Author Archives: Tamara Small

About Tamara Small

Tamara serves as the CEO for NAIOP Massachusetts.

Office Space: Dead on Arrival or a New Frontier?

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Tenants Are Getting a Crash Course in Remote Work’s Pluses and Minuses

Written by: Tamara Small | This article was originally published by Banker & Tradesman on October 4, 2020

As we approach the seven–month mark since the state of emergency was declared and office workers transitioned to Work from Home (WFH) overnight, many people are asking the same question: Will workers return to the office?  

A review of statistics paints a bleak picture. Office sublease space is at a record high. Occupancy rates in Boston and Cambridge remain in the single digits, while in the suburbs, it’s about a 10 percent occupancy rate. Companies that once said they would come back after Labor Day are now pushing tentative return dates out to January or well into 2021. We have seen the largest quarterly increase in vacancy rates since the fourth quarter of 2001.  

Given the uncertainty about what is to come, few transactions are happening. Rents are beginning to drop and short–term leases, once unheard of, are becoming much more common. Small businesses that support office workers from dry cleaners, to sandwich shops, to shoemakers remain closed. The economic impact cannot be overstated.  

Eric Rosengren, President of the Federal Reserve Bank of Boston, recently commented on the impact of so many empty office buildings.  

“It’s going to be very difficult for Massachusetts to fully recover until Boston fully recovers,” he said. “And a full recovery in Boston requires people to occupy the office buildings we have downtown.” 

However, we are now starting to see more people return, slowly, but surely, to their offices. And, when there is a vaccine, and children return to school and daycare, and commuters get back on public transit, as an industry we will have a unique opportunity to use what we have learned during this time to make offices better than ever. But what do we do in the meantime? 

While only 4 in 10 Americans can work from home, for those who have that privilege, the overnight transition to WFH was fairly seamless. Many companies who had never offered WFH as an option realized that work can, and will, get done remotely. Technology experts have become the glue that holds the office together – constantly adapting and innovating to accommodate cybersecurity, equity and access challenges.  

Tenants Discover Downsides 

There is a lot of positive that came out of this overnight shift. Several studies show that by eliminating commutes, some workers have gained invaluable personal time. Traffic congestion in our cities has improved dramatically, and many municipalities are expanding their alternative transit options, adding bike lanes and expanding walking paths to encourage outdoor activity. 

However, the longer WFH continues, the more we start to hear about its negative impacts.  

First, the boundaries between work and home have blurred. People are working more, and they are exhausted.  

Second, onboarding and mentorship are suffering. Bringing a new person onto a team that is completely remote is extremely challenging, as is mentoring a more junior employee or intern.  

Third, and most importantly, the collaboration and personal connections that shape successful office culture are difficult to replicate in a remote world. Remote work prevents learning by osmosis and diminishes opportunities for teamwork by eliminating those invaluable five-minute conversations that engage people across teams and disciplines. This has a significant impact on employees, particularly those new to the workforce.  

A recent study of employers by MassDOT/MBTA shows that very few companies plan to switch to WFH entirely when the world returns to “normal”:  52 percent of employers surveyed will send all employees back to the office;  41 percent will send some employees; and only 3 percent will remain full-time WFH.  

Embrace Office Innovation 

Clearly, employees will come back to the office, but work from home is here to stay. People want flexibility, but also some human interaction and collaboration. Are our office spaces ready to rise to the challenge? In short, yes. I predict employers will increasingly adopt a hybrid model that includes some remote and some in–person days. This means a total revision of what office space looks like, how it works, and how employees interact.   

A new and revived office sector will include an increased focus on wellness, collaboration, technology, and community. These components are critical as space becomes more fluid and flexible.  

At a recent NAIOP event, a panel of local experts shared what they are already beginning to see for the future of the office. Elizabeth Lowrey of Elkus Manfredi said, “the days of stack–and–pack are over.” Vickie Alani of CBT shared that we will likely see home offices remain dedicated spaces for focused work, while office spaces will be designed to enable remote and in–person collaboration. Kimberly Smith of Knoll focused on the enhanced role of technology to ensure that people at home and at the office “have an equitable experience in their office interactions.” And moderator Lauren Vecchione of Colliers Boston summed it up with the following statement: “If you take anything away from the discussion today, it should be that employees will come back to the office.” 

So, while the next few months may be a challenge, now is not the time to ring the death knell for the office sector. Instead, it’s time for CRE to embrace innovation and give the people what they want – a new and improved office for the next generation, today.

