COVID 19 Update: State Permits Extended by Executive Order

Today Governor Baker issued an Executive Order to suspend relevant permitting deadlines and extend out the validity of state permits. It applies to a wide range of state approvals and clarifies that all approvals shall toll during the State of Emergency. It shall remain in effect until rescinded or until the state of emergency is terminated, whichever happens first.

NAIOP is extremely grateful to the Baker-Polito Administration for recognizing the need for this language during these uncertain times.  

Language dealing with municipal approvals, which is supported by NAIOP and the Mass Municipal Association, is addressed in H.4586, which we urge the legislature to advance to ensure predictability for both municipalities and developers.  

COVID-19 UPDATE: MAYOR WALSH EXTENDS ORDER PAUSING NON-ESSENTIAL CONSTRUCTION WORK IN THE CITY OF BOSTON

The following is a press release from the Office of Boston Mayor Martin J. Walsh (March 25, 2020)

BOSTON – Wednesday, March 25, 2020 – Due to the public health emergency caused by the spread of COVID-19 (coronavirus) Mayor Martin J. Walsh today announced he is affirmatively extending the City of Boston’s order to pause non-essential construction for City of Boston permitted sites. Mayor Walsh first announced this order on March 16, 2020, and sites should have been locked down for safety by March 23. Due to the public health emergency in Boston and across the Commonwealth of Massachusetts, this pause is still in effect until further notice.   

“The safety and health of construction workers and all residents of Boston is my first priority, and I am not willing to put that at risk as the virus spreads throughout our communities,” said Mayor Walsh. “Large gatherings such as those at construction sites have been proven to escalate the spread of the virus, and Boston must do everything in its power to flatten the curve, and stop the spread of coronavirus.”   

Mayor Walsh is working with various partners including construction firms and the building trades to determine protocols that would allow these sites to safely re-open in Boston.    This policy only applies to projects permitted by the City of Boston. The City will still allow work that is essential to the safety and well-being of Boston’s residents at this time, particularly work related to the COVID-19 public health crisis.  

In addition to these construction projects, the City will, on a case-by-case basis, review requests for exemptions to the temporary construction moratorium. These may be granted by the Commissioner of Inspectional Services (ISDCommissioner@boston.gov) for building-related work or the Commissioner of Public Works for street-related work. These will be granted if they support increased public health and safety and precautions are taken to mitigate the risk of exposure to COVID-19 among workers.    

Additional details about the order can be found on boston.gov. The guidance order is available online.  

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COVID 19 Update: Baker Issues Guidance Overturning Local Construction Moratoriums

Today, March 25, Governor Baker issued guidance clarifying that the March 23, 2020 Order “Assuring Continued Operation of Essential Services in the Commonwealth, Closing Certain Workplaces, and Prohibiting Gatherings of More than 10 People” supersedes and makes inoperative any order or rule issued by a municipality that will or might in any way impede or interfere with the achievement of the objectives of this order. “Construction Workers who support the construction, operation, inspection and maintenance of construction sites and construction projects” are deemed essential.

Therefore, “the Order provides that all construction projects are to continue operations during the state of emergency, but to do so with allowance for social distancing protocols consistent with guidance provided by the Department of Public Health. Local policies, regulations or directives that provide otherwise are in direct conflict with the Order and should be withdrawn.”  

NAIOP had urged the Administration to issue guidance given the lack of uniformity across the Commonwealth on this issue and we are grateful for this clarity.  

COVID 19 Update: Permit Tolling Legislation Filed Today & FAQ on Essential Services

Permit Tolling Bill Filed Today
Today Governor Baker filed HD4974, An Act to Further Address Challenges Faced by Municipalities, School Districts, and State Authorities Resulting from COVID-19. While the bill addresses several topics, Section 9 of the bill addresses the tolling of permits. The language included in the bill is the result of a collaborative effort and many hours of work during the past few days between NAIOP Massachusetts, the Mass Municipal Association and the Home Builders & Remodelers Association of MA.   Specifically, the language provides the following:

– No permit is automatically granted, approved, or denied because a local permitting authority does not act within a time period required by law.
– Any permit that is currently valid will not lapse or expire during the state of emergency, and suspends any time limitation on such permits during the emergency.
– Allows applications for permits to be filed electronically, so as to eliminate the need for in-person filing.
– Suspends any requirement that a hearing on a permit application be held within a certain period of time until 45 days after the end of the state of emergency.  

