Mayor Michelle Wu’s plan to boost affordable housing requirements in new construction cleared a big hurdle last week.
But what it might mean for the city’s roiling housing crisis largely depends on who you ask, with housing advocates asserting her changes don’t go far enough while developers warn they will will stifle new production.
Either way, Wu’s move to require 17 percent of most new buildings to be set aside at income-restricted affordable rents — up from the current 13 — with another 3 percent set aside for Section 8 voucher holders, passed the Boston Planning & Development Agency, and will now head to the City Council.
Wu’s plan would be the latest in a series of tweaks to the city’s Inclusionary Development Policy, or IDP, since it was established by then-mayor Thomas M. Menino in 2000, but the first since 2015. One of the largest programs of its kind in the country, IDP is credited with creating more than 4,000 affordable units and generating more than $200 million in fees for city housing funds.
But amid Boston’s pre-COVID building boom and spiraling housing costs, housing advocates, and Wu herself, have long called for the city to do more. And upon taking office as mayor Wu said she would study an increase to 20 percent, before settling on 17 with 3 percent of units set aside for Section 8 voucher holders.
To take effect, the measure would need to be approved by two more political bodies — the Boston City Council and then the Boston Zoning Commission. Defeat at the council would require a supermajority — nine out of 13 members — to vote against.
Five councilors last week signaled concerns that the plan doesn’t go far enough, co-signing a letter along with 31 neighborhood and housing advocacy groups that calls for more units to be mandated at rents affordable to lower-income residents. Currently the rules call for rents affordable to households earning an average of 60 percent of area median income; The Coalition for a Truly Affordable Boston wants them set at 40 percent — $59,360 for a family of four.
“Displacement is impossible to reverse, and BIPOC communities will be impacted most, so we need strong affordability requirements to stabilize our city,” the coalition wrote in a statement.
Councilors will likely also hear from real estate developers, who are near unanimous in their opposition to the plan.
Many contend that ongoing economic uncertainty and inflation, high interest rates, and the Wu administration’s particular focus on real-estate policy changes such as rent control will drive away the deep-pocketed lenders and institutions that typically finance large-scale real-estate development — resulting in little new housing, at any price.
Tamara Small, CEO of commercial real estate development association NAIOP Massachusetts, described her members as “deeply concerned.”
“At a time when businesses and residents recognize that the need for more housing has never been greater, the city has chosen to advance a policy that has been proven to negatively impact housing production,” Small said.
At a public meeting on the proposed changes, NAIOP pointed to San Francisco’s proposed drawback of affordable-housing requirements. San Francisco in 2017 boosted its required levels of affordable housing to higher than 23 percent in some cases; but recently, amid that city’s post-pandemic struggles, a city committee voted to decrease that rate to as low as 12 percent.
Ted Egan, the chief economist for the San Francisco Controller’s Office, told the Globe the recommended decrease was a result of declining rents and increasing construction costs.
“None of the high-rise prototypes we studied were feasible at any level,” he said.
In designing its plan, Boston hired consulting firm RKG Associates to determine what might be feasible. The firm examined similar increases in Cambridge and Somerville, which each increased their requirement to 20 percent in recent years. Both cities saw an overall decline in the number of new housing units since the move, though that was also attributable in part to the COVID-19 pandemic, RKG’s president, Kyle Talente, previously told the Globe.
And while Boston’s increase from 13 percent to an effective 20 percent rate looks like a big jump on paper, in reality, many developers are already proposing developments at 17 percent, said BPDA planning director Aimee Chambers.
Boston Chief of Housing Sheila Dillon stressed that the city designed a program that it believes will strike the right balance. The proposed increase is what the city feels it “can ask developers to do without harming development,” Dillon said.
And they’re giving developers time to adjust. If approved, the changes would go into effect Oct. 1, 2024. The delay in implementation was “intentionally” made in recognition of the difficult real estate financing climate, Chambers said.
“We want to make sure that we’re continually monitoring the market,” she said.
Marc Draisen, executive director of the Metropolitan Area Planning Council, in an interview said the Wu administration’s proposal strikes a “reasonable middle ground.” And it’s key to remember that inclusionary zoning is “just one tool” to develop affordable housing, Draisen said.
“It is notoriously challenging to develop an appropriate inclusionary policy for any large city with multiple submarkets,” Draisen said. “The difference between Mattapan and Jamaica Plain and the South End — those could be different communities in different parts of the country.”