NAIOP Weighs In On Focus40: The 2040 Investment Plan for the MBTA

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Today NAIOP submitted comments in support of Focus40, the 2040 Investment Plan for the MBTA. NAIOP applauds Secretary Pollack and the Baker-Polito Administration for the significant time and thought that went into Focus40.  A reliable public transit system is critical for sustained economic growth and NAIOP believes that Focus40, combined with the Administration’s Commission on the Future of Transportation in the Commonwealth, and ongoing initiatives such as Rail Vision, as well as the significant work done by the Fiscal and Management Control Board, create a framework for the future.

By focusing on the three tiers of Doing, Planning and Imagining, Focus40 identifies investments that will make the MBTA a more reliable, robust and resilient public transportation system. Focus40 identifies 12 key programs: Blue Line 2040, Orange Line 2040, Green Line 2040, Silver Line 2040, Red Line 2040, Resiliency, Customer Experience, Paratransit, Commuter Rail 2040, Water Transportation 2040, Bus 2040 and Place Based Service Additions.

NAIOP’s comment letter is very supportive and encourages additional focus in the following areas:

– Water Transportation: In the current draft, an identified program objective for 2040 is “supporting a robust, multi-operator Boston Harbor water transportation system, serving more passengers and destinations and excellent connections to landside MBTA service.”  NAIOP believes that water transit has significant potential and that Focus40 provides a unique opportunity to further investigate how waterfront communities, including Boston, could benefit from an expanded system.  NAIOP looks forward to serving as a resource on this issue.

– Ride Sharing and Technology: While references to ridesharing are made under the Customer Experience program recommendations, NAIOP suggests that detailed analysis about the current and future impact of ride sharing services, e.g. Uber, Lyft as well as other technologies be included.  In addition to offering an alternative or complement to MBTA service, these companies are changing the composition of our streets and the level of congestion in many areas.  New and “disruptive” technologies are already impacting transportation and should be considered, making enhanced transportation information sharing through technology an integral part of the Commonwealth’s transportation plan.

– Regional Needs: Considering how the program objectives and recommendations might affect access to other parts of the Commonwealth should be further investigated in Focus40.  While we acknowledge that the MBTA is first and foremost the public transportation system for Boston and surrounding communities, we think that it’s necessary to zoom out and look at outside factors that may interact with the MBTA lines.

– Non-Capital Priorities and Human Resources Planning:  While it is important to have goals and big ideas to guide large investments, the essentials of good MBTA administration are absolutely critical.  The transformational work of the Fiscal and Management Control Board over the past three years illustrates this very clearly.  It is imperative that the big ideas in Focus40 do not overshadow the vital day to day needs and expectations of the region.  We recommend that Focus40 consider how human resources planning and operational strategies will allow this to continue.

Finally, it’s worth noting that in 2015, at the start of the Baker-Polito Administration, NAIOP issued the report, From Good to Great: Recommendations for the Baker-Polito Administration.  The report was based on member feedback and included recommendations on a wide range of policy areas, including transportation.  Specifically, NAIOP urged the Administration to develop a “Vision 2040 Transportation Plan,” which “should address tomorrow’s opportunities, focusing on the issues which may arise over the next 25 years, including long term demographic, economic, environmental, technological, cultural and governmental transformations, the potential effects of global climate change on infrastructure, and the development of new modal choices.”  It’s great to see that when NAIOP members weigh in, policymakers listen! We look forward to continuing to engage members and working with the MassDOT team on this and other transportation initiatives.

Legislative Wrap-Up: NAIOP Fights for Industry Through Final Hours of Session

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MAStateHouse_GrayIn the early hours of August 1, Massachusetts legislators adjourned a busy two-year legislative session in which lawmakers introduced 4,861 bills in the House and 3,128 bills in the Senate. NAIOP Massachusetts and its Government Affairs Committee members worked tirelessly to represent the interests of the commercial real estate development industry. NAIOP applauds the leadership of the “big three” – Governor Charlie Baker, House Speaker Robert DeLeo, former Senate President Harriette Chandler, newly elected Senate President Karen Spilka, as well as committee chairs and legislators who pursued a wide-ranging agenda. For the remainder of 2018, the legislature will meet in informal session, but during those sessions bills need the unanimous approval of the limited number of members attending to be approved. Any member of the legislature can prevent a bill from advancing simply by objecting.

While NAIOP advocates on hundreds of bills, here are the must-know highlights of the 2017-2018 legislative session and what they mean for CRE:

Railroad Right of Way Reform Passes in Economic Development Bill
In a win for NAIOP Massachusetts’ advocacy, the economic development bill approved by the House and Senate reforms the current railroad right of way statute (MGL 40/54a) that has created uncertainty and delays for projects on former railroad rights of way. The language in Section 10 of H. 4868 removes the confusing “land appurtenant to” language from the review process; directs MassDOT to establish guidelines, timeframes, and a determination of inapplicability option for unimpacted land; and brings certainty to landowners and lenders while protecting properties of importance to the Commonwealth’s future transportation needs. The final language was based on a stand-alone bill filed at the request of NAIOP by Rep. Joe Wagner and was the result of years of discussions between NAIOP, MassDOT and the legislature. The economic development bill also includes $250 million for the MassWorks program and $75 million for workforce skills capital grants, as well as many other bond reauthorizations designed to spur economic development.

