Boston's housing problem

Matthew said:
Further development is already strongly incentivized. Are you hoping that at some point it breaks through the zoning/red-tape stranglehold?
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At some point, the expected revenue from those sky high rates will be enough to grease the palms of every paper pusher in the city.
 
No accident that only luxury housing seems to get approved.
 
Developers are incentivized to keep housing supply low at the behest of the city government. Inflated property values with a lower population is a win win for the city coffers. City Hall knows full well it can collect a lot of cash and pay out very little in services if market conditions continue.
 
Lurker said:
Developers are incentivized to keep housing supply low at the behest of the city government. Inflated property values with a lower population is a win win for the city coffers. City Hall knows full well it can collect a lot of cash and pay out very little in services if market conditions continue.
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Plus the people that move into luxury condos don't send their kids to public schools...and if they do, it's once they have moved out of the city.
 
Boston to expand housing by 2020

Plan calls for up to 30,000 new units

As part of the plan, the city aims to create more housing for several demographics, including recent college graduates, middle-class families, low-income renters, and seniors.
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During his State of the City address in January, Menino pledged to make 1 million square feet of city-owned property available for middle-class housing development.
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http://bostonglobe.com/metro/2013/0...nits-boston/9s4cwGCnk1yTYoop9lyA6O/story.html
 
Boston Globe - June 04, 2013
Big housing plans for smaller cities
By Paul McMorrow
| Globe Columnist

June 04, 2013

The people who built Malden City Hall did their best to imitate Boston’s more famous seat of municipal government. Malden’s charmless version of Government Center is even harder on the eyes, and the surrounding neighborhood, than Boston’s. A squat brick monolith with a leaky roof overlooking an Orange Line station, the complex succeeds in imitating Boston in just one way: It chokes the life out of everything in its path.

Malden City Hall looks headed for the slag heap, since the building is both unloved and prohibitively expensive to maintain. City officials are moving toward putting the building out to bid for redevelopment. This doesn’t sound like a development on par with, say, the Big Dig and a clean Boston Harbor opening the Seaport’s vast parking lots to development. But the downtown rebuilding projects currently underway in Boston’s formerly industrial urban satellites will do more to shape the state than the towers rising above Fan Pier. The state’s housing shortage— brought on by decades of building new homes at a fraction of the national pace — is far too acute for Boston to tackle on its own.

Boston deserves every headline it gets. The city is the economic force that enables everything happening around it. But Massachusetts can’t just sit back, let Boston erect its shiny new apartment and condominium towers, and expect those developments to carry the state forward.

Northeastern University’s Dukakis Center has said the state needs to double or triple its rate of housing construction in order to meet coming demand. The Patrick administration believes the state needs 10,000 new apartments and condominiums per year over the next decade just to have a housing market that functions normally. Massachusetts has only hit that level of home construction a few times over the past two decades. Boston Mayor Tom Menino recently outlined a plan to add 30,000 new housing units to Boston by 2020; as big as that number sounds, it still means that 70 percent of the state’s new homes will have to come from somewhere outside Boston. Much of the remainder will have to come from places like Lowell, Quincy, and Malden.

The former industrial cities outside Boston loom large because, unlike the bulk of the state’s suburbs, the smaller cities are interested in building, and building the right way.

The suburbs eat land and promote costly sprawl without really addressing the state’s housing shortage. By contrast, Somerville, Quincy, and Worcester are aggressively pursuing dense tracts of new housing as an economic development strategy. Quincy and Worcester are pushing mega-projects that use housing to reinvigorate their downtowns; Somerville’s Assembly Square is turning an old Ford car plant into a new neighborhood of apartments, shops, and offices. Through smaller, more systematic housing efforts, Lowell and Haverhill have quietly turned their old industrial cores into thriving downtowns. In each case, transit access to Boston enabled a housing-first development strategy aimed at lifting up underutilized commercial centers.

Malden’s hulking, leaking City Hall fits squarely into the pattern other smaller post-industrial cities have cut. It sits in the middle of what was once the city’s main commercial artery. The Orange Line is on one side of the building, a historic downtown is on the other, and there’s no direct way of walking from one to the other. Downtown actually dead-ends at City Hall’s front door; not surprisingly, downtown is light on pedestrian traffic, and pockmarked by vacant storefronts.

Demand for housing near public transit is so strong that, even with a mixed bag of a downtown choking in City Hall’s shadow, Malden has roughly 550 apartments in its construction pipeline. Blowing up City Hall would free up two acres of prime transit-adjacent land for development and connect the downtown corridor to the Orange Line. If done right, trading a lifeless municipal building for dense new housing developments would activate downtown shops while opening the city’s center to further redevelopment efforts. There’s nothing exotic about this trade. It’s the same play that’s at work in Quincy and Haverhill and Lowell and Worcester. It’s just good city-building. But the state needs good city-building, and lots more of it. Leaning on Boston’s construction boom isn’t enough.

Paul McMorrow is an associate editor at Commonwealth Magazine. His column appears regularly in the Globe.
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Also, the WSJ had an article today on how single family home suburbs are densifying by changing zoning to allow "inlaw" appartments, with Vancouver leading the way. More residents without a new outlay for infrastructure.

On phone so can't easily post link but worth looking up.
 
Could the land already used as affordable housing provide a housing relief valve? Someone was telling me about a redevelopment just kicking off back home in Seattle, where a New Deal housing project of 561 units is being demolished. In its place are:

• 561 units affordable @ <30% AMI, with an option for 100 more units possible if more funding comes through
• 290 units affordable @ <60% AMI
• 850 units affordable @ <80% AMI, targeted to service workers downtown and at the nearby hospitals
• A whopping 3,199 units to be rented or sold at market rates to help cross-subsidize the affordable units

They’re going from 561 affordable units to 1,700-1,800 affordable units, and from 0 market rate to 3,200 market rate. There's also a streetcar line in the final phases of construction running right through the middle of it all. Could this go-big approach work here as mid-century housing projects start to approach their expiration dates?

