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The city of Boston is exploring how to create a $100 million fund to invest in permitted housing projects, Mayor Michelle Wu told the city’s business elite Wednesday morning.
Money for the fund would come from the city’s free cash balance.
The first project to benefit from the “Housing Accelerator Fund” will be a 265-unit building in Leggat McCall Properties’ redevelopment of the Boston Housing Authority’s Bunker Hill public housing project in Charlestown, according to a fact sheet released by the mayor’s office.
“By investing alongside private capital, we’ll be able to accelerate the production of housing, and use our return on these investments to reinvest in future projects,” Wu said in her annual speech to the Greater Boston Chamber of Commerce. “We’re also going to explore whether this will work for other mixed-income, public-private partnerships and for fully-private projects, as well, that could complement the state’s Momentum Fund.”
The Momentum Fund was created by part of Gov. Maura Healey’s $5.16 billion housing bond bill this summer and is targeted at large-scale developments that include a higher proportion of affordable units like The Davis Companies’ 1240 Soldiers Field Road development.
Speaking to reporters after the event, Wu said the Charlestown development would help the city work out the details of the fund, which must also be approved by the City Council.
“We’re going to start with one project that is a public-private partnership, where we know the finances inside and out and have spent years trying to get it actually to the point of getting over the line that will create more tax revenue and will create more affordability for our residents,” she said.
Wu touted the city’s pipeline of permitted housing developments in light of last week’s Federal Reserve’s 50-basis-point rate cut. According to the mayor’s office, Boston has a pipeline of over 20,000 permitted-but-unbuilt housing units, including 13,000 approved by the BPDA since 2022. The new accelerator fund, she said, would help kick-start construction on some of these projects.
“While lower interest rates aren’t a solution to all the challenges we face – they are a hopeful signal of the shift we’ve been preparing for. Loosening capital markets are creating a more favorable environment for financing,” she said.
ISD Revamp Finally Takes Place
The mayor also touted a planned “restructuring” of the city’s Inspectional Services Department which, she said, would fix time-consuming and costly bottlenecks in permitting that delay buildings when they’re actually under construction. Two weeks ago, the city set up a new call center for inspection requests to fix a situation Wu likened to “nailing jelly to a wall” and plans a new online portal to submit and track requests.
Wu has long stated that streamlining the ISD permitting process was a top goal of her first term.
ISD will soon have two separate teams, one for fast-track permitting for smaller and simpler projects and another dedicated to big, complex projects. The current structure “means that not only do all projects – big and small – go through one person, but because there’s no specialization or division on the team, if you’re trying to build a skyscraper, you could get stuck behind someone who’s building a triple-decker,” Wu said.
The city is also planning on making the certificate of occupancy and certificate of inspection processes “fully digitized” by “the middle of next year,” the mayor said.
The mayor criticized the drawn-out nature of the Article 80 approvals process, calling it “unacceptable,” and while she didn’t commit to establishing a “shot clock” or a definite time, she said pledged that affordable housing projects would see their permitting time cut “in half” from pre-pandemic norms.
Wu also pledged that every development proposal in a rezoned area will be given a fact sheet that explained “what they’re entitled to from the outset, rather than finding out two to four years into the process.”
No More Affordability Rules Delays
On top of the planned changes to the city’s Article 80 development review process and rezoning processes underway across the city, Wu sought to paint a picture of a city “open for business,” eager for more development and already beating national trends in class A office utilization – up to 96 percent of leased office space, she said, citing data provided by Boston Properties.
“I am proud of all the work that we have done at the city over the last three years – both internally and in partnership with the leaders in this room – to ensure that when the economic winds shifted, our anchor would be up, our ship would be in order, and we’d be ready to chart a course toward a smarter kind of growth,” she said.
But when asked by Greater Boston Chamber President Jim Rooney during a Q&A after the speech about the city’s new hike to affordable housing requirements city-wide, which are set to go into effect Oct. 1, Wu confirmed there would be no delay to a policy that a city-commissioned analysis predicted would make condominium projects financially infeasible in Dorchester, Hyde Park, Jamaica Plain, Mattapan, Roxbury and West Roxbury.
Wu couched her decision in what she said was her administration’s efforts to deliver a much more predictable development climate.
“The predictability of policy, setting clear baselines…is important,” Wu said, saying the new affordability rate reflects the on-the-ground reality of how development projects actually get built after negotiations with city officials and others. “Our adjustment was really to set that as the actual baseline to remove the need for years of haggling in the middle.”
Major developer trade group NAIOP-MA sent a letter to city officials last week urging Wu to delay implementing the proposal, citing ongoing challenges in the commercial real estate financing environment.
Boston’s new policy requires 17 percent of units to be reserved for households earning a maximum 60 percent of area median income, and another 3 percent for those with housing vouchers and incomes below 30 percent of AMI. Projects also could qualify by reserving 15 percent of units at a maximum of 50 percent AMI, plus the 3 percent voucher component.
For-sale condominium projects would have a 20 percent affordable unit minimum, but be required to reserve half of the units at 80 percent of AMI and half at 100 percent of AMI.
In a statement to the media earlier this week, Wu’s office had said there would be “flexibility” granted to developers in meeting those new targets. Speaking to reporters after her Chamber speech, Wu clarified that “flexibility” meant that projects that were filed before Oct. 1 of this year would be allowed to move forward under the old affordability requirements.