VERY special thanks to Secretary Pollack, Rep. Wagner, Rep. Strauss, Sen. Boncore, Sen. Lesser, legislative leadership, and NAIOP members for their work on this issue. The bill is now before Governor Baker and is expected to be signed very soon.

Flawed Zoning Bill Defeated
NAIOP and all real estate groups in the state, as well as the Mass Municipal Association, opposed H. 4397.  The bill was a top priority for planners and environmental groups and contained anti-growth concepts including eliminating the Approval Not Required (ANR) process, reducing the scope of zoning “freeze” protection under current law only to the particular subdivision plan that is submitted rather than to the “land shown on the plan,” authorizing the use of impact fees without limitation, and mandating inclusionary zoning without incentives. NAIOP educated lawmakers on the numerous provisions of the bill, which would have hindered housing production in Massachusetts.  We are very pleased this very flawed bill did not advance.

Housing Production Bill Left on the Table
NAIOP strongly supported H. 4290, which was filed by Governor Baker and given a favorable report by the Joint Committee on Housing.  That bill allowed cities and towns to adopt zoning best practices by a simple majority vote, rather than the current two-thirds supermajority.  This would have been allowed in situations where the zoning change encouraged more concentrated development including the adoption of 40R “Smart Growth” districts or starter homes, reduced parking requirements, allowing accessory dwelling units, and reducing minimum lot sizes.  The bill was supported by a broad coalition of business groups, the Massachusetts Municipal Association, and the real estate industry.  We are disappointed that the bill did not receive a vote.  Governor Baker has encouraged the legislature to move the policy during informal session (now through December).  NAIOP will continue to work with the Administration and the legislature to promote policies that encourage the production of housing.

Vicarious Liability Bill (Wage Theft) Does Not Pass
NAIOP was part of an 18-member coalition of business groups opposing flawed wage theft legislation containing vicarious liability for businesses that employ entities that commit wage theft (S. 2546). It would have targeted innocent, law-abiding businesses and held them responsible for the actions of other businesses. This would have applied stop work orders and penalties to the lead company who would have had no way of knowing about such a violation.  The Senate passed the bill, but it was not taken up in the House.  NAIOP, which served on a working group with legislators and the proponents of the bill (labor interests), will continue to advocate for fair and balanced solutions to wage theft that go after those who are breaking the law, while opposing proposals that target law abiding businesses.

Balanced and Effective Approach to Climate Change Passes
NAIOP supported the environmental bond bill and climate change resiliency legislation (H. 4835), which passed both chambers and is now before Governor Baker for his signature. It directs state agencies to draft a comprehensive climate adaptation plan and evaluate the Commonwealth’s adaptive capacity to respond to climate change. The Plan will be updated every five years, ensuring a focus on climate change resiliency beyond the current Administration. NAIOP was strongly opposed to other climate change legislation (CAMP – S. 2196)  that would have required “all certificates, licenses, permits, authorizations, grants, financial obligations, projects, actions and approvals issued by a state agency or state authority” to be consistent to the maximum extent practicable (MEP) with a plan.  NAIOP opposed the language because “consistency” would have been open to interpretation and the term “maximum extent practicable” was not defined and therefore set the stage for legal challenges against projects.  We are pleased that the final environmental bond bill does not include this language and NAIOP looks forward to working with the Administration to develop this important plan.

Housing Bond Bill – Brownfields Tax Credit Extended
Earlier in the session, Governor Baker signed the Housing Bond Bill (H. 4536), which included one of NAIOP’s top legislative priorities – a 5-year extension of the Brownfields Tax Credit. The bill authorized $1.8 million in new capital spending for the production and preservation of affordable housing with an extension of the Low-Income Housing Tax Credit and an increase in the annual allocation to $25 million. For more information, read our blog post, Brownfields Tax Credit Extension Signed into Law.

NAIOP is grateful to Senator Rodrigues for his leadership on this issue and applauds the housing bond bill conference committee members (Reps. Honan, McGonagle, Hill and Sens. Boncore, Keenan, O’Connor) for championing the Brownfields Tax Credit, which increases housing, creates new employment, and enhances local and state tax revenues by restoring blighted properties to productive use.

