As rents soar, Walsh pushed on affordable housing
Several dozen community activists are urging Mayor Martin J. Walsh to take advantage of the construction boom sweeping Boston by raising fees on developers to pay for affordable housing and job training initiatives.
At a meeting with city officials Wednesday, advocates representing a coalition of more than 30 housing and worker training organizations argued that soaring rents are driving low- and middle-income residents out of the city. They say higher fees will help Walsh fulfill one of his top priorities, increasing funding for affordable housing by $20 million a year and building 53,000 residential units by 2030.
And, with the Boston real estate market booming, they argue that developers can afford to pay more.
“In Boston, we’re blessed with a strong market, but that strong market is also creating challenges for residents in the form of high rents,” said Joseph Kriesberg, executive director of the Massachusetts Association of Community Development Corporations.
He and others are calling for a 40-plus percent hike in the so-called “linkage” fees that developers of most large commercial and institutional projects pay to city funds that underwrite affordable housing construction and job-training projects. The current fee is $8.34 for each square foot above 100,000 for affordable housing, and $1.67 for jobs programs.
A 350,000-square-foot commercial development would be assessed $2,085,000 for the housing fee, for example, after excluding the first 100,000 square feet; the payments would be made over seven years.
Advocates want to raise the housing fee to $12 per square foot and the jobs assessment to $2.40.
The fees were “put in place to make sure the benefits of growth were shared broadly,” Kriesberg said. “Now is the right time for an increase.”
The Walsh administration said it is open to raising those fees and has drafted a proposal. But city officials declined to release specifics, and in a statement the mayor struck a cautious tone.
“We’re exploring many options, and linkage is one of the resources we have in our toolbox. Any changes to linkage need to be carefully analyzed and balanced with its impact on commercial growth,” Walsh said.
Walsh has the authority to bump up fees every three years to account for inflation, but he would have to ask the Legislature for permission for increases of the magnitude sought by the advocates.
One possibility under consideration is lowering the cut-off size to 50,000 square feet, from 100,000.
Another is subjecting other types of developments to the fee, such as industrial parks.
The meeting Wednesday was hosted by John Barros, Boston’s chief of economic development.
The development community said a fee increase is unwarranted and would drive up the already steep cost of building in Boston, resulting in higher prices for tenants in those buildings.
Gregory Vasil, chief executive of the Greater Boston Real Estate Board, said city officials should first document how higher fees would affect building costs.
“A lot of these [nonprofit] groups look at it as a negotiation, so they come up with a number and double it,” he said. “We want specifics that we can quantify.”
The nonprofits, hoping to ride the current wave of development, are pushing for quick action by Walsh. Adding to the urgency: Several workforce and job-training programs were gutted by recent state budget cuts, while government support of affordable housing initiatives has dwindled.
“The city is not getting the help from the federal and state governments for affordable housing that it used to,” said Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance. “That puts more pressure on pots of money the city does control, like linkage.”
The city has raised $6.4 million to $6.5 million a year in linkage payments for the past decade; since its inception in 1983 the program has extracted $155 million from developers and helped to create about 12,000 affordable housing units.
The debate comes as Walsh’s administration continues to overhaul the Boston Redevelopment Authority. An audit last summer found that he BRA had failed to collect millions of dollars it was owed, including linkage fees, because of shoddy administrative practices.
Several advocates who attended Wednesday’s meeting said they were impressed by the BRA’s reform efforts, such as developing a centralized system for tracking which developers owe linkage fees. Improved collections could increase linkage revenues, they said.
Advocates were also pleased the city’s jobs office will issue reports on how it spends the linkage money it receives, and will now alert nonprofits when funds become available.
“The city needs to be thinking big about building lots of new housing if we’re going to maintain economic diversity in the city,” Callahan said.
“Otherwise, we’ll become a city of the very rich and the very poor, we lose the owner-occupants who invest in their homes and their neighborhoods, and we lose a labor force that’s within an easy commute of their jobs. The problem is very severe.”