Good to Great: Developing a Public Private Partnership on Climate Change Resiliency

Yesterday, NAIOP was proud to participate in a Climate Change Resiliency Forum at the State House. NAIOP’s CEO, David Begelfer, joined legislators, climatologists, environmental advocates, a representative from the insurance industry and EEA Secretary Matthew Beaton to discuss this important economic development issue. NAIOP advocated for a public private partnership and echoed the comments we presented to the Baker Administration in the Good to Great report. The following is our weekly excerpt from that report. Comments are encouraged!

Climate change can have significant impacts affecting the overall economy; directly, by damaging structures, and indirectly, by compromising transportation systems, communications, and utilities. An increasing number of extreme weather events and future sea level rise may lead to more frequent and extensive flooding along the coast and inland waterways.

The varying interpretations and projected economic and environmental impacts from climate change and sea level rise demand that the private and public sectors coordinate their common objectives. Unfortunately, to date, there has been a serious lack of coordination or collaboration on this issue. Individual cities and towns are taking their own steps to regulate and respond to climate change and sea level rise. Within MassDEP alone, multiple climate change policies and regulations are being drafted using different climate change projections. All of these regulatory and policy initiatives are focusing on how private development projects should address this issue, and very few have addressed the public sector’s role. For example, capital expenditures will be necessary for equipping existing public infrastructure to meet storm surges. Clearly, having a “climate change proof” building in the middle of a flooded neighborhood, without power or adequate transportation, provides no real public or private benefit.

There is no question this issue will be a significant challenge for the Baker Polito Administration. Addressing climate change and sea level rise requires coordination at the highest level of state government, and the participation of many state agencies. Therefore, NAIOP urges the Administration to consider the following steps to better coordinate how this issue is addressed in order to avoid the calamities that have been suffered by other coastal states:

Create a high level point of contact (Climate Change Chief) for local, state, and federal agencies, as well as the private sector. This position should be located in the Governor’s office or within the Executive Office of Administration & Finance. Given the need for coordination across many facets of state government, and the impact of this issue on the state’s resources, it should not be located in EOEEA. Planning for responses to rising sea levels is an operational and infrastructure challenge, not an environmental policy issue. To ensure consistency across the Administration, the Climate Change Chief should have input on all policies or regulations dealing with climate change. All agency findings and regulations regarding the extent of sea level rise or climate change must not be cost prohibitive to the private sector and should include public funding and participation.

Working closely with the Governor’s office, the Climate Change Chief would pursue the following action items:

  • Establish a structure/partnership with academic and research institutions to identify, develop, test, and incorporate reliable climate change and sea level rise forecasts and climate change preparedness programs.
  • Conduct an inventory of state agency regulations adopted or now under review/proposed dealing with how existing and new public and private development should respond to climate change and sea level rise.
  • Undertake an inventory of state and regional authorities, their threatened assets, and their infrastructure preparedness needs, and identify state monies committed to study climate change and sea level rise. Identify capital funds that should be dedicated to infrastructure upgrades for vital state and regional properties, with a priority toward vulnerable infrastructure.
  • Coordinate the agenda of the state agencies responsible for establishing a target range for sea level rise, determining its effect upon existing infrastructure and future development and developing guidelines for climate preparedness and mitigation planning and review (e.g., MEPA, MassDOT, MBTA, BBRS, MWRA, MassDEP, DPU, Mass Housing, MEMA and CZM).
  • Identify state agency personnel responsible for the review of policies, procedures, and regulations regarding climate change and sea level rise.
  • Ensure that cost-benefit analysis guides policy making. Policymakers should look at programs in terms of maximizing preparedness and resiliency benefits while minimizing burdens on fiscal and other resources.
  • Encourage consistent local efforts to address climate change preparedness including identifying susceptible infrastructure (e.g., mass transit, highways, stormwater systems, energy, fuel, communications, etc.), adopting reliable climate change projections, and establishing guidelines and regulations to incorporate climate change into future planning decisions and outreach programs.

We urge the Governor to coordinate this critical effort to ensure focus and consistency on this economic development issue.

Good to Great: Realigning Resources at Environmental Agencies

The following is our weekly excerpt from NAIOP’s report, Good to Great: Recommendations for the Baker Polito Administration. Comments are encouraged!

