The Wu administration wants more affordable housing in the city — a completely laudable goal.
And now that the city has the power to increase linkage fees on commercial developments and inclusionary zoning requirements for new residential construction, it is the master of its own fate.
Both of those programs basically assess a fee on new construction; the fee is then used to subsidize housing for low-income residents.
But how much of a cost increase is too much? Does Mayor Michelle Wu’s proposal to double linkage fees on new laboratory space, for example, risk killing off that golden-egg-laying goose? And do plans to reach down into new housing construction to capture buildings with a mere seven units put more modestly priced housing at risk? Where is that sweet spot that will raise money (or provide actual affordable housing units) without acting as a disincentive to construction?
The Boston Planning & Development Agency will spend the next six months or so holding community meetings and meetings with stakeholders as it makes that final judgment. Of course, that also turns the BPDA into a kind of Last Chance Café for developers looking for a bargain under the old rules — and maybe that’s not such a bad thing.
But is all of it good long-term policy? That’s a debatable question.
“The number one threat to our competitiveness is our cost of living and the cost of housing,” the city’s Chief of Planning Arthur Jemison told the Globe editorial board. “We have to tackle this issue directly. So we’re stepping forward.”
But while the city’s plan might create more opportunities for subsidized housing, it would do so by making housing more expensive for other Bostonians.
The proposal put forth by the administration earlier this month was to increase requirements on housing developers to set aside more space for affordable housing units — going from the current 13 percent of units to 20 percent — but now using total square footage of the project. Jemison explained this was to ensure that affordable units were not “shortchanged.” But he also conceded it will cost developers more.
As one development lawyer pointed out, that means the cost of the market-rate units will simply rise to cover the additional expense — thus sending Boston’s already sky-high rents and condo prices even higher. Boston just tied for second in a new survey of US cities with the highest projected rents for 2023.
And that’s only if developments still pencil out at all at the higher rates. If developers don’t think the market will bear the added costs, there will just be less new construction overall — and fewer affordable units.
The city is also looking to lower the threshold on inclusionary zoning requirements from the current 10-unit buildings to seven units. That still exempts, as Jemison pointed out, those side-by-side triple deckers so popular in his Dorchester neighborhood but suddenly that eight-unit building in, say, Hyde Park is fair game.
Jemison did note that the broader plan is accompanied by proposed reforms in permitting, including a “permitting ombudsman,” and a streamlined review process for projects that meet certain goals under a regulatory “scorecard.” All of that, like the fee hikes, are still works in progress.
Under Wu’s plan, linkage fees — fees paid by developers of commercial (non-housing) properties — which currently hit projects over 100,000 square feet, would be assessed on all projects over 50,000 square feet. The fee would go from the current $15.39 per square foot to $23.09 for regular commercial space and $30.78 for lab space.
Why single out labs?
“We’re very bullish on lab space,” Jemison insisted. “But it too needs to provide an appropriate level of support for housing.”
What’s appropriate is to not discriminate among businesses. While the fee bump on commercial space might be justifiable, the additional hit solely on lab space — at a time when lab construction in Greater Boston is already slowing — seems counterintuitive. And then there are the suburbs, which are fairly salivating at the prospect of competing with Boston. Needham just approved a project with nearly 500,000 square feet of office and lab space — with 1,362 parking spaces. Oh, and a pickleball court.
Yes, that’s the competition.
As for the hike in inclusionary zoning, the timing here couldn’t be worse. Last year the BPDA permitted a mere 3,247 new housing units, less than half the 6,643 permitted in 2021 and well below the 10,123 permitted in 2020 — numbers from the agency’s annual reports first reported in the Contrarian Boston newsletter.
Elsewhere, similar rate hikes have proven disastrous. In the five years since Cambridge hiked its inclusionary zoning requirement to 20 percent (which, by the way, does not hit developments under 10 units) it did increase affordable units by 2 percent but also saw a 33 percent decline in market-rate housing production, according to the RKG Associates study used to justify the proposed Boston policy.
In San Francisco, where housing of all kinds is in short supply, a 25 percent inclusionary zoning requirement has deepened the crisis. An analysis by the San Francisco Chronicle found “entitlements” — the authorization to begin the next phase of development after filing an application — in 2021 were at their lowest level in seven years and 2022 was looking just as bad.
Boston has led a charmed life resulting in, as Jemison put it, “many years’ worth of building” already in the pipeline under the existing rules. But Boston is also a geographically confined city, surrounded by would-be competitors for new construction, and today it faces a difficult balancing act — the challenge of creating more affordable housing without disrupting existing markets.
This plan isn’t yet writ in stone. It needs some work and some thought. It also needs more than promises about “streamlining” the permitting process to provide the carrot to developers who now only see the stick of higher costs.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.