In a series of proposals affecting major developments in Boston, Mayor Michelle Wu announced her support for requiring more affordable housing and higher linkage fees for commercial projects.
Under the first update to the city’s inclusionary development policy since 2015, multifamily projects will be required to include 20 percent income-restricted units, up from the current minimum of 13 percent. The policy also would be extended to smaller projects with as few as seven units, down from the current 10.
“We are using every tool that the city has to urgently address Boston’s housing crisis,” Wu said in a statement.
But the head of the Massachusetts’ commercial developers group said the changes could come at an inopportune time, as multifamily developers already face strong macroeconomic headwinds.
“We are a bit concerned with the timing,” said Tamara Small, CEO of NAIOP MA. “It is incredibly hard to build housing right now, given construction costs and continuing rising interest rates. We certainly will be examining the potential impact on housing.”
And the state’s life science industry group, MassBIO, said it’s been warning against increasing the costs of doing business in Boston further, as demand for lab space declines from its recent record levels.
“When costs like this go up, rents go up. That being said, we also recognize that the long-term competitiveness of the Massachusetts economy depends on the affordability and availability of housing, and a strong and diverse workforce pipeline,” MassBio President and incoming CEO Kendalle Burlin O’Connell said.
The changes don’t affect projects already proposed. The future changes to the IDP are subject to approval by the Boston Planning & Development Agency as well as the Boston city council, which last week pressed Wu to move faster on increasing the affordable requirements.
Of the income-restricted portion of multifamily projects, 17 percent would be reserved for households earning an average 60 percent of area median income. The remaining 3 percent would be offered at market rents for renters with housing vouchers.
For projects with home ownership instead of rentals, the affordable minimum would increase from 13 to 20 percent in the two-thirds of the city with the highest existing housing prices.
The changes drew support from Boston-based developer Samuels & Assoc., which issued a statement by Principal Abe Menzin that the administration’s approach is “thorough and based upon the many complex factors that determine affordability and economic feasibility.”
“The process for considering changes to the city’s Inclusionary Development Policy continues to be thorough and based on analysis of the many complex factors that determine affordability and economic feasibility. Though it is an increasingly difficult time to build and finance housing projects, we are committed to working with the city on creative solutions to advancing housing affordability goals,” Menzin said in a statement released by Wu’s office.
The Greater Boston Real Estate Board said it appreciated the “flexibility” in Wu’s proposal.
“We agree with Mayor Wu: Boston, and the region, are experiencing an unprecedented housing crisis that requires bold solutions to address,” GBREB CEO Greg Vasil said in an independent statement the group issued following Wu’s announcement. “While we are traditionally skeptical of government regulations placed on the real estate industry, we hope that policies like IDP reform may prove successful if they allow the real estate industry creativity and flexibility in their approach to zoning. Ensuring that the real estate industry may creatively and flexibly approach zoning is critical to driving increased production in the Greater Boston area – one of the most important steps needed to help us address the housing crisis.”
Linkage fees on commercial developments also would rise and apply to smaller projects.
The current $15.39 per square foot fee would double to $30.78 for lab buildings and $23.09 for other commercial projects. The linkage fees would now apply to all projects 50,000 square feet or more, down from 100,000 square feet. A 500,000-square-foot lab building, for example, would pay $15.4 million under the new rates.
Linkage fees are a strategy designed to leverage investment in desirable areas to provide community benefits, in the form of payments to an affordable housing fund and job training programs. The proposal devotes 84 percent of the fees to affordable housing.
RKG Associates and Karl Seidman Consulting Services/ConsultEcon were hired by the city to provide data analysis to an advisory committee appointed by Wu in April. Wu’s office released RKG’s report on its analysis for the proposed IDP increases and Karl Seidman’s report on the proposed linkage increases along with Thursday’s announcement.
The proposal also includes changes designed to streamline development in Boston, where some projects are reviewed for years before approval. The BPDA will create a “scorecard” giving an accelerated review to proposals with affordability and climate resiliency measures. Some projects could qualify for tax breaks and “infrastructure support,” the mayor’s office said in the announcement.
“In essence, the mayor is saying to the development community, ‘We’ll be expecting more public benefit from you, and we’ll also be making it easier for you to deliver it,” Matt Kiefer, a real estate attorney at Goulston & Storrs, said in a statement released by Wu’s office.
Public hearings will be held on all of the proposals before they come up for votes, the mayors’ office said.