Mayor Thomas M. Menino is proposing to reach his ambitious goal of building 30,000 homes in Boston by allowing taller structures with smaller units, selling public land to developers at a discount, and using subsidies to spur development of more affordable housing, according to a blueprint to be released Monday.
The plan, which calls for $16.5 billion in public and private investment, begins with a series of quick steps that could significantly alter the housing landscape before Menino’s term ends in four months. Those steps include selling large chunks of city property, increasing fees on developers to help fund affordable housing, and approving some of the 3,600 housing units awaiting city permits.
In the spring, Menino announced his goal of building 30,000 housing units by 2020. But he did not lay out how it would be accomplished. Those details are in the new blueprint. Menino hopes to persuade his successor to continue the effort.
Although 25,000 of the new units would be priced at market rates, Menino is proposing to increase subsidies and other assistance to make homes more affordable to middle-income households. About 26 percent of Boston’s households are classified as middle-income — below the national average of 30 percent — and the city’s housing costs are rising much faster than incomes.
“We don’t want to be a city of the rich and poor,” Menino said. “We want to make sure the working-class people have a place to live.”
The report amounts to a last major effort by Menino to address a housing affordability problem that has been among the most vexing issues of his tenure. Even as the city has significantly increased its supply of affordable units, housing prices in many neighborhoods have risen so fast that only affluent people can comfortably afford to buy homes.
In a way, Boston is a victim of its own success. More businesses and residents have moved into its downtown and outlying neighborhoods, helping to drive sky-high housing costs even higher. Boston’s population increased by nearly 30,000 residents between 2000 and 2010, to 618,000.
In South Boston, once filled with moderately priced homes, only 7 percent of the units sold in a recent 18-month period would be considered affordable to a two-person household earning the area’s median income of $75,500 a year. A couple earning that same income could afford only 5 percent of the homes recently sold in Charlestown and 15 percent of those sold in Jamaica Plain.
The middle-income program in Menino’s plan is relatively modest, calling for 5,000 units by 2020 at a cost of $1.5 billion to $2 billion. That would be achieved by promoting development in lower-cost neighborhoods such as East Boston, Dorchester, and Roxbury.
The city would also provide direct subsidies, such as $2,000 to help with a down payment and no-interest loans to help cover any cash shortages at closing, among other measures.
With prices expected to rise even further, housing experts said the city must play a more active role in connecting people with homes they can afford.
“You can’t just add to supply, you have to be strategic about it,” said Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University. “You have to drive affordability to serve people at particular income levels who are not going to get there through the normal operations of the market.”
Belsky was among the real estate specialists, developers, architects, and others who served on an advisory panel that helped craft Menino’s plan, setting forth a roadmap for building the 30,000 units to serve a variety of groups.
In addition to the middle-income plan, the report calls for the production of housing for another 10,000 full-time students, as well as more flexible unit sizes to tailor housing for elderly residents, families with children, and a surging population of young professionals.
The administration is already allowing smaller units — 450 square feet and below — to help house more singles and young professionals. The plan also makes several recommendations to the incoming mayor, an acknowledgment that it will largely be up to the next administration to achieve many of the goals. The report calls for private developers to contribute more money for affordable housing, but it also proposes to streamline permitting, allow taller buildings near transit stops and on city-owned land, and relax requirements that new projects incorporate large supplies of parking spaces.
“We have to get building costs down,” Menino said. “Some of those high costs are the government’s fault. We have stringent regulations, and we have to look at that. We have to get the developers and the unions to work with us on this.”
The average development cost per unit in city-assisted projects in the early 2000s was $259,000, according to the housing report. In the last four years, the average jumped 41 percent to $365,000. Private development costs have soared 87 percent, from $302,000 per unit in the early 2000s to $566,000 over the last four years. Getting cooperation from unions and developers to help build below-market-rate housing will be no easy task.
One representative of the commercial real estate industry asked if it will be economically possible for developers to build large amounts of middle or low-income housing.
“Costs of construction in Boston are among the highest in the country, and the costs of land are also extremely high,” said David Begelfer, chief executive of NAIOP Massachusetts. “Commercial developers would love to build more for that market, but the economics are standing in the way.”
He said the city should consider reducing real estate taxes on multifamily housing and cutting requirements that developers fund upgrades to public streets, utilities, and lighting every time they build.
Building more housing for low-income residents will be especially difficult. The federal government has drastically cut spending on affordable housing, with Boston losing nearly half its funding for some programs over a decade. The report sets a goal of 5,000 new units of affordable housing by 2020 for households that make below the median income.
It also suggests Boston consider adopting the Community Preservation Act, which allows cities to add surcharges to commercial and residential tax bills to help pay for affordable housing, open space, and historic preservation. Voters rejected such a surcharge in 2001.