Since the first days of her administration, Boston Mayor Michelle Wu has signaled that she wants the city to go further on affordable housing.
On Thursday, she laid out exactly how she would do that.
In a move that could ultimately generate hundreds of new affordable apartments and millions of dollars to build them, Wu proposed hiking the amount of space in new residential buildings that must be set aside for lower- and middle-income residents, and steep increases — as much as double — in fees commercial developers must pay into city housing funds.
Wu also promised to streamline the city’s review of new developments to more quickly approve projects that prioritize climate resilience, affordability, and equity.
“Housing and the price of housing continues to stress our residents and our employers,” she said at a presentation Thursday. “As we continue our recovery from the pandemic, where people can afford to live drives everything about our economic competitiveness as a region.”
The changes are centered on a city policy known as inclusionary development (IDP), which requires new housing projects to create affordable units, and linkage fees, which commercial developers pay toward affordable housing creation and workforce development.
Currently, the city requires housing developers to set aside 13 percent of units in new projects as affordable, beginning with projects of 10 units or more. Wu would increase that set-aside to 17 percent of a project’s square footage, and lower the size threshold to seven units or more. The units would be reserved for residents whose incomes do not exceed 60 percent of the area median income, currently $84,100 for a family of four.
And, in a new move that city officials say is the first of its kind in the country, developers would also be required to set aside 3 percent of the building space for holders of Section 8 and other rental vouchers.
The linkage fees that commercial developers pay, meanwhile, are currently $15.39 per square foot, for projects 100,000 square feet or larger. Wu has proposed cutting that threshold to 50,000 square feet, doubling the linkage rate to $30.78 for lab developments, and boosting it by 50 percent for other commercial projects. The changes to linkage fees would be phased in over two years, the city said.
Kendalle Burlin O’Connell, incoming chief executive of the Massachusetts Biotechnology Council, said Thursday that the group had “deep reservations about increasing the cost of doing business in the city” during times of inflated construction costs and cooling lab demand. Boston already has some of the most expensive rent for life-science space in the country, O’Connell said.
“When costs like this go up, rents go up,” she said. “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.”
Joe Kriesberg, the outgoing CEO of the Massachusetts Association of Community Development Corps., whose members build many affordable housing projects, said he is glad to see the city moving forward.
“We have a major housing crisis in Boston, in Greater Boston, and in Massachusetts,” Kriesberg said. “Both of these steps are needed. They’re urgently needed.”
Establishing a new set-aside target helps set a baseline minimum so the city can better plan for housing, Kriesberg said. But neither the boost in linkage fees nor the higher affordability requirement increase will solve Boston’s housing crisis on its own, he said.
“We shouldn’t expect any one of these policies to be the silver bullet to fix the massive, massive problem,” he said.
The National Low Income Housing Coalition estimates that to meet demand, Massachusetts as a whole needs an additional 163,000 homes that are available and affordable to lower-income renters.
The proposed changes come at a time of increasing economic uncertainty, with interest rates on the rise and construction costs still high.
“It has never been, in recent memory, more challenging to build housing,” said Tamara Small, CEO of commercial real estate industry group NAIOP Massachusetts. “Something that could potentially make it more difficult to finance and build housing is certainly concerning.”
In recent years, both Cambridge and Somerville have also increased their own versions of inclusionary zoning to 20 percent — and both have seen an overall decline in the number of new units, said Kyle Talente, president of consulting firm RKG Associates. The decline is partially attributable to both zoning changes as well as the COVID-19 pandemic, he said, along with other economic factors.
Earlier this year the Wu administration organized a task force of advocates, developers, and other housing experts to start working on changes to the IDP, and in June the city tapped RKG to examine financial aspects. The firm reviewed multiple options, and found there was financial feasibility for an IDP structure with 17 percent of units, at 60 percent AMI, with 3 percent set aside for voucher holders.
“It looks like something that will create a good balance,” Talente said.
Wu has more housing moves coming.
By early 2023, she’s planning to propose some form of rent control — or rent stabilization — and renew her push for a 2 percent transfer tax on high-dollar real estate sales, which could raise huge sums for affordable housing. Both proposals, though, would need approval from state lawmakers and Governor-elect Maura Healey.
The changes to linkage and IDP are largely under Wu’s control.
The Boston Planning and Development Agency and the Mayor’s Office of Housing will host public hearings and ask for public comment before creating final amendments to be approved by city agencies and officials. The changes to IDP will require City Council approval in addition to votes by the BPDA and Zoning Commission, while the linkage changes only need BPDA and Zoning Commission votes.