Wu lays out hikes to development fees, efforts to increase city’s affordable housing stock

Boston City Hall. (File photo)

Mayor Michelle Wu on Thursday proposed changes to the city’s development process, saying the moves, which include higher fees, will boost the supply of affordable housing as high demand and low stock wreak economic havoc on the region’s workforce and overall economic competitiveness.

The changes involve formulas the city uses in its oversight of the development process.

Boston developers who are building market-rate residences and seeking zoning relief are required to back affordable housing through what’s known as the city’s Inclusionary Development Policy (IDP). A developer building 10 or more units and needing zoning relief must pay into an IDP fund or create income-restricted housing through on-site or off-site units. Wu proposes lowering the IDP threshold from 10 to 7 units.

For rental projects, the percentage of income-restricted units rises to 20 percent of square footage, from 13 percent of the square footage. “In an innovative approach, 17% of the project will be income restricted at an average of 60% of Area Median Income (AMI), and an additional 3% of the project will be offered at market rents and reserved for people with housing vouchers,” Wu administration officials said in a statement.

Developments that do not need zoning relief will still need to support income-restricted housing.

Projects that are currently under review won’t be affected by the proposed changes. The effective date is unclear because it depends on the approval processes of the city’s Zoning Commission, the Boston Planning and Development Agency’s board and the City Council.

Wu is also proposing changes to the city’s “linkage” process, which calls for any commercial real estate development project over 100,000 square feet, and needing zoning relief, pay a “linkage” fee that goes towards the creation and preservation of affordable housing, as well as job training for residents.

Under Wu’s proposal, the threshold would be lowered to 50,000 square feet, and over two years the linkage fee would be upped to $30.78 per square foot for lab space, and $23.09 for other commercial spaces, an increase from $15.39.

“This is one slice of a wide portfolio of changes that we are looking to move forward to emphasize that everything we possibly can do at the city level is on the table to boost affordability and access,” Wu said. “We recognize that much of that is what we do as a city government in the approvals process.”

In discussing bringing more affordable housing to a high-cost city, Wu also pointed to worker shortages and pressures employees face living in the city. There are 2,000 vacancies within city government, which employs 19,000 people, while the MBTA has 1,500 spots that, if filled, could add to the frequency of trains during rush hour. The public transit agency says federal safety directives, tied to the number of people in place, are driving the low frequency of trains.

Wu said Arthur Jemison, the city’s planning chief and head of the BPDA, and his team have been working to speed up and streamline the development process.

Wu and Jemison are seeking to introduce more predictability in the development process known as “Article 80.” The changes, according to city officials, will be studied with an eye towards implementing them in the new fiscal year, which starts July 2023.

City officials are looking at a “scorecard” using resilience, affordability and equity in the criteria. Projects that include those aspects would be eligible for an ombudsman who would help expedite the permitting process at various levels of city government, including the transportation and parks departments. “Project management support,” tax relief, and infrastructure support, would also be available.

“Obviously there’s been changes in the business climate and as government we’re part of the business climate. The changes that were proposed today are important because what they’re going to do is help us solve the issue that is in each of your publications’ headlines probably once a week, about the issues of affordability, issues of housing, of workforce,” Jemison told reporters during a roundtable inside City Hall.

The first public hearing for comments on the linkage changes is set for Wednesday, Jan. 11, while a hearing on IDP changes is set for Saturday, Jan. 21. The BPDA is leading both public processes.

Some developers sounded positive notes about the moves.

“Expanding the supply of affordable housing in the city is critical to both long term economic success and advancing equity goals; the Samuels & Associates team supports the Mayor’s efforts to identify multiple strategies to address this challenge,” said Abe Menzin, principal and executive vice president at Samuels and Associates, which is one of the companies behind the “Dot Block” mixed-use project in Glover’s Corner.

“The process for considering changes to the city’s Inclusionary Development Policy continues to be thorough and based on analysis of the many complex factors that determine affordability and economic feasibility,” he added in his statement. “Though it is an increasingly difficult time to build and finance housing projects, we are committed to working with the city on creative solutions to advancing housing affordability goals.”

In a separate statement, Greg Vasil, CEO of the Greater Boston Real Estate Board, expressed openness to changes to the development process, citing an “unprecedented” housing crisis.

“While we are traditionally skeptical of government regulations placed on the real estate industry, we hope that policies like IDP reform may prove successful if they allow the real estate industry creativity and flexibility in their approach to zoning,” he said. “Ensuring that the real estate industry may creatively and flexibly approach zoning is critical to driving increased production in the Greater Boston area - one of the most important steps needed to help us address the housing crisis.”

Subscribe to the Dorchester Reporter