When considering a long-term vision for the Commonwealth’s environmental agencies, NAIOP encourages the Executive Office of Energy & Environmental Affairs (EEA) to start by realigning resources to ensure 1) environmental protection and 2) that resources are appropriately allocated to ensure timely and predictable permitting. In recent years, the regulated community has observed that a larger percentage of staff at the environmental agencies is focused on the development of new policies and regulations instead of the expedient implementation of existing regulations (i.e., permit approvals, compliance assistance, etc.). Prompt and predictable permitting is critical for economic development projects and ensures increased tax revenue for the Commonwealth. Compliance assistance programs provide a preventive and cost effective approach to ensuring environmental protection.

Therefore, NAIOP proposes the following recommendations:

  • Tie Permit Fees to Results: Permit streamlining was brought to MassDEP’s doorstep in the late 1980’s. Facing considerable time delays for the issuance of permits with no timetables, NAIOP was a founding member of the MassDEP Fees and Program Advisory Committee that established a fee program for all permits and a retained revenue account in return for the MassDEP’s agreement to set enforceable timetables for administrative review, technical review, and issuance of permits. General results were positive and fees have been adjusted gradually over the years to reflect cost of living increases. Permitting fees went into a dedicated revenue account, which was intended to supplement the MassDEP budget so that it could continue to provide its other non-permitting services. The original committee included NAIOP, AIM, Mass Municipal Association, MASSPIRG, Environmental League of Massachusetts, and other private and public sector representatives. The enacting statute establishing the agreement and authorizing MassDEP to establish the fee program is M.G.L., c. 21A, §18 and the regulations are at 310 CMR 4.00.As the architects of the Program left state government and Massachusetts faced revenue shortfalls, the original agreement was sacrificed for revenues. Gradually the Legislature began to apply permit monies to the MassDEP operating budget. Rather than decreasing the time for permit issuance based upon the lesser number of permits due to a slow economy, the General Fund percentage decreased for the MassDEP budget. As recently as 2013, the Fees Committee wrote to the Governor and to the Ways and Means Committees requesting that the agreement be honored. Business was hesitant to support the Department’s request for additional funding based upon the legislative track record applying fees for operations. NAIOP urges the Baker Polito Administration to reinstate the original agreement and ensure permitting fees are directed to the dedicated revenue account to ensure adequate resources for permit issuance.
  • Increase Use of General Permits: NAIOP encourages all environmental agencies to consider increasing the use of general permits. General permits are more cost effective and achieve the same goal as individualized permits, but do so faster and more cost-effectively and provide a higher level of certainty in outcome (including reducing the risk of permit appeals). In order for this to work, however, it is critical that agencies be committed to making these general permits effective and not so limited in scope or so overly burdened by contingent conditions that they are no longer useful. EEA should conduct an internal review of all programs to identify those that could move, in whole or in part, from individualized permits to general permits.
  • Move to Permit-by-Rule (aka self-certification): Self-certification needs limited staff resources to administer and oversee and uses enforceable third-party certifications to ensure that rules are met and standards are achieved. MassDEP is already using self-certification for some programs, but there are numerous opportunities for expanding the use of this cost-effective and proven regulatory approach.
  • Increase Permitting Staffing for Waterways Program: Waterways is responsible for issuing Chapter 91 licenses for docks, piers, and other water-dependent structures as well as non-water dependent uses and structures on tidelands and filled tidelands. It is involved in almost every major coastal project, including transportation, energy, infrastructure, commercial buildings and housing. Staff has recently been increased to five persons, still woefully inadequate to ensure timely processing of project permitting demands. The lack of staff is holding back the development of many major public and private projects. Additional resources must be committed and dedicated to new employees that focus solely on Waterways permitting and not policy development.
  • Continue Regulatory Reform Implementation: The Regulatory Reform initiative was originally motivated by a reduced budget affecting staff permitting and oversight, but the effort has also resulted in important regulatory and policy changes. Continually reviewing existing regulations to determine if they are needed or if changes are required, and closely examining the costs and benefits associated with new regulations before they are drafted, should be a top priority for the Baker Polito Administration (and is required under Chapter 238 of the Acts of 2012).
  • Provide MassDEP with Delegated Authority over National Pollutant Discharge Elimination System (NPDES) Programs and the Funding Needed to Adequately Administer the Program: As of June 2013, 46 states had been authorized to administer the federal NPDES permit program. Massachusetts is just one of four states in the nation where the federal government is in charge of the permit issuance, compliance and enforcement for the 2,990 NPDES permit holders in Massachusetts. MassDEP jointly issues NPDES permits with EPA. Having MassDEP as the sole permitting authority with EPA limited to an oversight role could result in a more efficient permitting process. In addition, as the NPDES program continues to evolve in response to increased concerns over issues like nutrient loading and stormwater impacts, MassDEP would have greater control over policy decisions. However, appropriate resources would be needed (estimated at approximately $9.5 million per year) to ensure a carefully coordinated approach to watershed management.
  • Concentrate on Implementing & Enforcing Existing Rules and Regulations: Agencies should concentrate on implementing and enforcing existing rules and regulations before expending resources on new program and policy development. This builds on the Regulatory Reform Initiative and is critical for the proper allocation of resources.

