Business

Boston might require developers to set aside more low-income units

Mayor Martin J. Walsh’s administration is likely to raise affordable housing requirements again.
Keith Bedford/Globe Staff/File 2017
Mayor Martin J. Walsh’s administration is likely to raise affordable housing requirements again.

With Boston’s affordable housing crunch showing no signs of easing, the Walsh Administration appears ready to ask developers to do more to help solve it.

City officials are gearing up to review Boston’s policy later this year that requires builders to set aside units at modest rents, with an eye towards increasing those requirements. That would make it the second increase in three years.

The prospect was raised in a recent letter filed by Tim Davis, housing policy manager at the Boston Planning & Development Agency, on the planned redevelopment of Suffolk Downs in East Boston. He wrote that a review of the city’s so-called Inclusionary Development Policy will take place “over the next year, and it is expected that there will be changes to the policy that will increase the level of affordability requested of developers.”

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Davis was not available for comment, a BPDA spokeswoman said. She said the housing requirement, last updated in late 2015, is subject to review every three years, but added it is “premature” to discuss specific changes.

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“Prior to proposing any changes, a feasibility study will be conducted and will incorporate perspectives from a wide range of stakeholders,” the agency said in a statement.

Boston and other cities are increasingly requiring developers of new buildings to either include affordable units for low- and middle-income residents in their developments or pay for them to be built nearby.

With Boston in a building boom and housing prices becoming ever more expensive, Mayor Martin J. Walsh has used the program as a key tool to create new affordable housing. The program has generated nearly 1,200 affordable units in buildings permitted from 2014 through 2016, according to BPDA data, and hundreds more since.

Maximum rents for apartments created under the program vary, and are tied to income. But a typical two-bedroom for a family of four that earns $82,700 would cost $1,655 a month, nearly $1,000 less than the average rent for a two-bedroom in the city, according to estimates by Zillow.

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Walsh updated the program in late 2015, nearly doubling the minimum payment for condo developers who chose not to build their affordable units within their own properties. Requirements for on-site affordable units remained unchanged, at 13 percent of the building. The aim was to encourage developers to keep affordable units on-site, while capitalizing on high-end condo construction in some of the city’s prime neighborhoods.

Since then, activists have pushed for higher requirements in certain areas, such as the Washington Street corridor in Jamaica Plain and Roxbury, and housing became a major issue in then-City Councilor Tito Jackson’s campaign against Walsh last fall.

Walsh has tried other ways to boost affordable housing, endorsing a small surcharge on property owners approved by city voters in 2016, and requiring more affordable units in buildings that go up on city-owned land.

But when it comes to the main Inclusionary Development Policy, housing experts said, the city has to walk a fine line: On the one hand, they say that with federal housing funds declining, the program is Boston’s most powerful tool to create new affordable housing, and the city needs every unit it can get; but require too much, and developers may not build out of fear they would lose money because of the high costs of subsidizing affordable units.

The changes three years ago took months of discussions among developers and housing advocates, but the city struck the right balance, said Greg Vasil, chief executive of the Greater Boston Real Estate Board. He was hopeful City Hall will take the same approach this time.

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“The changes they’ve made have worked out very well,” Vasil said. “They were really sensitive last time about not making deals uneconomic.”

But the market is strong enough — and the need big enough — that developers could probably bear to build a little more affordable housing, said Joe Kriesberg, president of the Massachusetts Association of Community Development Corporations, which represents nonprofit developers.

“We didn’t want a policy that was going to kill the golden goose. Well, it certainly hasn’t done that,” he said. “That would suggest there’s more margin here to ratchet up the requirements a bit.”

But how much? And when?

Any changes are likely still months away. But in its letter on Suffolk Downs, the city urged developer HYM Investment Group, — which has proposed as many as 10,000 condos and apartments in all — to aim higher than 13 percent for affordable housing. That call was echoed by letters from some community groups and East Boston residents such as Ernani DeAraujo, who urged HYM to make the project 20 percent affordable, and set aside funds to help preserve existing affordable housing in the fast-changing neighborhood.

“Housing inequality is the number one issue impacting the families in East Boston and Boston at large,” he wrote. “Mayor Walsh has successfully expedited the building process for new homes, but we can’t get out of a problem that was decades in the making in a few short years of building.”

In a statement, HYM pointed out it has already planned to build nearly 1,000 affordable units in the huge development, and is open to discussing the issue with city officials, both about Suffolk Downs and affordable housing across the city.

“We will continue to work in partnership with the city as they explore updating the policy,” HYM said.

Tim Logan can be reached at tim.logan@globe.com. Follow him on Twitter at @bytimlogan.