As in much of the rest of the American economy, the middle is falling out of Greater Boston’s housing market. Million-dollar condos and high-rise rentals are blooming faster than roadside daisies, while new housing construction for working families is coming in dribs and drabs. Average rents for a two-bedroom apartment in Greater Boston have increased 42 percent since 2009, and a new report shows that only 12 percent of the two-bedroom rental listings in the metro area are affordable for a family earning $75,000.
So you can see why everyone is so excited about Parcel 1B.
The 239-unit rental housing development with the utilitarian name has been a long time coming, but, when completed, it will be 100 percent affordable for working families. Located on a former Big Dig parcel near North Station, the $230 million project will be the most significant addition of workforce housing in downtown Boston in a quarter century. “This project serves as a great example of the types of transit-oriented, affordable housing opportunities we are looking to unlock for all of our families,” Mayor Martin Walsh said at a groundbreaking in February.
The parcel sat dormant for six years during the recession, until it was acquired by Related Beal developers in 2014. When it is ready for occupancy, around 2018, the coveted units will be distributed by lottery. “We expect a lot of demand,” said Ted Lubitz, Related’s vice president, in an understatement. The decision to shift from an earlier developer’s proposal for a market rate project, Lubitz said, stems from the firm’s long-term commitment to workforce housing (that is, neither subsidized public housing nor luxury units). “It’s in our DNA,” he said.
But this project’s DNA is so refined as to be almost mutant. To make it work financially, Parcel 1B is erected on a complex foundation of loans, tax breaks, and other incentives. These include $3 million in financing from the state’s Affordable Housing Trust Fund; $86 million in tax-exempt state bond financing; a 99-year lease from the state Department of Transportation, which owns the parcel; a variety of federal and state low-income housing tax credits; and a City of Boston tax stabilization deal that will charge a percentage of revenues in lieu of taxes. Related Beal is making its own voluntary contribution, and an adjacent 220-room hotel will help support the bottom line. In all, the project tapped 11 public and private financing sources, and required a sign-off by 25 city, state, and federal agencies.
All for 239 of the 44,000 units Walsh has set as a workforce housing goal in the next 15 years.
To be clear, Parcel 1B is worth celebrating: Related Beal didn’t scrimp on materials or amenities, and the project includes family-friendly three-bedroom units, which are exceedingly rare in new construction. But it’s more a demonstration project, like a specially-bred tulip. It’s hard to see how it can be a model for the city or brought to scale.
And vast fields of less expensive housing is what the region needs. According to a new study by the Urban Land Institute and the Metropolitan Area Planning Council, continued economic growth in the region will require 490,000 new working households by 2030. But the study projects a housing gap of 108,000 units for lower-income residents and 21,000 units for middle-income households. Retiring baby boomers and normal population turnover could free up some houses, and lower-cost communities like Chelsea and Lynn could play a bigger role.
But if Parcel 1B symbolizes anything, it’s how devilishly difficult it is to build affordable housing in this market. Pumping up the supply of market-rate housing alone won’t do it; too many new units would be needed before lower prices start to trickle down. Every city and town needs to up its workforce housing game. Greater Boston is thriving economically, with the city’s population growing more rapidly than in years. People shouldn’t have to hit the lottery to afford a place to live.
Renée Loth's column appears regularly in the Globe.
Correction: An earlier version of this story misstated Boston’s population growth.