NAIOP Supports MTF Report on MBTA

The recent Massachusetts Taxpayers Foundation’s report The T: The End of Its Line is a must read. NAIOP Massachusetts fully endorses the report and its recommendations.

According to the report, there are some critical next steps that decision makers can and must take in the near term. The Foundation recommends that the state prioritize the following nine steps to inform a more detailed analysis so that it may develop a plan for rescuing the T:

•    Tie FY 2016 state contract assistance to the release of up-to-date State of Good Repair (SGR) backlog data
The MBTA’s asset management system, which quantifies the SGR backlog and helps to prioritize maintenance projects, has been inoperative for several years and full implementation of a new Federal Transit Administration (FTA)-funded system is several years away. This is an enormous management failing and the state should withhold additional assistance until the T can produce a comprehensive SGR backlog project list that clearly and accurately states both the size of total maintenance shortfall and the cost to keep the system from deteriorating further.
•    Conduct a detailed audit of the MBTA’s maintenance protocols
The state should insist on an independent assessment of the T’s maintenance protocols, project selection criteria, and capital spending to determine whether the T has the capacity to bring its infrastructure into a state-of-good repair.
•    Require an independent fiscal audit of the T
The Governor should request an independent, third-party, in-depth analysis of the T’s finances. The T’s long history of using financial maneuvers such as debt restructurings and securitizing long-term revenue streams have complicated its debt obligations, and the T provides minimal information on unfunded pension and retiree health care liabilities. All pose substantial hurdles to the T’s ability to continue as a going concern. Full analysis and disclosure of the T’s financial exposures is necessary before solutions can be found.
•    Halt expansion contracts for the remainder of 2015
Before the MBTA undertakes any further expansion (with the exception of the Green Line Extension), it must get its current fiscal house in order. The state and the T must perform more analysis of the impact that expansions will have on the operating budget and maintenance expenditures and must identify revenue streams to cover the ongoing costs of expansions before any additional outlays are made. A brief delay will afford an opportunity to re-examine both the way in which projects are being carried through and the sustainability of each expansion as a part of the T system as a whole.
•    Reform the procurement process including a two-year moratorium of the Pacheco Law with a report on savings
Just as its maintenance systems require a careful review, so too do the T’s procurement practices. A series of problems with T procurement practices and other policies have further eroded public confidence in the T. The size and uniqueness of the T’s capital purchases warrant a centralized procurement process with in-house experts overseeing contracts to ensure purchases are delivered on time, on budget, and fully operative.
•    Reexamine the MBTA’s governance structure
The T’s long-term problems cannot be addressed effectively unless the Authority’s own leadership is fully committed to the reform effort. Currently, the T’s Board is independent and not accountable to the Secretary of Transportation, the Governor, or the Legislature and management has too often been resistant to external examination and proposals for change. The Administration should have control over the MBTA board in the short-term to ensure compliance, accountability, and full transparency. The Administration should also have the authority to select the next general manager and work with the Legislature to determine the most suitable governance structure to develop and execute a rescue plan for the T.
•    Eliminate Social Security eligibility to align with the state pension system
The unique dual pension eligibility of T employees, dating back to the state takeover of private operators, makes no sense decades later, and it imposes significant unnecessary costs on a financially stressed system.
•    Eliminate binding arbitration
Binding arbitration stands in the way of the responsible cost-conscious management the T requires. It was eliminated for most public employees a generation ago.
•    Require full disclosure of the pension system finances
Despite efforts by the Legislature, the T has not released details regarding its pension system and assets because it asserts that the pension system is a private entity. However, the T would have no hope of meeting its annual pension obligations without the annual infusion of hundreds of millions of dollars in tax revenues. At a minimum, the T pension system should release the details on its investments and cash flows and provide actuarial valuations.