Community Benefit District Legislation Falls Short of Approval
Legislation (H.4546) that would have authorized Community Benefit Districts did not receive final procedural support in the legislature after initial approval in the House and Senate. Community Benefit Districts (CBD) impose assessments on property owners, in addition to property taxes, to fund supplemental services. A CBD may be established only if the property owners in the district who sign the petition to create the CBD will pay more than 50 percent of the yearly assessment. Like last session, NAIOP opposed the CBD framework based on the issue that it would impose additional fees on property owners who may not have supported the creation of the district in the first place. Many other advocacy groups and legislators recognized the potential problems with the CBD framework and stopped the bill from becoming law.

Water Banking Fees Defeated
NAIOP strongly opposed Act Providing for the Establishment of Sustainable Water Resource Funds. House Bill 2116 would have provided communities with the authority to create water banks – essentially an impact fee that unfairly targeted new development and focused on environmental mitigation and water conservation measures rather than water infrastructure upgrades or capacity issues.

Job Site Roster Bill Defeated
Senate Bill 1019, An Act relative to transparency in employee benefits reporting in private construction, would have affected projects with 10 or more residential units or commercial projects of 5000 square feet or more by requiring that a roster of employees and independent contractors on a jobsite be publicly posted.  The legislation required a certificate of compliance with no mechanism for applications and issuance, and no timeframes.  Given the extremely fluid nature of a job site, combined with the project delays and costs associated with this legislation, compliance with such a requirement would have been nearly impossible.

Special thanks to all NAIOP members who provided input and expertise on the wide range of issues NAIOP pursued this session. NAIOP will now begin drafting its legislative agenda for the 2019 – 2020 session by meeting with members to determine how to best advance the goals of the industry.

Mass Municipal Association and Real Estate Community Join Together to Support Housing Choice Legislation to Create Much-Needed Housing Across the Commonwealth

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Today the following statement was issued in support of An Act to Promote Housing Choices (H.4290):

The Greater Boston Real Estate Board, the Home Builders and Remodelers Association of Massachusetts, the Massachusetts Association of Realtors, NAIOP—The Commercial Real Estate Development Association, and the Massachusetts Municipal Association, join together to express our strong support for H. 4290, An Act to promote housing choices. In its current form, this important bill is a unique opportunity to increase the much-needed supply of housing in Massachusetts.

As reported favorably by the Joint Committee on Housing, H. 4290 represents an unprecedented consensus by the major stakeholders to advance housing development. This narrowly tailored bill addresses the state’s need for housing while respecting the important role municipalities play in determining whether new housing is built. It does so by eliminating one barrier to housing production – the need for a supermajority vote of Town Meeting or a city council to approve zoning changes for housing and smart growth planning.

To encourage cities and towns to adopt zoning that supports sustainable housing production, the Department of Housing and Community Development created the Housing Choice Initiative. That program rewards communities that produce new housing and adopt best practices to promote smart growth with grants and technical assistance. Passage of H. 4290 will make it easier for communities to achieve Housing Choice designation.

Unlike another legislative proposal now before House Committee on Ways & Means (H. 4397), which would rewrite the Zoning Act in ways that are complicated, controversial, and would hinder the production of housing, H. 4290 contains no mandates or other provisions that are opposed by all of our organizations.

According to the UMass Donahue Institute, “the challenge for Massachusetts going forward will be to address the housing, transportation, and infrastructure constraints that make it more difficult for the workers who will be needed to fill these positions to relocate to the state and meet the needs of growing employers. While this challenge is not new, the price of inaction is high and rising.” Massachusetts is one of the most expensive states in the country in terms of housing affordability. It is critical that we do not complicate or increase housing costs by enacting legislation that would further worsen the existing problem.

Together with the recently enacted Housing Bond Bill, H. 4290 can make a significant impact on the Commonwealth’s historic shortage of housing. We respectfully urge the legislature to pass this important bill before the end of the formal session.

 

Do Climate Resiliency the Right Way

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NAIOP Massachusetts authored the following op-ed on key climate change resiliency legislation. Commonwealth Magazine ran the op-ed on April 1, 2018. 

Do Climate Resiliency the Right Way

Extreme weather is a threat to overall economy

Promoting climate change resiliency is top of mind for Massachusetts residents and businesses. The 2018 nor’easters have placed considerable stress on our infrastructure and communities, as well as the public’s consciousness.  Sixty-five percent of voters now say that climate change is affecting storms, according to a recent WBUR poll, conducted by the MassINC Polling Group.

In addition to the public health and environmental risks associated with climate change, NAIOP Massachusetts, The Commercial Real Estate Development Association, views climate change as a threat to the overall economy.  As we have seen with increasing frequency, transportation systems, communications, utilities, and businesses of all sizes are affected by extreme weather events.  Preparing for a changing climate needs to be a shared responsibility between the public and private sectors.

