Luxury Residence Report Misses the Mark

A report was recently issued from the Institute for Policy Studies that has attracted significant media coverage and editorials from virtually all of the local print and broadcast outlets.

Elisif_20161213_5514.jpgCredit: Elisif Brandon

It’s a great story: the ultra-rich, international money launderers have descended on the Boston real estate scene, crowding out poor and middle-class residents.

However, when you go beyond the buzz and dig into the content of the report, there is much to question. The report implies that owning condos through a trust or LLC is done to hide the owner’s identity. This form of ownership is actually a very common practice for tax, estate, and transactional reasons. Furthermore, while some buyers may choose to remain anonymous, it’s rather uncommon and to imply that anyone who does this is somehow laundering money is factually incorrect.

If these higher priced apartments or condos were not built, middle income apartments would not be replacing them — the economics just do not work with the current high construction costs. Furthermore, these buildings are already paying a tax devoted to the production of affordable housing, with a requirement to provide for at least 15 percent of the units built on site as affordable or a fee to produce those units off site. In addition, the city’s office buildings must also pay a “linkage fee” for affordable housing and workforce training.

Virtually all of these new developments are built on vacant land or in commercial areas where there had not been any housing, so they have not displaced existing residents. In fact, many of these developments have been the catalyst to creating new 24/7 neighborhoods.

If these condo owners are not here full-time to justify a residential tax break, so what? Do we want to discourage retirees living in Florida from living here for six months? Do we want to tell the penthouse owner, Michael Dell, to take a hike and take his jobs with him? I don’t think so.

The real issue is that it will take federal and state resources, communities working with developers, and overcoming NIMBY-ism and fear of affordable housing at the local level to truly address this housing crisis. Rather than drawing false conclusions and creating easy scapegoats, it’s time we all come together to find economically feasible solutions.

This letter to the editor originally appeared in the Boston Business Journal on September 20, 2018, as written by NAIOP Massachusetts CEO David Begelfer.

 

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