It was designed to throw a lifeline to moribund developments in the depths of the Great Recession, and renewed two years later amid continuing sluggishness in the real estate market.
The Massachusetts Permit Extension Act is being credited with serving as a Band-Aid and helping commercial developers retain financing commitments while waiting for a market recovery. But the full benefits, industry observers say, may have yet to to be felt.
“Our members said it was vital for us to have the tools and flexibility to keep a project going,” said Greg Vasil, CEO of the Greater Boston Real Estate Board. “You have the little things that would not put the knife through the heart, but delay it enough to be a problem. They saw it as being just enough to keep them afloat.”
Many state and local development permits expire after two to five years, potentially imperiling projects that were conceived during the boom years of the previous decade.
Developers whose ambitious proposals entered holding patterns as financing dried up would have been required to return to local land-use boards to renew permits. And economic hardship does not necessarily justify an extension, said Peter Tamm, a real estate attorney for Goulston & Storrs.
“Usually you have to show you’ve been proceeding diligently with either predevelopment or actual construction,” Tamm said.
Signed by Gov. Deval Patrick in 2010, the act established an automatic four-year extension to a broad array of local and state development permits issued between August 2008 and August 2010. It was renewed for an additional four years in 2012, covering permits issued between August 2010 and August 2012.
‘Critical’ Component
John Rosenthal, president of Newton-based Meredith Management Corp., said the permit extension act has been “critical” to stabilizing the region’s commercial real estate market.
“We came through the worst recession in 80 years and it’s in everyone’s best interest to keep projects alive if there are circumstances beyond your control,” Rosenthal said.
In 2007, Rosenthal’s company first proposed the $500-million Fenway Center, which would transform an array of parking lots into a mixed-use community of five buildings containing apartments, stores, restaurants and offices. The law did not directly benefit the complex project but Rosenthal said it sent an important vote of confidence to developers and lenders.
“There’s a real recognition that one of the things that makes Boston special is it’s not overdeveloped and the barriers to entry are extreme,” he said. “It’s really hard to get a project approved.”
Brian Grossman, a partner at Prince Lobel in Boston, said many of his firm’s telecommunications clients have benefited from the extension while siting towers and equipment.
“It certainly has accomplished in part what it set out to do,” Grossman said. “It alleviated some of the fears of developers, and in some cases lending institutions. It also kept them from having to spend the time, money and effort to file extensions for projects that boards might have looked favorably upon anyway.”
Goulston & Storrs’ Tamm said the savings on permitting costs is a significant incentive, particularly in Massachusetts’ regulatory landscape.
“People had spent a considerable amount of time and effort and there are a lot of barriers to entry in Massachusetts,” he said. “These entitlements took many years and were very costly for many projects.”
As the economy and real estate markets recover, the full benefits of the act might be only beginning to be felt.
“Because any projects {permitted} between 2008 and 2012 now have an additional four years of life in them, our economy could realize the benefit of this for quite some time,” said April Anderson Lamoureux, a land-use consultant and the state’s former assistant secretary for economic development.