Currently, developers are tailoring plans to local site needs, particularly flooding risks in Cambridge and Boston, and, as an example, utilizing technology such as aquafences. They are bringing working knowledge to Climate Ready Boston and similar initiatives, seeking best practices from developers and governments in other states, and partnering with the public sector on key climate initiatives.

On March 15, NAIOP was proud to join Gov. Charlie Baker, public officials, and members of the environmental advocacy community to support new climate change resiliency and environmental bond legislation.  The governor’s bill (House 4318 – An Act Promoting Climate Change Adaptation, Environmental and Natural Resource Protection and Investment in Recreational Assets and Opportunity) directs the state, led by the secretary of energy and environmental affairs and the secretary of public safety and security, to draft a comprehensive plan, known as the Integrated State Hazard Mitigation and Climate Adaptation Plan.

Under the legislation, the plan would need to be updated every five years, ensuring a focus on climate change resiliency beyond the current administration. The plan would include the following components: observed and projected climate trends, risk analysis and vulnerability assessments, and evaluation of the Commonwealth’s adaptive capacity to respond to climate change.  It further requires the state to carry out the plan and to offer guidance and strategies for municipalities to navigate the state plan, alongside local bylaws and regulations.

The legislation authorizes $1.4 billion in capital allocations for investments in safeguarding residents, communities, and businesses from the impacts of climate change.  As an example, it expands the Municipal Vulnerability Preparedness grant program, which 20 percent of Massachusetts municipalities currently participate in, with a $50 million commitment.  It also commits another $170 million to coastal resiliency measures, such as critical seawalls and dams that protect our environmental assets.

This comprehensive approach sets the Commonwealth on a path towards improved resiliency without unreasonably hampering economic development and new housing.  Other climate change legislation, such as Senate bill 2196 – known as the Comprehensive Management Adaptation Plan, or CAMP, bill, is the wrong approach.  The bill, [crafted initially by Sen. Marc Pacheco of Taunton], goes far beyond regulating the reasonable impacts of climate change and would create tremendous uncertainty for the real estate industry, the business community, and regulatory agencies.

Under CAMP, “all certificates, licenses, permits, authorizations, grants, financial obligations, projects, actions, and approvals issued thereafter by a state agency or state authority” would need to be consistent to the maximum extent practicable with the yet to be determined adaptation plan.  Consistency with this plan would be open to interpretation and the term “maximum extent practicable” is not defined.  It is disconcerting that a cost-benefit analysis is not part of this approach. It is unclear how such a broad requirement could even be implemented and the legal challenges around such a concept could be significant.  Tying up every grant, permit, approval, certificate, and authorization in court would do nothing to better prepare the Commonwealth for climate change.

Unlike CAMP, the governor’s climate change legislation builds on the significant work done to date by the Baker-Polito Administration on this issue.  It codifies key portions of Executive Order No. 569, which established an integrated climate change strategy for the Commonwealth.

The governor’s climate change resiliency legislation prepares the Commonwealth to adapt and mitigate climate change on a long-term basis, working hand in hand with local policymakers and regulators.  It provides communities with the tools they need to build up resiliency efforts through new grants and programs aimed at protecting critical environmental resources.

In short, House bill 4318 is the right approach at the right time.  Its passage will ensure that climate change adaptation and resiliency continue to be a top priority for the public and private sectors.

The legislation now goes to a legislative committee for its consideration. NAIOP strongly urges legislative leaders to approve the necessary investment in planning for extreme storms and rising sea levels.

Tamara Small is the senior vice president of government affairs for NAIOP Massachusetts – The Commercial Real Estate Development Association.

 

Legislative Update: Issues Affecting CRE on Beacon Hill

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Coasting past a February 7th deadline to advance, retract, or postpone action on the 7,300 bills filed this session, Massachusetts legislators are now meeting through July 31, at which point they will break for the summer and the fall campaign cycle.

As NAIOP expected, several opportunities and threats made it through the deadline set for legislative committees to report out bills to the legislature, including the following:

Housing Choice Initiative

Having unveiled the Housing Choice Initiative with broad-based support in December, Governor Baker used his January State of the Commonwealth speech to highlight the Administration’s plan to spur housing production. The Governor’s legislative package, supported by NAIOP, received a favorable report from the Joint Committee on Housing in February. H.4075 is expected to now move to the House Committee on Ways & Means. Under the legislation, numerous local zoning changes, including the adoption of a 40R district, reduced parking ratios or mixed-use zoning, among others, would require only a majority vote of the local legislative body instead of a supermajority. NAIOP believes this bill, combined with the Housing Choice Designation for municipalities that prioritize housing production, and the Housing Bond Bill (referenced below) are important tools for addressing the Commonwealth’s housing crisis. NAIOP will continue to work to advance this much-needed legislation.

