Report, Recommendations to Increase Housing Supply in Commonwealth Released

November 10, 2003

Boston – A report released today, Building on our Heritage: A Housing Strategy for Smart Growth and Economic Development, offers the most comprehensive new policy approach to increasing housing production in the state in more than 30 years.  The report includes recommendations that, when implemented, are expected to lead to the construction of nearly 30,000 new housing units over the next decade for households at all income levels.  A presentation of the report and recommendations will be made before a joint hearing of the legislature’s Housing Committees on Thursday, November 13th.

The Task Force’s Housing Proposal encourages towns and cities to re-zone land around transit stops, town centers, and abandoned commercial and industrial buildings to produce new units of housing in “smart growth” areas.  The proposal uses three kinds of state incentives to bring the interests of the Commonwealth into line with the interests of individual communities.  These include special density bonuses to communities that pass these “special zoning overlay districts,” state payment of the full costs of public school for children whose families move into housing in these districts, and redirection of state infrastructure dollars for roads, sewers, etc., to those communities implementing the overlay districts.

“This program is designed to allow the Commonwealth to increase funding for affordable housing, to reduce development sprawl, to increase the amount of open space, and to enhance opportunities for historic preservation and neighborhood revitalization,” said Barry Bluestone, Director of the Center for Urban and Regional Policy at Northeastern University and an author of the report.  Edward Carman, President of Concord Square Development Company and Eleanor White, President of Housing Partners, Inc., also co-authored the report.

This report was prepared for the Commonwealth Housing Task Force, a powerful coalition of Boston leaders that came together after the conflict surrounding the campaigns for and against the Community Preservation Act in Boston.  The Task Force includes active participation by representatives from business, labor, higher education, the health care sector, housing advocacy and environmental groups, housing and real estate development companies, and many elected and appointed officials.  The Boston Foundation has served as the convener of the Task Force.   Foundation President and CEO Paul S. Grogan called for the creation of “a consensus housing agenda” in October 2002, when the Foundation released its Greater Boston Housing Report Card, a comprehensive review of housing production in Eastern Massachusetts after the release of the so-called Cardinal’s Report on housing in October 2000.

The current study notes that the Commonwealth’s housing shortage is not just an affordability issue for low and moderate-income families, but also an economic issue that affects the well-being of all residents of the state. Housing is excessively expensive for its citizens, for the adult children of families who already live here, and for workers and their families who wish to move to Massachusetts to find or take jobs.  For businesses that are hiring, the high cost of housing poses a potentially serious barrier to attracting workers from outside the state.

“The human capital of this area – a unique and essential asset because of Boston’s high tech businesses and its educational, research, and medical institutions – is being compromised because young scientists, engineers, doctors, and business people find it difficult to afford, even with substantial salaries, the purchase price on homes that meet their family needs,” said Grogan.  “Therefore, an increasing number choose not to come to Massachusetts and seek jobs in other regions of the country.  The future economic expansion for the Commonwealth is therefore at risk.”

The report was released at a press conference today at the Boston Foundation.  Guest speakers included Paul Grogan; Eleanor White; Paul Guzzi, President of the Greater Boston Chamber of Commerce; Stan Lukowski, Chairman of Eastern Bank; Dr. Richard Freeland, President of Northeastern University; Jeanne Pinado, Executive Director of Madison Park Development Corporation; Stephanie Pollack of Conservation Law Foundation; and Jeanette Ives Erickson, Senior Vice President for Patient Care and Chief Nurse at Massachusetts General Hospital.  Co-chairs of the Commonwealth Housing Task Force are Jerry Rappaport, Jr., President of the New Boston Fund; Eleanor White; Larry DiCara, Partner at Nixon Peabody; Thomas Hollister, President of Citizens Bank, Massachusetts, and Karl “Chip” Case, Professor of Economics, Wellesley College.

“This coalition is determined to create the political will to produce more housing in the Commonwealth, consistent with the principles of smart growth,” noted Rappaport. “Building more housing in the Commonwealth benefits the public and enriches workers and businesses by spurring economic development throughout the state.   We need a broad-based solution, a broad-based funding source, and unwavering resolve.” 

