Category Archives: Economic Development

Reduce the Regulatory Burden in Massachusetts

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At a recent John LaWare Leadership Forum at the Federal Reserve Bank of Boston, I joined a panel of business leaders to discuss “What Keeps Us Up At Night.”

My comments were as follows:

  • Massachusetts was once known as Taxachusetts. Unfortunately, we are now becoming known for our cumbersome local and state regulatory system.
  • This problem has grown over the last two decades to the point that it is an inhibitor of job growth.
  • The problem on the local stage is a lengthy, unclear, and unpredictable permitting process with specialized regulatory bylaws that further raise the conservative thresholds established by the state.
  • On the state level, regulatory agencies have operated in an economic vacuum for too many years, unconcerned with the impacts of their rules on business growth and competitiveness. Rarely, if ever, are cost/benefit analyses performed on proposed regulations to determine, in advance, their impacts on businesses.

Market risks are enough to make new innovative businesses think long and hard before starting up.  Massachusetts should not be adding unreasonable delays and uncertainty to this important economic engine.

Post Election Economic Strategy for Massachusetts

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NAIOP congratulates Governor Deval Patrick on his election to a second term!

Ed Glaeser

Ed Glaeser

Under the category “it’s never too early to do good planning,” we would like to recommend that the Governor listen to the advice of Harvard Professor Ed Glaeser as outlined in his recent column in the Fall issue of Commonwealth Magazine. 

Glaeser very succinctly spells out what the leadership in Massachusetts should focus on in order to position the state for sustained long-term growth including:

  1. Renew the Commonwealth’s commitment to invest in education and show a willingness to innovate.  The state must also do a better job educating disadvantaged children without access to safe, quality schools.  Further support for charter schools is needed.
  2. Create a business environment hospitable to all businesses, large and small, rather than picking winners in only certain sectors
  3. Make Massachusetts  more “small-firm friendly” (e.g., substantially reduce the enforcement of non-compete clauses.)
  4. Establish a “blue-ribbon” panel to review the extensive list of tough regulations and rules that result in Massachusetts frequently being listed as among the least business friendly states.
  5. Tie local allocations of state aid to better, faster local business permitting.
  6. Try to retain more of our local college graduates.  Consider expanding the Adams Scholarship program, waiving in-state tuition charges and fees for high performing in-state high school graduates.
  7. Tie state education aid to good school practices.
  8. Press for housing market reforms that will make the state more affordable and dynamic to be able to attract and keep skilled workers and entrepreneurs.  The state must provide a counter-weight against local regulations discouraging workforce housing.  (e.g. Tie state aid to issuance of building permits, encouraging localities to lower barriers.)

As Glaeser concludes, job creation is a result of the state focusing on its core competencies of providing a decent quality of life to people throughout the state in order to attract entrepreneurs. Then the Commonwealth should step back and allow business to move forward. 

I totally concur.

Housing Affordability: Not Yet in Massachusetts

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One would think that with the national housing market bust, the issue of affordable housing in Massachusetts is on its way to resolution. Well, maybe not so quickly.

The New England Public Policy Center and the Federal Reserve Bank of Boston recently produced a discussion paper: The Housing Bust and Housing Affordability in New England by Robert Clifford, Research Associate.

The paper looks at affordability in the New England states and the rest of the nation. The results show that although New England’s housing prices have declined and affordability has returned to the pre-housing crisis levels of the early 2000s, owner-occupied housing in Massachusetts is still less affordable than in the rest of the nation. Clifford remarks:

The affordability measures explored here point to lingering sources of concern pertaining to the high cost of homeownership in New England. In four of the six New England states (all but Maine and New Hampshire), recent drops in home prices have not been large enough to make the median-priced home affordable for the median-income household. Or—to present the same results from a different angle—the weak economy has prevented middle-income households from augmenting their incomes enough to allow them to afford the median-housed home in their state. The difference in affordability between New England and the nation is especially acute in Massachusetts.

The study also shows that more of the region’s households are becoming cost-burdened, particularly low- and middle-income homeowners.

Unfortunately, what this means for the Massachusetts economy is that, as the recovery begins nationally, job opportunities in other states will start attracting young families out of the region and into areas that are more affordable, leaving us yet again with a declining skilled workforce.

Once and for all, we need to develop a serious policy that allows for the construction of smaller, denser, affordable, starter homes.

No Turkeys Here

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Banker & Tradesman’s “Turkey Hunt” column (September 20) unfairly took aim at some of the city’s most innovative real estate projects. The premise was that too many development projects have languished over the years because of “do-nothing” developers whose approvals should be “terminated” by the city to allow other developers a chance to build in Boston.

I think we need to set the record straight about permitting and developing in Boston.

First, permitting is a lengthy process for major projects – from land acquisition, feasibility studies, and discussions with the BRA, to endless meetings with neighborhood groups, and renegotiating the design proposal… all before the formal permitting process can begin. Then there is the city’s Article 80 process and the state’s permitting and MEPA review. 

Many years of negotiation and planning are required before a developer can get to a final approval. Because the process takes so long, a developer cannot know if there will be a market for their project when they finally get the necessary permits. That reality can cause serious delays. The recent credit crisis freezing projects all over the country for the past two years is proof of this. 

These are not “do-nothing” developers.  These investors want to move forward, but they can’t without financing and a ready and willing market.  No developer can avoid market realities.

The good news is that, as a result of the Permit Extension Act, many projects will now be able to maintain their permits so they will be “shovel-ready” when the market improves – avoiding another 5-7 years spent reapplying for permits and missing another market cycle.

As any good hunter knows, before you start hunting for turkeys you better know what you’re looking for.

Permit Me to Glow: The Permit Extension Act Will Help Massachusetts Grow

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On August 5, Governor Deval Patrick signed into law an economic development bill (Chapter 240 of the Acts of 2010) that included the Permit Extension Act (Section 173 of the new law).  In response to the credit crisis and market crash of late 2008, NAIOP Massachusetts promoted the Permit Extension Act from the very first day of the legislative session in January 2009.

At that time, none of us could have imagined how or if the country would emerge from one of the worst downturns since the Great Depression.  What was clear was that it would be a long time before any of us would see any new construction from the private or institutional sectors. 

It seemed obvious that if this Commonwealth was to have “shovel-ready” projects set to move forward when the economy turns, those projects could not lose the many permits and licenses already issued by either the local or state authorities.  

It takes years to get a new project approved – starting with numerous local hearings and going through everything from zoning changes, to special permits, to wetlands permits, to traffic mitigation, to environmental reviews at the state MEPA office.  Compound this with numerous appeals, and then you miss your economic cycle! Allowing these permits and approvals to expire would have killed countless projects.

The Permit Extension Act:

  • Extends permits in effect at anytime between 8/15/08 – 8/15/10 for two years (including those that expired during this time).
  • Takes effect immediately for projects that had approvals in place for even a single day of the two year window.
  • Applies to a wide range of permits including wetlands, MEPA, building permits, waterways, and approvals under Chapter 21, 40A, 40R, 43D, as well as variances, and all local bylaws and ordinances. 
  • Goes into effect automatically and no approval is needed by the state or local permitting authority.

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