BOSTON As construction cranes rise over this city, officials are well ahead of schedule in their plan to issue building permits for 2,100 new units of affordable housing and to preserve another 3,000 units in just four years.
As of June 2005, the city had permitted 1,138 new units of housing for low- or moderate-income tenants since Mayor Thomas Menino’s Leading the Way II plan began in July 2003. At this pace, officials expect to permit 2,679 units by the time the plan is finished in June 2007. That’s more than 500 above what the mayor had promised in his plan.
Leading the Way II also aims to raise $25 million in new money for affordable housing and begin a new $10 million plan to help people who are at risk of becoming homeless to keep their homes.
The plan is also set to beat its goal of issuing permits for a total of 10,000 new housing units of all types. Officials expect to permit 12,759 new housing units by the time the plan is finished in June 2007.
“Greater Boston still has a cumulative housing production deficit, and not only for affordable housing,” Menino said. As more people compete for a limited number of places to live, prices rise, especially as once-blighted neighborhoods like Roxbury and Dorchester gradually lose their dangerous reputations.
Much of the plan’s success comes from hacking away at the layers of red tape that delay development – Boston has been famous for its excruciatingly slow community review process, which could tie a project up for as long as seven years.
“Having the plan fundamentally changes the way government reacts,” said Kevin McColl, senior policy advisor for Boston’s Department of Neighborhood Development. “We have this goal to reach.”
More than half of the new permits were for rehabilitation projects, usually converting vacant or abandoned buildings into habitable housing. But Boston is running out of empty warehouses and boarded-up townhouses. Since the city began counting in 1997, the total number of unoccupied buildings in Boston that also have some visible signs of deterioration, like fire or roof damage, has decreased by 67%, from 1,044 to 350.
Soon, affordable housing developers will have to look elsewhere for places to build their projects. At the same time, the price of land has risen. The median price of a home in Boston rose to $390,000 in fiscal 2005, up nearly 10% from $360,000 in 2004, according to the city.
Local Initiatives Support Corp., a national housing nonprofit, recently had to shut down a program here to buy vacant and dilapidated properties to be turned into affordable housing. “There are basically no properties that they could afford to buy,” McColl said.
The city will increasingly rely on its tough inclusionary development rule to create new affordable housing. Every residential development with more than 10 units that receives financing or zoning relief from the city must also set aside units for low- and moderate-income tenants. The number of units must equal 15% of the number of market-rate units; thus, a project with 100 market-rate units must include 15 affordable units.
Developers can also choose to build a slightly larger number of affordable housing units at a different site. Or they can put the amount it would take to develop off-site units into the city’s affordable housing fund: currently, that’s set at $97,000 per unit. These affordability restrictions stay on the properties for 30 years, with 20-year renewals.
“It enables you to do more with ever smaller levels of resources,” McColl said.
Boston is also one of the few cities that spends its own money to develop affordable housing. Leading the Way II promises to raise $25 million in new revenues for affordable housing. To date, the city is more than halfway there, at $13.9 million, and officials expect to meet their $25 million goal. The city has raised the money through the sale of city-owned properties, like old firehouses, in addition to inclusionary development payments to the city’s affordable housing trust fund.
Boston also hits developers up for what the city calls “linkage fees” equal to a percentage of a project’s square footage, which the developer must pay into the city’s affordable housing fund. The money will help provide gap financing for affordable housing development.
The city is also on track to preserve 4,324 rental housing units by 2007, well over the 3,000 units promised in the plan. These units include properties at risk of losing their income restrictions, public housing units needing substantial renovation, and nonprofit-owned housing needing repair or financial restructuring. n
The historic restoration of the Dartmouth Hotel helped Boston stay on track to meet its housing goals by creating 45 affordable rental units, plus 20 more units in a newly constructed annex.