Problematic Zoning Legislation

Smart growth advocates and environmental groups remain committed to Senate Bill 81 and House Bill 2420, the zoning bills that are strongly opposed by the real estate industry. Both of the bills were granted an extension order to March 7. NAIOP, working with a broad real estate coalition, continues to educate lawmakers about the problematic provisions of the bills – particularly language that would hinder the production of housing in Massachusetts. Now that new Senate President Harriette Chandler has indicated that affordable housing is a top priority, NAIOP is advocating that the Governor’s approach is the best path forward for the Commonwealth and will continue to oppose any efforts to combine the Governor’s bill and the zoning bills.

Wage Theft

Wage theft is a serious matter and those who intentionally violate wage theft laws should be held accountable. Unfortunately, two wage theft bills (Senate Bill 999 and House Bill 1033), while well-intended, go after employers who are following the rules and doing the right thing. The bills penalize those who inadvertently do business with a firm that has committed a wage violation, through the imposition of vicarious liability (something that no other state imposes). The legislation would affect anyone involved in construction and development, but it would also have a huge impact on all businesses. It would apply equally to hospitals, universities, and businesses, large and small, that outsource aspects of their operations to other companies or “contractors.”  The financial impact could be severe. Both of the bills were given an extension order until March 7.

NAIOP is part of a large business coalition that is deeply concerned with the impact these bills could have on the Massachusetts economy. Senator Jason Lewis and Representative Paul Brodeur created a wage theft working group, which includes representatives from both sides of the issue. The group has met several times and we will continue to offer up alternative solutions to addressing the issue of wage theft and we will continue to oppose any wage theft bill that would include vicarious liability.

Housing Bond Bill & Brownfields Tax Credit

In January, the House passed a $1.7 billion housing bond bill, which contains numerous provisions supported by NAIOP.  It includes an extension of the soon-to-expire Brownfields Tax Credit and extends the authorization of other tax credits including the state’s Low-Income Housing Tax Credit and the Community Investment Tax Credit.  The bill is now before the Senate Committee on Bonding, which held a hearing on it last week. NAIOP will continue to advocate for quick passage of this important legislation.

A potential economic development bill, an omnibus energy bill, and countless other bills are also on NAIOP’s radar. In the next five months, NAIOP will continue to fight for legislation that encourages economic development and supports the commercial real estate industry.  If there are issues of interest to you or your firm, please contact NAIOP’s Government Affairs Team.

NAIOP Supports Baker-Polito Housing Legislation

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On Monday, NAIOP was pleased to join Governor Baker, Lieutenant Governor Polito, and Undersecretary Chrystal Kornegay to support a new initiative to increase housing production in the Commonwealth. The Administration’s Housing Choice Initiative creates a new system of incentives and rewards for municipalities that deliver sustainable housing growth. It also creates a new technical assistance toolbox to empower cities and towns to plan for new housing production and proposes legislative changes, through An Act to Promote Housing Choices, to deliver smart, effective zoning at the local level. (A section by section summary of the bill is also available.)

NAIOP believes the production of workforce housing is critical for the continued growth of the Massachusetts economy and we are pleased to support this initiative. Unlike the extremely problematic zoning legislation that is supported by planners and environmental groups and opposed by the real estate industry and municipalities, this bill does not include language that would hinder the production of housing. Instead, it rewards communities that are producing new housing units and have adopted certain best practices with a new Housing Choice Designation.

Cities and towns that receive the Housing Choice Designation will be eligible for new financial resources, including exclusive access to new Housing Choice Capital Grants, and preferential treatment for many state grant and capital funding programs, including MassWorks, Complete Streets, MassDOT capital projects and PARC and LAND grants.

Under the legislation, the following local zoning changes would require only a majority vote of the local legislative body:

  • Reducing dimensional requirements, such as minimum lot sizes, to allow homes to be built closer together.
  • Reducing required parking ratios, which can lower the cost of building new housing and accommodate development on a smaller footprint.
  • Creating mixed-use zoning in town centers, and creating multi-family and starter home zoning in town centers, near transit, and in other smart locations.
  • Adopting “Natural Resource Protection Zoning” and “Open Space Residential Development.” These zoning techniques allow the clustering of new development while protecting open space or conservation land.
  • Adopting provisions for Transfer of Development Rights (TDR), which protects open space while creating more density in suitable locations.
  • Adopting 40R “Smart Growth” zoning, which provides incentives for dense, mixed-use development in town centers, near transit, and in other “smart” locations.
  • Allowing accessory dwelling units or “in-law” apartments – small apartments in the same building or on the same lot as an existing home.
  • Allowing for increased density through a Special Permit process promoting more flexible development.

