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A formula that includes discounted land acquisition costs, federal ARPA funding and promises of fast-track permitting will be tested as Boston begins to offer surplus properties for multifamily development and try to put a dent in housing costs.

Sizeable parcels from Charlestown to Roxbury could be offered to developers at below-market cost if projects meet goals for affordability and other community benefits, according to city officials.

Nearly a year after a citywide audit identified 1,200 public properties suitable for redevelopment as housing, details are starting to emerge of the expectations for the first-priority sites potentially yielding thousands of multifamily units.

“There is a lot of land available and we want to develop affordable and mixed-income communities,” Chief of Housing Sheila Dillon said. “That is very much this administration’s priority, and we want to support these developments, especially in the early phases.”

Three Priority Parcels in Boston

Mayor Michelle Wu’s administration is offering $30 million in ARPA funding to offset developers’ costs at five “priority sites,” including at least three that are beginning the developer selection process this year.

A request for proposals to be issued this month will seek developers for 290 Tremont St. in Chinatown, a two-thirds-acre parcel where an approximately 36-story building could be approved under current zoning.

Proposals are due July 10 for 6 acres of parking lots on Austin Street in Charlestown, where the BPDA has presented development scenarios including buildings up to 18 stories. The RFP lists a ground lease payment of $3 per foot of gross floor area per year.

Developers vying for both sites are asked to include 60 percent income-restricted units, qualifying for an expedited permitting process.

A third priority site, approximately 4 acres of Boston Water and Sewer Commission parking lots on Harrison Avenue in Roxbury, is going through community meetings before issuance of a request for proposals in late summer, BPDA Director of Real Estate Rebecca Hansen said.

Parcels will be offered through 70- to 99-year ground leases, with potential below-market terms offered depending upon the affordability levels and community benefits, Hansen said.

Boston officials will seek proposals this month to redevelop a 290 Tremont St. parking lot, identified as a priority site for affordable housing production in a 2022 citywide land audit. Photo courtesy of Boston Planning & Development Agency

What Matters to Developers?

Public property dispositions usually come with a different set of development expectations than private transactions, including elevated requirements for affordability or other public policy goals.

The trade-off for developers trying to make the numbers work: opportunities to acquire parcels at below-market rate.

“Getting site control and a reasonable [acquisition] price is critical for building affordable and mixed-income housing at scale,” said Jerry Rappaport, founder of the New Boston Fund, which broke ground last month on 80 mixed-income condominiums known as Olmsted Green at the former Boston State Hospital property in Mattapan. “And if the [cost] basis is zero to turn it over, it gives a good running head start to figuring out how to build a capital stack.”

New Boston Fund and its partner Lena Park Community Development Corp. have been redeveloping the campus since being selected by state officials in 2005. The newest phase received funding from the Mayor’s Office of Housing and the MassHousing’s CommonWealth Builder Program, reducing developers’ costs and enabling nearly half of the units to be offered to households earning a maximum 80 or 100 percent of area median income.

“It’s a very good methodology for producing housing at scale at a wide range of affordability,” Rappaport said.

But public dispositions sometimes come with additional risks, including lengthy political processes before a developer is even designated.

Massport announced in 2021 that it would seek proposals for up to 200 units of mixed-income housing at a parcel on D Street, for its first income-restricted housing project in the Seaport District. The agency narrowed the field to five finalists in June 2022, but hasn’t picked a developer yet. The Massport board of directors’ real estate committee continued to review proposals for parcel D-4 on April 4, according to meeting materials.

Thomas O’Brien, managing director of Boston-based HYM Investment Group, said public dispositions typically have lengthier timelines than private transactions. The firm has been redeveloping Boston’s Government Center garage property since initially pitching the 2 million-square-foot project in 2011 and breaking ground in 2016.

“If a request for proposals for a particular site became available tomorrow, that [selection] process can take six months, and then you need to go through permitting which can take a year, and then go into design before you can get in the ground,” O’Brien said. “To get these things done, you need to have a sense of urgency.”

Healey Targets 2024 for Surplus Rollout

That urgency appears to be felt on Beacon Hill.

Upon taking office in January, Healey gave Secretary of Administration and Finance Matthew Gorzkowicz an priority assignment: Pull together a list of all state properties suitable for disposition for housing developments by 2024.

The state owns nearly 658,000 acres of land, according to the Division of Capital Asset Maintenance and Management’s 2023 real property report, which doesn’t include properties owned by authorities such as the MBTA and Massport which have boards of directors that control land dispositions.

A spokesperson said A&F already has partnered with MBTA, MassDOT and MassDevelopment “to compile an initial list of future projects to boost housing production” and is building an “expanded inventory of property and projects that could be unlocked to support the administration’s housing mission.”

Concerns About Timing and Density

A prominent housing advocate praised the Wu and Healey administrations’ focus on housing production, but said public dispositions could end up as missed opportunities without sufficient density and timely approvals.

Steve Adams

“We need to have a conversation about zoning and what it takes to build a sufficient number of units,” said Jesse Kanson-Benenav, executive director of advocacy group Abundant Housing Massachusetts. “Developers who propose great projects still face incredible opposition, and projects get whittled down.”

The BPDA is offering expedited permitting for the first priority sites, reflecting its recent policy change fast-tracking projects where 60 percent or more of the housing units are income-restricted. RFPs for the Austin Street and Chinatown parcels specifically require a minimum 60 percent affordable units, qualifying proposals for the expedited review.

While the BPDA oversees the rollout of priority sites, the Mayor’s Office of Housing is currently seeking proposals for 20 smaller vacant city-owned parcels in Dorchester, which are due June 9.

“The cost of construction is high, and we want sales prices to be affordable to moderate-income families,” Dillon said. “If it’s rental housing, we are discounting the land or offering at a nominal sum. And most of these projects will be coming in for additional resources to make their numbers work.”