These changes will provide necessary relief to cities and towns that, due to disruptions caused by the state of emergency, are unable to timely process and hear permitting applications. At the same time, these changes balance the needs of residents and developers by ensuring that their current permits are not impaired by the emergency. We are pushing for quick passage of this bill and we are incredibly grateful to a phenomenal team of NAIOP members who worked tirelessly to perfect this language and reach a compromise. We will keep you posted as this bill advances. In addition, we are pursuing numerous other forms of legislative and regulatory relief. Please contact us if you have any questions or ideas.  

Non-Essential vs. Essential Businesses: FAQ Now Available  
Yesterday Governor Charlie Baker issued an emergency order requiring all businesses and organizations that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to workers, customers and the public as of Tuesday, March 24th at noon until Tuesday, April 7th at noon. These businesses are encouraged to continue operations remotely.  NAIOP has been inundated with requests from professionals who are not specifically listed. The Administration has launched an FAQ page to address some of the most commonly asked questions.  

In addition, if the function of your business is not listed as essential, but you believe that it is essential or it is an entity providing essential services or functions, you may request designation as an essential business. Requests by businesses to be designated an essential function should only be made if they are NOT covered by the guidance. To request designation as an essential business, please click here  Any questions can be directed to covid19.biz@mass.gov  

Construction Moratoriums Continue & Conflict with Executive Order?
Last night, Somerville ordered all construction projects to cease general operations, establish services necessary for in-use buildings to function, and make their sites safe to the general public by Friday, March 27.  Somerville now joins Boston, Cambridge, and numerous other cities and towns that have put construction moratoriums in place.

We have received numerous requests for clarification on how the Essential Services list, which lists as essential:  “Construction Workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)” and “Workers to ensure continuity of building functions, including local and state inspectors and administrative support of inspection services who are responsible for the inspection of elevators, escalators, lifts, buildings, plumbing and gas fitting, electrical work, and other safety related professional work”should be interpreted in communities where there is a construction moratorium.   

As of March 23, Mayor Walsh and the BPDA made it clear that they do not plan to lift the moratorium. However, given the sheer volume of questions on this issue and the confusion that exists, we have reached out to the Baker-Polito Administration for guidance on this issue.

E-Notary Legislation Filed
Massachusetts is one of only a handful of states that does not allow for e-notarization. On Friday, SD2882, An Act Relative to Remote Notarization During COVID-19 State of Emergency was filed to allow for e-notarization until 3 days after the emergency declaration is lifted. The Real Estate Bar Association has been the lead on this issue, but NAIOP is supportive of the legislation and will be advocating for its passage.

COVID-19: Update on Issues Affecting CRE

We hope you are staying safe and healthy during this challenging time. As this situation is changing by the hour, NAIOP Massachusetts would like to serve as a resource on issues affecting the CRE industry. We are in constant contact with state officials on this issue and we are committed to working to find solutions that address both the long and short-term impacts of this crisis. We are already working on legislative and regulatory solutions including discussions around an extension of permits and other emergency measures. Have an idea you would like to share or a challenge that needs to be addressed in response to this crisis? Contact NAIOP’s CEO Tamara Small or Government Affairs Associate Anastasia Nicolaou.   

