tax revenues and employing in excess of 250 people. This distribution facility was exceptionally well suited to the proposed location, which was in an industrial park, directly adjacent to Route 146 and located just south of the new Interstate 90 interchange.
Courting the Law
The necessary permit applications were filed in June of 2001. After a six-month municipal review process involving numerous meetings and at least four public hearings, the town gave its approval to the project. Despite that approval, two abutters were able to delay the project by filing a lawsuit. In July of 2002, a three-day trial was held in the Massachusetts Land Court. In March of 2004, the Court finally issued its decision, affirming the town’s decision in all respects. Even though the abutters lost each challenge, they ultimately succeeded in killing the project by procedural delays. After nearly two and a half years of delay the company abandoned its plans for the site and chose to go forward with its distribution facility in a different location on a significantly smaller scale. The end result is the commonwealth and the town have lost new jobs, investment and tax revenue.
While the abutting property owners may delight in this outcome, it is a troubling result. Because the process of review was so slow and cumbersome, the project will not be built. This speaks to a procedural system that is weighted far too heavily in favor of opponents of development. What Massachusetts desperately needs is a more balanced procedure that allows the appropriateness of a proposed development to be evaluated in a careful but more expeditious manner.
Such a streamlined procedure would provide for a full public hearing of issues and concerns before the permitting board. The decision of the permitting board could then be challenged in court, but the challenge would be based “on the record” developed at the permitting board. Once in court, parties would not be entitled to make new arguments or introduce new evidence that had not previously been made to the permitting board. This simple change, coupled with the adoption of reasonable timelines for decisions by the judiciary, would go a long way toward repairing Massachusetts’ reputation as a place that is extremely inhospitable to new development.
Gov. Mitt Romney took a bold step when he selected former Conservation Law Foundation President Doug Foy to head up a new position as secretary of commonwealth development. In his prior position, Foy had more than a passing familiarity with delays in real estate projects. Perhaps it will take the former head of an environmental organization that mastered the art of challenging development projects to lead us on a path toward rationalizing our current environmental regulatory process.