While it does not mandate that any town adopt these zoning best practices, it does remove the barrier of having to convince a supermajority of the legislative body to adopt them.  

Unlike the zoning bills referenced above, this bill has the support of all of the key players – municipalities, business groups, housing advocates, environmental groups, and real estate. NAIOP looks forward to working with the Baker Administration and the legislature to advance this important legislation, which will be an important step in truly addressing the housing crisis facing Massachusetts.

Federal Court Rejects Lawsuit to Force Stormwater Permits in the Charles River Watershed

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The following is a guest post by Hamilton Hackney of Greenberg Traurig regarding the recent decision in CLF v. EPA. NAIOP is extremely pleased with the decision in this case, which we had been following closely. NAIOP will continue to monitor stormwater issues at the state and federal levels on behalf of the commercial real estate industry.

Last week, the federal district court dismissed a lawsuit that sought to force USEPA to create a permitting program for stormwater discharges in the Charles River watershed.  Filed by the Conservation Law Foundation and the Charles River Watershed Association, the suit claimed that USEPA had a mandatory duty to require commercial and institutional properties that discharged stormwater to obtain permits to do so.  If successful, this suit would have forced commercial and institutional property owners to obtain permits, develop stormwater control plans and possibly design and install additional stormwater controls on their properties.

The suit invoked USEPA’s so-called Residual Designation Authority in the Clean Water Act. Although this authority has been exercised very infrequently to date, environmental groups are increasingly citing this statutory authorization as a basis for demanding that USEPA expand regulation of stormwater beyond industrial sources, construction sites and municipal stormwater systems.  In this particular case, the environmental groups argued that USEPA’s approval of “pollution budgets” (Total Daily Maximum Loads or TMDLs) for the Charles River obligated USEPA to regulate previously unregulated stormwater discharges to ensure that the TMDLs were achieved.  Given the hundreds of existing or proposed TMDLs in Massachusetts alone, that position could have far-reaching consequences for commercial and institutional real estate in the many watersheds with TMDLs.

The federal district court’s dismissal of this lawsuit follows another federal court decision last December in a similar case in Rhode Island.  Together, these decisions indicate that courts remain reluctant to intrude on USEPA’s discretion to choose when and how it may exercise its Residual Designation Authority.  While that is an encouraging outcome, these decisions are likely to be appealed, so there may be more developments on this issue.

Massachusetts Adopts New Energy Code & Stretch Energy Code

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The Board of Building Regulations and Standards (BBRS) voted in July to adopt several changes to the energy provisions of the existing building code (8th edition). The BBRS adopted the next edition of the International Energy Conservation Code (IECC 2015) as the base energy code in non-stretch code communities and adopted a new stretch energy code (approximately 15% more energy efficient than the current base energy code), which will automatically take effect in existing stretch code communities without a vote by the city or town.

NAIOP was pleased that the BBRS did not advance the solar rooftop readiness or electric vehicle readiness requirements that had been proposed (and opposed by NAIOP), but disappointed that a new stretch energy code was adopted.

A concurrency period will run from August 12, 2016 – January 1, 2017 which allows persons seeking building permits to submit plans and other required documents that conform to either the energy provisions in effect prior to August 12, 2016, or the amended energy provisions effective August 12, 2016, but not a combination of the two. Beginning January 2, 2017, all building permits and submitted documents must conform to the amended energy provisions only.

Public hearings on the next (9th) edition of the building and energy codes are expected this fall. NAIOP will continue to advocate on behalf of the industry on these important issues.

Legislative Wrap-Up

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Around 12:30AM on August 1, 2016, the Massachusetts Legislature wrapped up its work for the 2015 – 2016 legislative session. There was a flurry of activity in the final hours of the session. For the remainder of 2016, the Legislature will meet in informal session, but during those sessions bills need the unanimous approval of the limited number of members attending to be approved. Any member of the Legislature can prevent any bill from advancing simply by objecting.