In the meantime, we will continue to update this blog to provide you with the most recent and up to date information:

Construction Moratoriums: On Monday, Mayor Walsh issued a halt to all construction in Boston. Companies should maintain the crews necessary to make sure sites are “safe and secure.” The sites need to be secure by Monday, March 23. Skeleton crews will be allowed to stay on to make sure the sites are safe. The ban will be reevaluated in 14 days. Although Governor Baker has not proposed a statewide shutdown on construction sites, many communities throughout Massachusetts have followed Boston’s lead and are now shutting down sites. Cambridge announced its construction shutdown yesterday and we are aware of many other suburban communities who have also enacted shutdowns. The Cambridge shutdown is effective only for construction work on public and private property, including building trades, regulated or permitted by the Commissioner of Inspectional Services or the Commissioner of Public Works.

BBRS Issues Guidance for Building Inspectors: On Tuesday, March 17, the state Office of Public Safety and Inspections issued guidance for local building officials to identify options that would satisfy the inspector’s responsibilities in connection to administering and enforcing the state building code. Specifically, the state building code provides inspectors with the authority to accept reports from an approved subject matter expert per building code sections 104.4 and R104.4.

Changes at MEPA: MEPA procedures have changed in response to COVID-19. and these changes will be in place until April 3, 2020, unless further extended. Among other changes, electronic submittals that are sent to MEPA@mass.gov by 5:00 PM on the submittal deadline will be accepted for publication in the next edition of the Environmental Monitor. Check out the MEPA web site for more information.

Extension of Professional Licensure: On March 18, Governor Baker signed a new emergency order to ensure that licensed professionals do not have their licenses or registrations lapse due to unforeseen problems with renewal during the COVID-19 emergency. Specifically, under this order, occupational or professional licenses of individuals that are in good standing and that would otherwise be up for renewal during the COVID-19 emergency shall be extended for 90 days after the end of the public health emergency. This order does not affect license extensions that have already been granted in earlier emergency orders.

SJC Issues Order Extending All Statutory Deadlines to Apr. 21: The SJC issued an order extending all statutory deadlines to April 21. Specifically, paragraph 9 states “Unless otherwise ordered by the applicable court, all deadlines set forth in statutes or court rules, standing orders, or guidelines that would otherwise expire before April 21, 2020, are extended to that date.”

Resources for Businesses: The Commonwealth has published a list of resources for businesses impacted by the outbreak, including dedicated guidance for businesses affected by the Emergency Order issued on Sunday, 3/15.

Changes to Open Meeting Law: An emergency order was filed temporarily modifying the state’s Open Meeting Law in order to allow state, quasi and local governments to continue to carry out essential functions and operations during the ongoing COVID-19 outbreak. This emergency order suspends the requirement for public access to the physical location where a public meeting is taking place, provided there are other means of access available (such as a phone conference line, social media or other internet streaming services, etc.). Additionally, the order relieves the requirement that a quorum of members be physically present at a public meeting. During this period, members may all participate by remote or virtual means. This order is applicable to meetings of public bodies including commissions, boards, and committees that engage in policy making at the state, quasi and local level. 

Small Business Administration’s Economic Injury Disaster Loan Program Open: Massachusetts small businesses can now access and apply for Economic Impact Disaster Loans at www.sba.gov/disaster. The SBA has established a toll-free line to answer questions at 1-800-659-2955. U.S. Small Business Administration, SCORE, and Women Business Centers will be providing workshops to answer questions and to help small businesses with the loan application process.

Changes to Unemployment Insurance Signed into Law: Yesterday Governor Baker signed (S 2598), which will allow workers to begin immediately collecting unemployment benefits. The Executive Office of Labor and Workforce Development will also file emergency regulations allowing employees affected by the coronavirus to collect unemployment if their workplace shuts down with plans to reopen within four weeks.

Municipal Flexibility Bill: The municipal flexibility bill (H 4572) would allow town moderators, in consultation with local board of selectmen, to postpone Town Meetings for up to 30 days because of a public health emergency, and a select board could push the meeting beyond June 30, which is currently the deadline in state law. Towns would also be able to reduce quorum requirements to conduct the most pressing Town Meeting business, and town leaders could extend budgets on a month-to-month basis based at prior-year spending levels if they are unable to complete a new fiscal year 2021 budget. This is still moving through the legislative process.