The Old Colony redevelopment was a huge missed opportunity, as far as I can tell they demolished 164 units and built 116 units in Phase 1, and Phase 2 is demolishing 223 units to be replaced by 169 units for a net loss of 102 affordable apartments. The Charlesview redevelopment didn’t make things worse at least, there they replaced 213 units with 240 units. Still a far cry from a nearly ten-fold increasing in housing being accomplished with the Yesler Terrace redevelopment.
 
Scipio said:
Could the land already used as affordable housing provide a housing relief valve? Someone was telling me about a redevelopment just kicking off back home in Seattle, where a New Deal housing project of 561 units is being demolished. In its place are:

• 561 units affordable @ <30% AMI, with an option for 100 more units possible if more funding comes through
• 290 units affordable @ <60% AMI
• 850 units affordable @ <80% AMI, targeted to service workers downtown and at the nearby hospitals
• A whopping 3,199 units to be rented or sold at market rates to help cross-subsidize the affordable units

They’re going from 561 affordable units to 1,700-1,800 affordable units, and from 0 market rate to 3,200 market rate. There's also a streetcar line in the final phases of construction running right through the middle of it all. Could this go-big approach work here as mid-century housing projects start to approach their expiration dates?

The Old Colony redevelopment was a huge missed opportunity, as far as I can tell they demolished 164 units and built 116 units in Phase 1, and Phase 2 is demolishing 223 units to be replaced by 169 units for a net loss of 102 affordable apartments. The Charlesview redevelopment didn’t make things worse at least, there they replaced 213 units with 240 units. Still a far cry from a nearly ten-fold increasing in housing being accomplished with the Yesler Terrace redevelopment.
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Regarding Charlesview, it also added a ton of retail, and phase two is now underway which is adding 10 two bed and 10 three bed townhouses for sale to middle income buyers.


In general I agree with your point. Most of the projects are not only depressing for their residents and the surrounding area, but a tremendous waste of space. Redeveloping them as traditional neighborhoods, with a 1-1 replacement of subsidized units as well as an addition of market rate or less subsidized units would be great.
 
Frankly, 10,000 transit-accessible Olympic Village units, wherever they might go, would be a huge help to bring supply in line with demand.

The worst outcome though, would be for the "other 20,000" units to not get built out of fear that the OV would "cause prices to crash"

I'm warming to the idea of an Olympic bid, mostly for its housing impact.
 
I'm warming to it for its transportation impact, though the housing is certainly great too. Frankly i could care less if the olympic activities took place in Boston, but part of me feels like its justified if its the only way to bring some actual change to the way our state government views transit. If the olympics don't come, its near impossible that any real change will come to the T. That being said, I'll curl up into the fetal position and cry if the olympics brings more "BRT".
 
Deetroyt said:
I'm warming to it for its transportation impact, though the housing is certainly great too. Frankly i could care less if the olympic activities took place in Boston, but part of me feels like its justified if its the only way to bring some actual change to the way our state government views transit. If the olympics don't come, its near impossible that any real change will come to the T. That being said, I'll curl up into the fetal position and cry if the olympics brings more "BRT".
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I've been a booster from the start precisely because I want the transit and housing benefits. If their proposal doesn't at least include Red-Blue then I'll be right on the bandwagon with all the haters. If the only thing we "get" in exchange for the cost and the headaches is highway upgrades and buses, then they can shove the whole thing.
 
How much does the "Affordable Housing" requirement in new condo development drive up development and rental costs, if at all?
 
That probably depends on the proposed makeup of the units and what the AMI (area median income - used to calculate "affordability") is for the area the development is in. Affordable housing shouldn't necessarily drive up the costs of development, but it does alter the makeup of rents/costs.

In terms of the affordable housing issue, this is how I see it:

1) A developer wants to build a building;

2) Because most developers cannot self finance, the developer seeks investors (including joint ventures, bridge loans, etc.)

3) Because there is only a limited amount of capital out there that can invest in hundred+ million dollar projects, the developer must compete with other development proposals nationwide for investors.

4) To do this, the developer may try to convince investors that his project is the safest bet (by citing market pressures etc.)

5) However, more often money will flow to those projects that offer the best ROI (return on investment) for the capital investors, with investors using less lucrative "safe projects" to hedge bigger bets.

6) The ROI is determined by calculating the ratio between the projected net operating income produced by the development and the development's capital cost (the capitalization rate)

7) Because affordable units necessarily cut into the projected net operating income of a development, the developer must recuperate the lost income in increased revenue elsewhere, which is usually accomplished via increased valuation of the units, although it could similarly be met by reducing parking requirements, speeding the review process, or other methods that would reduce the project's capital costs.

8) This is particularly problematic in areas like Boston, where there are already a number of factors that act to increase a development's initial capital cost. Combine those costs with inclusionary zoning requirements, essentially force large scale residential developments to cater to the luxury demographic in order to offer competitive cap rates that can attract the necessary large money national and institutional investors.

Or at least this is my understanding after talking with a relatively prominent local developer about why there is so much variation in the amount of development cities across the country are seeing. If Boston's cap rate is routinely lower than other cities because of high initial capital costs, it will always struggle to attract the same kind of investment. This may insulate it from the boom/bust cycle that other cities have seen (low risk investments aren't always a bad thing), but it does serve to limit how much development money the city can attract and shapes what form that investment will take.
 
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