Good to Great: Expanding & Implementing Statewide Regulatory Reform

The following is our weekly excerpt from NAIOP’s report, Good to Great: Recommendations for the Baker Polito Administration. Comments are encouraged!

In 2012, the Patrick Administration launched a top-to-bottom regulatory reevaluation for all state agencies. The initiative resulted in a review of 1,791 regulations for efficiency and effectiveness. In addition, 255 regulations were amended or eliminated. The goal was to determine which regulations should be rescinded, modified, or made more consistent with a national model or standard.

The Baker Polito Administration should expand upon and strengthen the Regulatory Reform Initiative through the following initiatives:

– Appoint a proactive Regulatory Ombudsman with significant authority operating out of the Governor’s office. This person and a support team will be responsible for implementing the Regulatory Reform initiative by overseeing the following:

  • Seek out and motivate agencies to respond to feedback from the regulated community on problematic policies or regulations.
  • Maintain and reinvigorate the Business Advisory Committee to help the Ombudsman and team identify problematic regulations and alternative processes.
  • Consider initially freezing and reviewing any policies or regulations approved in the final 60 days of 2014, until there is a thorough review by the agency and the Ombudsman. (NAIOP strongly supports the “Regulatory Pause” put in place by the Baker Administration.)
  • Ensure that any newly proposed regulation go through an extensive vetting process that begins first with identifying the need for the regulation and ensuring the benefits of the regulation outweigh the impacts and burdens on business and the public. Any agency proposing a new regulation must complete a “small business impact statement” documenting the potential financial and time costs. This impact statement must include feedback from the regulated community. The Ombudsman and team will be responsible for ensuring the small business impact statement meets certain established standards.
  • Provide authorization on the public comment period for draft regulations.
  • Ensure the implementation of the ongoing periodic review of existing regulations required under the economic development bill passed in 2012 to identify those that should be amended or repealed.

– When regulations are approved for public comment, draft regulations must be posted online and emailed to a list of affected stakeholders (via voluntary sign-up as now done with DEP, DOR, and a few other agencies).

– While guidance can be helpful, it should be clarified by the Baker Polito Administration that guidance is just that, guidance, and does not take the place of regulations in any way.

– The Baker Polito Administration should seriously consider amending or eliminating current state regulations that exceed federal standards or duplicate federal processes.

Good to Great: Creating Workforce Housing

BakerPolitoCoverThe following is our weekly excerpt from NAIOP’s report, Good to Great: Recommendations for the Baker Polito Administration. The report is the result of significant input from NAIOP members and focuses on a wide range of ideas – big and small – affecting the Executive Office of Housing & Economic Development (EOHED), the Executive Office of Energy & Environmental Affairs (EOEEA) and transportation (MassDOT). Each week will cover a different recommendation. Comments are encouraged!

EOHED: Creating Workforce Housing

The Commonwealth’s economy depends on its ability to attract and retain a talented workforce. Massachusetts has one of the highest housing costs in the nation – a significant barrier for talent recruitment and retention. This is a supply problem due, in part, to a shortage of single family and multi-family housing. Lengthy and unpredictable local permitting, combined with high land and construction labor costs, put new housing out of reach of many of the state’s working families.

Massachusetts communities have some of the strictest zoning in the region, with large minimum lot sizes, restrictions limiting multi-family housing, and unworkable cluster zoning ordinances. Communities have tightened permitting, making it harder to build and meet the demand for housing, in general, and moderately priced and affordable units, in particular. Zoning requirements have become more onerous with local rules and special by-laws, making the development process longer and more unpredictable. Currently, there is a serious lack of permits issued for housing for families.