$10M Small Business Recovery Fund Announced by Governor Baker: The program is open to small businesses with less than 50 employees who can demonstrate an adverse impact on revenues resulting from the coronavirus outbreak. Loans are up to $75,000, with an annual interest rate of 3%; there are no payments for the first six months, followed 30-months of principal and interest payments.

Massachusetts 2-1-1: Massachusetts residents are urged to use 2-1-1 for information, resources, and referrals regarding COVID-19. Operators are staffing this hotline 24/7 and translators are available in multiple languages. Residents with questions can dial 2-1-1 from any landline or cellphone or use the live chat option on the Mass 2-1-1 website. There are 17 staff now answering calls, including staff from United Way and 7 staff members from DPH.

Goulston & Storrs Files Amicus Brief on Behalf of NAIOP Massachusetts in Murchison v. Sherborn ZBA

Brief Urges SJC to Reject Appellate Court’s Decision on Standing

BOSTON, MA – Law firm Goulston & Storrs recently filed an amicus brief on behalf of NAIOP Massachusetts, The Commercial Real Estate Development Association, in the case of Murchison v. Sherborn ZBA.  The amicus brief urged the Supreme Judicial Court to overturn the lower court’s decision, which sided with the plaintiffs in the case.

NAIOP chose to pursue this opportunity because of concern that the Appeals Court’s decision in this case will, if allowed to stand, chill the development of commercial, industrial, and residential projects statewide by eliminating a meaningful requirement that plaintiffs in zoning cases must establish their standing with admissible evidence of harm to their interests protected by zoning.

“We are grateful to the incredible team at Goulston & Storrs for their work,” said Tamara Small, CEO of NAIOP Massachusetts. “Meritless appeals of zoning decisions are used all too frequently to delay and kill beneficial development projects. The decision in Murchison v. Sherborn ZBA will have far reaching implications for our industry. Making it easier for plaintiffs who are not injured to pursue zoning appeals will worsen the current housing shortage, hinder economic development projects, and eliminate a critical standing doctrine. For these reasons, we hope the SJC will overturn the Appeals Court decision.”

The Goulston & Storrs team involved in the matter includes Gary Ronan and Alana Rusin. 

Oral arguments will be held Thursday March 5.

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NAIOP Contact: Anastasia Nicolaou / 650-380-9440

About NAIOP

NAIOP Massachusetts, The Commercial Real Estate Development Association, represents the interests of companies involved with the development, ownership, management, and financing of commercial properties.  NAIOP’s 1,700 members are involved with more than 250 million square feet of office, research & development, industrial, mixed use, multifamily, retail and institutional space. In addition to providing education and networking opportunities, NAIOP advances the interests of the industry and advocates for effective public policy. For more information, visit www.naiopma.org.

About Goulston & Storrs

With over 200 lawyers across multiple disciplines, Goulston & Storrs is a real estate powerhouse with leading-edge corporate, litigation, tax, and private client and trust practices. We employ a team approach that values client outcomes first and foremost. The firm’s dedication to providing prompt, practical legal advice, cost-efficiently and tailored to our clients’ business needs, has resulted in Goulston & Storrs being acknowledged for excellence by leading industry, client, and peer rankings including Chambers USA, BTI’s A-Team for Client Service, and U.S. News & World Report Best Lawyers. Goulston & Storrs is an Am Law 200 law firm with offices in Boston, New York, and Washington, D.C.

What Does 2020 Hold for CRE in Massachusetts? Companies Incorporate Real Estate as Recruitment Tool

By: Tamara Small, CEO of NAIOP Massachusetts

The following first appeared in Banker & Tradesman on December 29, 2019.

The end of 2019 marks more than 10 years in the current real estate cycle. As we enter a new decade, now is a good time to take stock of current market conditions and make predictions for 2020. 

Experts are predicting continued, moderate, growth for 2020. Nationally, investor appetite for real estate remains strong and active in all sectors – retail, industrial, lab, office and housing. National vacancy rates are not showing signs of oversupply, and banks are remaining disciplined and conservative in their lending practices.  

