Future location of The Stage at Suffolk Downs/ Photo courtesy of HYM
The redevelopment of Suffolk Downs promises to be one of the biggest real estate plays in Boston’s history, with thousands of new – and mostly luxury – apartments and condominiums.
But amid a dire shortage of middle-class housing, it also represents a massive missed opportunity.
Former City Hall development czar Tom O’Brien and his firm HYM Investments are gearing up to move forward with plans to build 10,000 new residential units, millions of square feet of new offices, all sorts of restaurants, shops and green space on the grounds of the 161-acre East Boston ex-racetrack.
O’Brien, a one-time chief of the old Boston Redevelopment Authority turned private developer, says 20 percent of the apartments and condos slated to take shape on the grounds of the old racetrack will be affordable set-asides, rented or sold at below market rents and prices.
The commitment is clearly designed to help defuse opposition from neighborhood and housing activists in East Boston and beyond who fear yet another high-priced enclave for the rich.
That 20 percent affordable pledge is nothing to sneeze at. Yet it effectively ensures that the redevelopment of Suffolk Downs will follow the same dreary model that transformed the Seaport and large tracts of downtown into playgrounds for the rich, packed with cookie-cutter luxury condo high-rises and pricey corporate offices.
Tough Numbers
It’s a matter of simple economics.
In exchange for carrying the cost of renting out a number of apartments at significantly below–market rates, developers are given a free hand to push the limits on the pricing of the other 80 percent of their units, driven by the reality of developing in Boston today.
Buildable land is hard to come by in this nearly 400-year-old city, and when it becomes available, it sells for a premium.
HYM spent more than $155 million to acquire the 161-acre Suffolk Downs in 2017 – that’s roughly $1 million an acre and, of course, not all of that space is buildable.
But it’s not just the hefty upfront cost of acquiring land, but also the cost of carrying it for years, with no revenue coming in, as plans are hashed out and city approvals are obtained. That also means deploying a small army of lawyers, engineers and architects to hammer out plans and work with regulators at the Boston Planning & Development Agency.
All this means HYM’s new neighborhood – if we’ll even be able to call it that – will be full of condos selling for millions and apartments renting for $10,000 a month to hedge fund tycoons and biotech executives, with a sprinkling of the deserving poor hidden away in their affordable units.
That leaves everyone else in the broad middle class on the outside looking in, battling it out for tired rentals and grossly overpriced, beat-up single-family homes in the suburbs.
A Better Way
Developers aren’t lying when they complain the only way to ensure a decent return and nail down financing for a new residential project in Boston is to go the luxury route.
But there is another way this whole project could have gone done, one that gets to that massive missed opportunity I alluded to earlier.
What if Boston had bought Suffolk Downs itself – or even taken the site through eminent domain – and then leased it out to developers?
And what if the BPDA had promised a streamlined approval process – say, three to six months – to developers with solid plans for middle–class housing?
To further drive down costs, the city could also finance the buildout of the sewer and water lines, using future tax money generated by the project to pay for roads and other infrastructure through a tax increment financing deal.
With the burden of massive land acquisition and infrastructure costs lifted, the development of middle-class housing at Suffolk Downs suddenly becomes far more feasible.
Hope for the Future
Yes, it would be a lot of money for the city to put down up front – but it’s not unprecedented.
The Boston Redevelopment Authority – the predecessor to today’s BPDA – flexed its eminent domain muscles a couple decades back to acquire the 60 acres of Seaport land on which the Boston Convention and Exhibition Center was built.
The takings cost well into the tens of millions of dollars and amounted to a giant subsidy for Boston’s hotel and tourism industries, the main beneficiaries of the massive new meeting hall.
It’s been long a matter of debate whether the investment – which eventually amounted to hundreds of millions of dollars in state and city money – was worth it.
But imagine if Boston development officials had applied my Suffolk Downs strategy instead?
Scott Van Voorhis
The Seaport might look today more like a real Boston neighborhood, and not some luxury condo developer’s fantasy.
Sadly, barring some last-minute collapse of HYM’s development plan and its financing, we’re probably too late to do anything about Suffolk Downs.
And who knows whether there ever be another redevelopment project quite this big.
That said, Boston hasn’t seen the end of big development projects. Here’s hoping the next time an opportunity presents itself, Boston’s leaders will ditch their worn–out development playbook and try something completely different.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