Therefore, NAIOP suggests that the Baker Polito Administration and EOHED work to increase the production of a wide range of housing types through the implementation of a plan that allows for the construction of family-friendly apartment housing as well as smaller, denser, affordable, single family starter homes. The plan should eliminate barriers to housing production and provide new ways of meeting the existing need for workforce housing by addressing the following (among other things):

  • Expand Chapter 40S to Address School Budget Challenges: The most frequent argument used to oppose apartment construction is the burden it will put on local school budgets. That is not always the case. Although Chapter 40S has been adopted to help offset the cost of student education for projects developed under Chapter 40R, it should be expanded to incentivize and assist those communities that would substantially increase their school-age population through new housing development of any kind. An important place to start would be to include Ch. 40B projects under this school “reimbursement” program, removing one of the objections to affordable housing projects.
  • Encourage Production of Starter Homes: There is a serious lack of moderately priced single family homes (starter homes) for many working households. A goal should be set to encourage cities and towns to establish zoning districts that permit the construction of a modest number of small, single family homes that are affordable for middle-income families. “Starter Home” zoning districts could be established in the most appropriate locations for these new neighborhoods. Incentives could include qualifying for Chapter 40S funds, assistance grants, and an increase in local aid. To keep the land cost per unit down, density bonuses would be needed for this type of housing, with the requirement that the scale of the homes be smaller (e.g. 1,500 square feet.)

Making the Olympic Argument with NAIOP: 2024 and Beyond

The following blog post was written by T.J Winick, Vice President at Solomon McCown & Company.

It’s only been about 50 days since the Elisif_20150224_0962United States Olympic Committee officially named Boston as America’s bid city for the 2024 Summer Olympics. Yet it was quite apparent at Tuesday morning’s NAIOP Massachusetts’ Breakfast Panel that Boston 2024 has settled on its pitch to the public: The quest to host the Games is all about “the future of Boston”. The phrase repeated over and over at the event (entitled 2024 Olympics: Vision, Opportunity and a Catalyst for Change) was “2030 and beyond.” As in, “This isn’t about those 30 days in the summer of 2024, it’s about what we want our city to look like in 2030 and beyond.”

Moderator Tom Alperin, President of National Development, remarked, “We can win by losing,” meaning that Boston will benefit from a fierce debate over infrastructure and sustainably whether we’re awarded the games or not. That sentiment was echoed by panelists Rich Davey, CEO of Boston 2024 and former Mass. Secretary of Transportation; David Manfredi of Elkus-Manfredi Architects; David Nagahiro of CBT Architects and Stephen Thomas of VHB. However, winning, as Manfredi noted, is the name of the game.

This was a coming out party of sorts for Davey, who was only recently named CEO of the effort to submit Boston’s bid to the International Olympic Committee. He’s pledging that ours would be a new type of Olympics: Sustainable, largely privately-financed with no cost overruns, and that leaves a positive legacy. He cited a quarter of a billion dollars in foundation grants that have been handed out by Los Angeles over the past 31 years, financed by their hosting the 1984 games. That’s the type of legacy the Boston Games would leave, Davey insists, not the fraud, waste and abuse the anti-Olympics crowd argues would cripple the region.

It was Manfredi’s presentation that focused on real estate: in this case, potential Olympic venues. One of the reasons Boston was chosen to represent America (over New York, Washington, D.C. and San Francisco) was the viability of hosting the most “walkable” Olympic Games in history, with 28 of the 33 proposed venues within a 10 kilometer radius and an average of 5.3 kilometers between each venue. The Olympic Village, which must house 16,000 individuals, would be built on Columbia Point, which is currently home to UMass Boston. About 5,000-6,000 of those beds would later become UMass student dorms, helping to satisfy the school’s goal of adding student residences. The remainder would be transformed into affordable and workforce housing, helping Mayor Walsh achieve his goal of 53,000 units of new housing by 2030.

David Nagahiro, whose firm CBT is focused on the village, underscored the concept of a sustainable games when he noted that, “UMass students are interchangeable with Olympic athletes” in benefitting from modern dorms and amenities overlooking Boston Harbor and the Harbor Islands. It’s this type of development that would help transform the University, typically thought of as a commuter school, into a more residential campus. Nagahiro, who recently visited London and Barcelona to speak with former Olympic officials there, gushed about long-term benefits enjoyed by the former Olympic hosts. Back in Boston, infrastructure improvements would also mean UMass students would enjoy a new transportation “Superhub” at the JFK-UMass Stop along the MBTA’s Red Line.