While slow and steady job growth is expected, trade wars, political uncertainty and a labor shortage pose the biggest threats to continued economic growth. Market fundamentals remain strong, but such threats should be monitored closely given their potential to dramatically impact the market. 

Access to Talent Drives Market  

The Greater Boston market had an exceptionally strong year in 2019 with record rent growth and tenant demand. Boston remains one of the top markets for foreign investment. However, while continued growth in 2020 is expected, threats exist.   

Construction and land costs continue to soar, weakening returns and potentially threatening the feasibility of new projects. In the third quarter of 2019, Massachusetts real gross domestic product declined 0.2 percent according to MassBenchmarks, while U.S. real gross domestic product grew by 1.9 percent. A labor shortage, which is only expected to continue, is viewed as the single largest threat to the Massachusetts economy.  

At the recent NAIOP/SIOR Annual Market Forecast, which featured leading real estate experts who provided an analysis of the 2019 statistics and predictions for 2020, the need for access to a talented workforce – and what this means for real estate – was a major theme.   

Historically, tenant space was viewed as a cost center by employers, but it is now being used to attract and retain talent. While WeWork’s business model may have been flawed, it did have a dramatic impact on tenant expectations. Whether it’s beer on tap, game rooms or state-of-the-art fitness centers, employers are now using their space to gain a competitive edge when it comes to getting the best talent. This can be seen in the suburbs as well as Cambridge, Boston and surrounding markets, and it will continue in 2020. This all translates into a rising need for new or renovated space and an average tenant improvement allowance average of $5 per square foot. 

Looking Ahead to 2020  

As we enter a new decade, the Boston market remains strong with opportunities opening up beyond the urban core. Limited supply and high demand for lab space are fueling growth. With East Cambridge lab vacancy rates now at 0.8 percent, life science projects are moving forward in Watertown, Alewife, Allston/Brighton and Somerville, as well as Dorchester, the Seaport and South Boston. Cambridge’s success will also create opportunities for well-located suburban assets, particularly transit oriented development projects with the right amenity base.   

Unprecedented growth is expected to continue in the industrial sector. According to Rick Schuhwerk, executive managing director at Newmark Knight Frank, every $1 billion in online sales translates to 1.25 million square feet of new warehouse demand. The demand for “last-mile” facilities near high-density urban centers is driving up values. In the last five years, rents in core urban industrial space have more than doubled. In 2020, with online sales only expected to increase, vacancies will drop and rents will continue to rise. Spec developments are expected as well as a western migration of industrial space.  

On the housing front, according to Kelly Whitman, vice president of investment research at PGIM Real Estate, opportunities exist to upgrade and develop larger suburban apartments. Suburban apartment annual rent growth continues to outperform the urban, and, given changing demographics, a shift away from small units in the suburbs is expected. As the housing crunch continues, these areas outside of Boston’s core are vital to easing the pressure and providing middle income housing.  

On Tap on Beacon Hill 

Finally, while national economic and market indicators tell us that continued growth is expected next year, legislative and regulatory proposals at the state and local levels have the potential to significantly impact the market and should be watched closely. 

Housing: More housing production is needed to keep up with increased population growth. H.3507, An Act to Promote Housing Choices, is targeted at lowering voting thresholds in key zoning votes, allowing for increased production of housing. If it is not passed before the end of the legislative session, anticipate a continued tightening of the housing market, statewide. 

Transportation: NAIOP believes that a functional, accessible transportation system is key to continued development and investment. As area residents and business owners know, congestion has gotten worse in Greater Boston. The Baker-Polito Administration recently filed the Transportation Bond Bill, (H.4002), outlining a capital plan for addressing gaps in transportation infrastructure statewide. Other legislative proposals to address transportation are expected in 2020.  

Fossil Fuel Bans: A number of communities are considering bans on natural gas connections in all new construction, which will likely halt development entirely. While addressing climate change must be a priority, it is critical that policymakers employ achievable measures that are grounded in the reality of today’s technologies, without blocking housing production.