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Affordable housing on the agenda of the state’s commercial real estate community?
Not only on the agenda, but at the top of the list, according to David Begelfer, chief executive officer of the Massachusetts chapter of the National Association of Industrial and Office Properties (NAIOP).
“Affordable housing is our most important focus,” Begelfer said. “It is the Achilles’ heel of Massachusetts’ economic future. No other state is losing its 25-to-40-year-old population to the extent Massachusetts is. And the main reason is the cost of housing. Without some aggressive programs to develop affordable worker homes and starter homes, our economic future is very dim.”
Equally important to the state’s economic future, Begelfer said, is permitting reform.
“It’s very difficult to attract new businesses to Massachusetts because it takes so long to process a project,” he said. “We are supporting a lot of initiatives by the governor, the Legislature and the judiciary that would promote both the development of more affordable housing and cut down on the very long, unpredictable amount of time it takes to permit a project.”
Affordable housing and permitting reform have been top priorities of the state’s business community for years. In addition to those critical issues, the commercial real estate industry is working on several other legislative fronts this year. The most urgent is Chapter 91. In March, the Supreme Judicial Court eliminated Chapter 91 exemptions for landlocked tidelands.
“There are many properties, including all of the Back Bay, South Boston seaport, parts of the Financial District, good chunks of Lynn, Cambridge, Gloucester and other locations on the sea coast on formerly filled land,” Begelfer said. “An exemption from the Chapter 91 process was given to a lot of those properties. All of a sudden, the SJC has taken away that exemption. It’s left everything in a state of limbo.”
That limbo will end when the SJC’s six-month “stay” of its ruling ends in mid-September. If the Legislature does not address the issue, the Environmental Protection Agency must issue emergency regulations for all of those properties.
“It’s a very serious problem,” Begelfer said. “It affects existing development as well as new development.”
Several competing bills have been filed to address the problem. Begelfer said NAIOP and other business groups are supporting the governor’s bill, which would restore the exemptions.
“There are a lot of politics going on about this,” Begelfer said. “We support the governor’s version because it would get things back to the way they were. It would bring about certainty and get projects that have been started and are about to start on some sound starting point.”
Another top priority for the state’s commercial development community this year is liability protection for new owners of previously contaminated properties. Begelfer said such protection would stimulate brownfield redevelopment and help revitalize urban centers where many of those sites are located.
“We’ve talked a lot about ‘smart’ growth – denser growth instead of suburban sprawl – the last several years,” Begelfer said. “For that to happen we have to have the ability to develop properties in urban settings. Anything the state can do to encourage redevelopment of brownfield sites, to make it less risky to take on environmental cleanup of these sites, the better for everyone.”
A hearing on the bill is scheduled for September.
Another bill filed by NAIOP would make a seemingly small change – eliminating the inflation factor in district improvement bond financing – but have a major impact on development, Begelfer said.
“District improvement financing has been a very effective economic tool since it was passed four years ago,” Begelfer said. He said eliminating the “inflation factor” in the original bill will make it even more effective by making bonds easier to get.
“It’s a small, technical change that will have a tremendous impact,” he said. “I’m optimistic it will pass this session.”
‘Modest Change’
Another financing tool NAIOP wants to change is Chapter 40R, which allows property owners to get bond financing, paid for from assessments on the property, for needed infrastructure improvements.
“It’s been a very good tool, especially with limited state and municipal funds to pay for infrastructure improvements,” Begelfer said.
By eliminating some of the restrictions in the original legislation, Begelfer said NAIOP’s bill would enable more communities to take advantage of the program.
“Right now there are some limitations on what sites can be used for 40R,” Begelfer said. “For example, one restriction says any housing needs to be transit-oriented. The bill defines transit as fixed-rail. We think that restriction should be broadened to allow communities to consider housing sites at major bus terminals, for example. We think this is a very modest change that would open 40R to more sites and allow communities to make greater judgment for sites for housing.”
And here we are, back to affordable housing again.
“We have a serious affordable housing crunch in this state,” Begelfer noted. “Anything we can do to make Chapter 40R more successful in more communities throughout the state, the better off the whole commonwealth will be.”
Other bills NAIOP has filed this session would:
• Coordinate the Massachusetts Historical Commission (MHC) and the Massachusetts Environmental Policy Act (MEPA) review processes;
• Require the Secretary of Economic Development to provide input on the economic benefits of any regional transportation project before it is placed on the statewide transportation plan;
• Reform the attendance requirements for Municipal Board hearings;
• Consolidate the responsibility for Chapter 91 within the Department of Environmental Protection;
• Create special development districts to allow municipalities to fund infrastructure costs when local and state resources are unavailable.
Another bill of interest to the commercial development community would provide a tax credit for green buildings.
“A green tax credit would help incentive developers to get over the initial 3-10 percent added cost of building green,” said Andrew Baldwin, public policy manager at the Boston Society of Architects (BSA).
A green tax credit initiative has been before the legislature for years. This session there are two nearly identical proposals. Both would provide up to a 7 percent tax credit (8 percent in targeted economic development areas) on overall capital costs for green buildings.
Although the idea has not gotten out of committee in the past, Baldwin was hopeful the measure would finally pass this year.
“There’s a lot of focus on ‘green’ this year,” he said. “The holdup has been that it’s a tax credit and costs money. We would say that it really has a net positive benefit and would stimulate business to come here.”
One issue the commercial real estate community is not supporting this year is a bill that would create licensed interior designers and allow them to sign construction documents.
“It would fracture a building and create confusion on who’s responsible for different parts of the construction documents,” Baldwin said. “We’re opposing it on the merits. It’s not a good idea. It wouldn’t help anyone and, at worst, it would create serious confusion and compromise public safety.”
Baldwin said the proposal has many opponents, including the state fire chiefs, state building officials, the Kitchen and Bath Association, Association of General Contractors, National Federation of Independent Businesses and others, including some interior designers. The bill is currently in committee.