Moving 635,000 athletes, media, staff, volunteers and spectators between the city’s two Olympic “Clusters” (A Waterfront Cluster downtown and a University Cluster encompassing M.I.T., Harvard and B.U.) is Thomas’ and VHB’s domain. He insisted that Boston proves its ability to host multiple, massive events annually with the Boston Marathon and a morning Red Sox game every Patriots Day. While the MBTA is currently is crisis mode, everyone on the panel agreed that the T must be a catalyst for moving this bid forward and that public transportation is the key to economic opportunity and growth. While not as “sexy” as new train cars, Davey pointed out that signal and power systems, along with capacity improvements, would benefit Greater Boston long after the games are gone. The numbers being cited by Boston 2024 are $5 billion in transportation investment already underway and an additional $5 billion planned. However, some of those numbers were called into question in a Boston Globe article that came out the same morning as the panel.

In 2017, Boston will find out if its quest to host the games was successful. If it is, it could mean beach volleyball on the Boston Common and Olympic baseball at Fenway Park, not to mention more than 600,000 visitors to our city over a 30 day stretch. But for those looking to make the games a reality, clearly 2024 would be just the beginning.

Good to Great: Recommendations for the Baker Polito Administration

BakerPolitoCoverDuring the first week of January, NAIOP Massachusetts provided the Baker- Polito Administration (including select cabinet secretaries and commissioners) with the report, Good to Great: Recommendations for the Baker Polito Administration. The report is the result of significant input from NAIOP members and focuses on a wide range of ideas – big and small – affecting the Executive Office of Housing & Economic Development (EOHED), the Executive Office of Energy & Environmental Affairs (EOEEA) and transportation (MassDOT).

Over the course of the next few months, we will highlight one recommendation per week on this blog. Comments are encouraged! NAIOP looks forward to working with the new Administration to implement these recommendations and find new ways to encourage economic growth in Massachusetts.

EOHED: Establishing Economic Priorities & Initiatives
The Secretary of Housing & Economic Development should be the empowered advocate for the business community, both within the Cabinet and externally. Nearly all policies and regulations have an impact on the business community – including the businesses that are already located in Massachusetts, as well as those relocating to the Commonwealth. NAIOP urges the Baker Polito Administration to make the Secretary of Housing & Economic Development the vocal advocate for business interests through the following initiatives:

  • Work closely with the leading business trade groups to ensure the state is providing the kind of incentives and programs needed to foster broad-based growth, not simply those favored by the Administration (i.e., don’t pick winners, make decisions based on need).
  • Expand and strengthen the Regulatory Reform Initiative created in 2012, an Administration-wide regulatory reevaluation for all state agencies. Start by appointing a Regulatory Ombudsman and consider freezing any policies or regulations approved in the final 60 days of 2014.
  • Simplify the administration of all of the state’s business incentives and consolidate economic development agencies. The Baker Polito Administration should examine the current list of economic development agencies and quasi-publics and determine if there should be some consolidation. In addition, incentives should be coordinated and streamlined – too many agencies are overseeing incentives right now, resulting in confusion and missed opportunities for businesses.
  • Identify opportunities for privatization and public-private partnerships. There are numerous opportunities for privatization (e.g., transportation, water infrastructure, etc.) However, the “Pacheco” law makes it virtually impossible to actually do any of these. The Baker Polito Administration should consider a targeted “pilot” program to break through this problem, with EOHED taking a lead in advocating for such a concept.
  • Create incentive packages for start-ups. Most of the net job growth in the country is attributable to companies in operation five years or less. Many states are aggressively looking to attract and nurture start-ups (e.g. New York’s startup.ny.gov). Massachusetts, led by EOHED and working with organizations like the Cambridge Innovation Center, should consider strategies that provide the necessary ecosystem for start-ups within Massachusetts to thrive and grow into profitable companies. Concepts like “LabCentral,” a shared laboratory space designed as a launch-pad for high potential life sciences and biotech start-ups, could be expanded to most any of the industries in the state offering the space and resources start-ups need.
  • Identify ways to build on the Commonwealth’s innovation economy to strengthen and improve government services, while better serving the business community. Massachusetts leads the way in innovation. The many start-ups and globally recognized institutions like MIT and Harvard are an untapped resource for state government. Possible opportunities may exist for apps or innovation companies to improve services for Massachusetts residents and businesses.