This report proposes that the state enact legislation that will reward communities for passing Overlay Zoning Districts in Smart Growth locations.  All communities in the state will be eligible to participate on a voluntary basis.  Smart Growth locations are those near public transit stations, town centers, and under-utilized industrial, commercial and institutional buildings and sites.

The proposed incentives to communities are:

  • Density Bonus Payments upon passage of the Districts equal to $2,000 for each apartment unit and $3,000 for each single family home that is allowed in the District;
  • State assumption of 100% of the cost of providing K-12 education for each child in public schools living in a new housing unit built in the District; and
  • Priority for receiving capital investments from the state for infrastructure improvements.

In order to be eligible for the above incentives, the proposal recommends that Overlay Zoning Districts allow mixed-use development with a density for apartment buildings of at least 20 units per acre, and for single-family homes of at least 8 units per acre.  They would encourage the development of housing on infill lots and the conversion of underutilized commercial, industrial and institutional sites or properties.  Each District would also require that in all projects containing more than 12 units, 20% of the units be affordable to those with incomes at 80% of median income or less.

The report estimates that implementing the Overlay Zoning District program is likely to result in the construction of 33,000 new housing units – both market rate and affordable – within the Overlay Zoning Districts over the next 10 years.  The report also calls for an increase in state funding for affordable housing outside the districts. The net increase in production should be sufficient to moderate housing price inflation in the Commonwealth to the point where housing price increases will not appreciably exceed the increase in family incomes.  Over time, this will provide housing more in line with what families can afford.  Moreover, the units “transferred” into the Districts around transit stations and near town centers from other locations will help reduce congestion and urban sprawl and will preserve valuable open space.

It is estimated that the cost to the state for the Density Bonus Payments for the new zoning will start at $11 million and grow to $14 million per year by the tenth year. The additional state costs for public schooling is estimated to start at $3 million in the second year, and rise to approximately $60 million by the tenth year.  To put this $60 million number in context, ten years from now, after building 33,000 new units in Overlay Zoning districts, the annual increased schooling cost of this new initiative is estimated to be only 2.1% of the 2001 state reimbursement for school expenditures.

Affordability remains a key concern. Recent studies name Massachusetts as the least affordable state for housing in the country, and this report contains a number of recommendations to address this issue.   In order to increase housing affordability for those earning up to 80% of the median income, as well as to assist the least well-off citizens of the Commonwealth, the report recommends that state funding for affordability assistance should be increased by $670 million over the next ten years.  To offset these costs, it is recommended that surplus state land be sold during this period in the amount of $400 million over the next ten years.

"The recommendations of the Commonwealth Housing Task Force are profoundly important for the Commonwealth,” said Tom Hollister, President and CEO of Citizens Bank of Massachusetts and Chair of the Greater Boston Chamber of Commerce.  “First, because of the unique coalition of housing advocates, developers, business and political leaders sponsoring the recommendations; secondly, because the recommendations themselves will soundly and creatively stimulate housing development, and, finally, because the recommendations are fiscally responsible and achievable."

The Commonwealth Housing Task Force plans to assist in writing legislation embodying the key proposals in the report for introduction to the Massachusetts legislature early next year.

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Additional Comments

“The recommendations in the report would, for the first time, align the policy needs of the business community and the Commonwealth for more housing production with the fiscal realities of cities and towns in Massachusetts.  The resulting increase in housing supply would make it possible for young workers as well as elders with a broad range of incomes to remain in their home communities.” Eleanor White, President, Citizens Housing and Planning Association

“It is time for all of us who care about the future to agree on one simple statement - Massachusetts needs a new housing policy which encourages the production of thousands of new units yearly, and which eliminates the barriers to housing production which have hindered economic growth and discouraged bright young people from staying in Massachusetts.”  Larry DiCara, Partner, Nixon Peabody

“The Urban Land Institute supported the Commonwealth Housing Task Force because it focused on economic development for the state. Both the coalition of parties and the work that has been created can be used as a national model for growing metropolitan areas that need to encourage economic development in the face of tight housing and suburban congestion. It is an elegant proposal that should frame the housing issues relating to economic growth.”   Georgia Murray, Member, Urban Land Institute