Long-awaited changes to the city’s affordable housing policy are taking shape, and Mayor Michelle Wu is poised to push developers to build more of it.
Boston’s Inclusionary Development Policy — the rules that require developers of market-rate housing to also build or fund affordable units — hasn’t been updated since 2015. Four years later, the City Council passed a home-rule petition allowing IDP to be incorporated into the city’s zoning code. Any additional changes, however, were derailed by the COVID-19 pandemic, and Boston’s subsequent stretch of three mayors in a single year.
Wu debuted her initial IDP proposal in December, and a public hearing on the policy will be held on Tuesday evening by the Boston Planning & Development Agency. If approved by the BPDA and City Council, it would make a variety of tweaks that would amount to bigger affordable housing requirements for many projects.
The current policy requires 13 percent of units in a housing development to be income-restricted; the new plan would bump that up as high as 17 percent, with another 3 percent set aside for people who hold rental vouchers.
The policy would also lower the threshold of projects required to comply with IDP from 10 units to seven units — a change that was welcomed by many affordable housing advocacy groups, which had long decried small developers’ penchant for building 9-unit properties that were able to skirt IDP requirements.
The policy also allows for those percentages to be calculated by square footage, not simply by units, which the city hopes will encourage more family-sized affordable units, rather than one-bedrooms or studios.
“By using a square footage calculation versus a unit count, we can create family size units, which is often the desire of the community,” said Boston Housing Chief Sheila Dillon in a statement. “At the same time, it does not put additional strain on the economics of development.”
The changes prompted immediate pushback from developers, who say financing construction projects is already difficult amid a turbulent global economy, surging interest rates, banking turmoil, and high construction costs. Adding larger affordability requirements on top of all that, they contend, will slow housing creation. Indeed, new construction is already slow. Through the end of April, permits for new housing in Greater Boston this year are down 30.2 percent, according to data tracked by the Census.
“The bottom line is that this is, without a doubt, not going to encourage housing production in the city of Boston,” said Tamara Small, CEO of commercial real estate industry group NAIOP Massachusetts. “We have heard that loud and clear from all of the major developers that we have spoken with … they believe that this is not a workable proposal, if in fact we are committed to building more housing.”
The city, meanwhile, contends that the policy is a reasonable update, and little different from what’s already getting built. It’s rare nowadays for developers to propose new projects where less than 17 percent of units are affordable, Dillon said.
“We have done everything we can to create additional affordable housing resources for our residents while ensuring stability in the market,” she said in a statement.
For their part, many housing advocates would like to see the policy require even deeper levels of affordability, with rents aimed at lower-income residents. But city officials say they also had to make sure that the economics behind housing projects could still work.
One option would give developers a choice: 15 percent of affordable units to be set aside for households making an average of 50 percent of the area median income — $70,100 for a family of four, according to city data — or 17 percent of units to be set aside for those who make 60 percent — $84,100 for a family of four.
Had the changes been implemented five years ago, they would have netted an additional 1,500 affordable units, according to research from the Mayor’s Office of Housing.
Leo Ruiz Sanchez, a community organizer with the Fenway Community Development Corp., said an option that calls for units to be affordable for those making 50 percent of the area median income is “a huge win.” Housing advocates have long complained that affordable units — whose rents are tied to regional income levels — are not actually affordable for many residents of a city where median household income for Black and Latino households hovers in the low $30,000s.
“Boston deserves a strong IDP to equitably serve Boston’s most marginalized groups and to prevent displacement in our neighborhoods,” Ruiz Sanchez said. “We are encouraged by the improvements of the new proposal.”
Kathy Brown, the executive director of the Boston Tenant Coalition, said IDP is “not the only tool, but it’s a critical tool” to create affordable housing in Boston. The Boston Tenant Coalition is an anchor of the Coalition for a Truly Affordable Boston, which is pushing for 25 percent affordable units at a rate of 40 percent of the area median income, a rate of $56,100 for a family of four.
The coalition, Brown said, is broadly supportive of the IDP changes.
“But, you know, we think you can do a little more,” she said.