This session NAIOP played offense and defense on a wide range of bills – with a number of significant victories. The following is an end-of session update on some of the bills NAIOP pursued this session:

Economic Development Bill Includes NAIOP Priorities
One of the final bills passed at the end of the session was the Economic Development Bill, H.4569 An Relative to Job Creation & Workforce Development. The bill included a number of provisions supported by NAIOP that will encourage economic activity in Massachusetts including:

  • Extends (from 6 months to 12 months) the period of time within which an applicant must begin construction following the issuance of a building permit or special permit or otherwise be subject to subsequent amendments to local ordinances. Extends (from 2 years to 3 years) the life of a special permit if construction has not commenced.
  • Increases the total number of projects allowed per community under the I-cubed program from 8 to 10 projects.
  • $45 million for the depleted Brownfields Redevelopment Fund.
  • Creates a new starter home program as part of Chapter 40R. Communities that establish a starter home district will be eligible for incentive payments from the state. The program encourages the production of densely located, smaller, single family homes, with a requirement that at least 20% of the homes in the district be affordable to and occupied by households with incomes at or below 100% of AMI.
  • $500 million for MassWorks, which gives municipalities and other public entities grants to support public infrastructure, economic development and job creation.
  • $15 million for a Site Readiness Fund, which will be administered by MassDevelopment and will promote site assembly, site assessment, pre-development permitting and other pre-development and marketing activities. These activities may enhance a site’s readiness for commercial, industrial or mixed-use development.
  • $15 million for an Innovation Infrastructure Fund, which will make grants and loans available to municipalities, private property owners, and business operations for design, construction and improvement of buildings and for equipment to spur innovation and entrepreneurship across the state, including co-working spaces, innovation centers, maker spaces, and artist spaces.
  • $45 million for the Transformative Development Initiative. The TDI Fund makes equity investments in major development projects in Gateway Cities. The fund also supports needed technical assistance for these municipalities.
  • $15 million for the Smart Growth Housing Trust Fund. This funds incentive payments to communities that create dense residential or mixed-use smart growth zoning districts in accordance with the Smart Growth Zoning Overlay District Act.
  • $25 million for the Workforce Housing Production Program.  The pilot program will supplement the Housing Development Incentive Program (HDIP) to encourage redevelopment of underutilized buildings in Gateway Cities.
  • Makes important reforms to the EDIP program
  • Reforms the Urban Center Housing Tax Increment Financing Zone (UCH-TIF), which authorizes cities and towns to utilize tax increment financing to encourage increased residential growth, affordable housing, and commercial growth.
  • Reforms the Housing Development Incentive Program (HDIP), which offers developers a state tax credit for substantially rehabilitating properties for lease or sale as multi-unit market rate housing in Gateway Cities, to now include new construction, as well as rehabilitation of existing structures. The bill further increases the maximum allowable credit under the program from 10% of qualifying expenses to 25% of qualifying expenses.

The Governor did veto a section of the bill opposed by NAIOP that would have created Community Benefit Districts. The proposed language created uncertainty and confusion and would have imposed fees on commercial, residential and non-profit property owners.  NAIOP applauds the Governor and the Legislature for their work on this very important bill.

Energy Bill – NAIOP Objections Removed, Commercial PACE Adopted
Another bill that emerged from conference committee on Sunday, July 31 was the energy bill, H.4568, An Act to Promote Energy Diversity. NAIOP was pleased that all of the sections the organization opposed were removed from the final bill. Those sections included: the Climate Adaptation Management Plan, which went well beyond planning and contained subjective and far reaching language that could have had extremely negative consequences for the Massachusetts economy; electric vehicle requirements as part of the building code; and mandatory energy inspections prior to the sale of a home and the creation and use of a mandatory energy score.  The legislature did adopt Commercial PACE, which is supported by NAIOP and creates a financing mechanism for energy efficiency improvements in commercial properties.

Zoning Legislation – Defeated
NAIOP was extremely pleased that the House did not take up the zoning bill that was passed by the Senate. S. 2311, An Act Promoting Housing and Sustainable Development, was supported by planners and environmental groups and strongly opposed by the real estate and business groups in the state, as well as the Mass Municipal Association. The legislation would have added expense and delay to the land development process in Massachusetts.

Wage Bill – Defeated
NAIOP and a coalition of business groups were also glad to see that the House did not support another problematic bill passed by the Senate, S.2207 An Act to Prevent Wage Theft and Promote Employer Accountability. The bill would have affected all businesses, including anyone involved in construction and development. It was a radical proposal that went far beyond what other states have done. It did not target wage cheaters. Instead, it would have targeted and punished the companies who contracted with them, even if the companies knew nothing or had no way of knowing about any wage violations.

Water Banking – Defeated
Finally, NAIOP brought together a coalition of organizations to defeat H. 657, An Act Providing for the Establishment of Sustainable Water Resource Funds. The bill would have provided communities with the authority to create water banks – essentially an impact fee that unfairly targeted new development and focused on environmental mitigation and water conservation measures rather than water infrastructure upgrades or capacity issues.

Special thanks to all NAIOP members who provided input and expertise on the wide range of issues NAIOP pursued this session. NAIOP will now begin drafting its legislative agenda for the 2017 – 2018 session by meeting with members to determine how to best advance the goals of the industry.