BLDUP Spotlight and Q&A – David Begelfer, Reesa Fischer and Tamara Small of NAIOP Massachusetts

This post comes from BLDUP.com: BLDUP Spotlight – David Begelfer, Reesa Fischer and Tamara Small of NAIOP Massachusetts

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Last week NAIOP announced that David Begelfer would be retiring after more than 27 years leading the organization. NAIOP’s Board of Directors voted Reesa Fischer, currently Chief Operating Officer, and Tamara Small, currently Senior Vice President of Government Affairs, to co-lead the association. Fischer will serve as Executive Director with operational, financial, programming and membership/marketing oversight. Small will serve as Chief Executive Officer with oversight of the organization’s government affairs and lobbying activities, public relations, and research. BLDUP sat down with the three industry leaders to discuss the transition and NAIOP’s goals for the future.

BLDUP: For our readers that are not familiar, what is NAIOP?

Tamara Small: Officially NAIOP is The Commercial Real Estate Development Association. Long ago NAIOP stood for National Association of Industrial and Office Parks. It was then changed to National Association of Industrial and Office Properties.  In 2009, the national organization recognized we represented so much more than industrial and office properties.  They did not want to lose the brand recognition that NAIOP had so they kept the acronym, but changed what it stood for.  We now represent office, retail, mixed-use, multifamily, lab and institutional space here in Massachusetts. We are the largest of all the NAIOP chapters at nearly 1,700 members.

Reesa Fischer: Our membership is made up of a variety of industry leaders.  While we are primarily (60%), owners, developers, and operators, the other 40% is made up of attorneys, brokers, and everyone else who supports the commercial real estate industry.  This variety of folks involved in the organization is also a big differentiator for NAIOP.  We operate based on a 3 legs of the stool principle, government affairs advocacy, events/education & networking.

BLDUP:  What is NAIOP forecasting for the Boston market?  Are there any trends you are seeing?

David Begelfer: What I see as our greatest risk going forward is probably not a recession, at least locally.  The Boston market is quite strong and we do not see a lot of oversupply or speculative projects.

A serious downturn does not look like it’s in the cards for the next 2-3 years but we do anticipate somewhat of a slow down because of our success. There are two major components exceeding inflation, land cost and construction costs (the biggest part being labor costs) and these two issues affect development.  We have a very tight market with regards to the construction industry and the number of people and subcontractors.  We also have barriers for entry for companies and individuals to move in from out of state because of the high cost of living.  We are seeing inflation in costs of land/construction because of our dynamic economy. Because of this, we are already starting to price out residential rent projects, pushing them toward condos.

Another aspect of this looming problem is the limited capacity of skilled unemployed workers that can fuel the market going forward.  We have relied upon immigration from out of the country for the last 25 years of growth.  Immigration is starting to have some cracks for various reasons (policy, political, practical economic).  We have concerns that the constant flow is drying up and Massachusetts has always had a problem with net migration out of the state.  The bottom line, as I see it, is that we are at a greater risk from our success than from a possible recession.

BLDUP:  David, What is your proudest achievement as outgoing CEO of NAIOP?

David Begelfer:  It is very hard to choose one particular moment, but if I had to take an overview of the past 27+ years, I’m very proud of the “secret sauce” of NAIOP.  From the start, the secret sauce was to integrate the top professionals and engage in our organization primarily in government affairs and advocacy.  It’s very difficult to handle the wide range of issues that we deal with, regulatory, legislative, judicial, policy and then within each of those baskets another array of issues from environmental, transportation, economic, building codes, all across the map.  The only way we have been able to handle this and provide expert feedback is the unbelievably involved professionals who work with us. This has allowed us to expand the breadth and depth of issues that we deal with and we have done it in a way that we can give something back. We can’t pay for this counsel but instead, we offer networking, connections, and leadership opportunities to add value to our relationships and provide a win/win for everyone involved.  The involvement and growth of volunteerism within the organization is the greatest success I could imagine.

Additionally, we have been able to bring some of the top people in the industry onto our staff.  One of the reasons this is a seamless transition is that others have developed expertise within our organization. It was very easy to choose Reesa & Tamara to move forward into the leadership of the organization.

Reesa Fischer: I feel it is important to mention David’s ability to embrace change.  Most trade associations are very stagnant and very conservative.  They do what they do and as long as it’s not broken they don’t fix it is. One thing we value at NAIOP (and it’s why I love working here) is that embracing change is what it’s going to take to stay competitive.  We like to think of our organization as a disruptor and we are always trying new things that people wouldn’t necessarily expect from a trade association.

David Begelfer: We are always looking to see what can be changed and done differently.  There is no complacency in this organization. People talk about having periodic strategic plans; we strategically think about our organization throughout the year.  That may cause more work, but it keeps us relevant. You can’t fight change you have to embrace it!

BLDUP: Government affairs and advocacy is a big part of what you do. How do you work to accomplish your advocacy goals?

Tamara Small: We have our eyes and ears on anything that would have an impact on the industry and we weigh in wherever appropriate – whether it’s legislative, regulatory or judicial advocacy.  The process is a very collaborative one.  We have over 200 people on our Government Affairs committee and a very active board of directors who provide input. This expertise allows us to provide real-world examples that illustrate the impact of any proposed changes.

As an example, we just wrapped up the legislative session which ran from January 2017 through July 31, 2018.  There were about 8,000 bills filed this session and we tracked hundreds of them, provided testimony, served on legislative task forces and met with legislators.  Clearly, no legislator can be an expert on every single issue. So, for those issues that are of interest to us, we provide substantive, factual information on how the bill would affect the commercial real estate industry – and often the greater overall economy. Through this approach, we have built strong relationships with legislators and regulators.

A good example of how NAIOP handles advocacy would be a provision of the economic development bill that was signed into law by Governor Baker on August 10. The bill includes language that will bring clarity to the development process for properties along railroad rights of way. The process had been a source of frustration to the development community for many years. So, through our government affairs committee, we drafted a legislative fix and worked for 8 years to educate lawmakers on the need for the change. Through the leadership of key legislators and MassDOT Secretary Stephanie Pollack, we were able to work together on language that was signed into law. It will bring transparency and predictability to the development process – two things that are critical for any real estate project.   Talking about railroad rights of way may not be the most exciting topic, but it is one of those things that will affect important transit-oriented projects throughout the Commonwealth.

BLDUP:  What is the next legislative issue you will be focusing on?

Looking ahead, our three areas of focus will be: Housing, Transportation, and Climate Resiliency

We believe that climate resiliency is a top priority for the industry. It’s an economic development issue.  We were very supportive of the climate change legislation that passed this session. The bill that was passed requires the Commonwealth to develop a climate adaptation plan, complete vulnerability assessments at the state and local levels, and identify how the public and private sectors can work together to really think through what climate change means for the real estate industry and for the greater economy.

Another broader economic development issue that we are passionate about is the need for more workforce housing.  We were very supportive of Governor Baker’s housing bill.  We worked with all of the business groups as well as the Mass Municipal Association to try and get that passed in the final hours of the legislative session, but unfortunately, it didn’t make it. In my mind, it would have been the most significant housing bill in years.  We also thought it was very significant that we had such a broad coalition of support for the first time in 30 years of discussion around this issue. We are going to continue to push for this in the next session, which kicks off in January.

Our third big area is transportation. We will continue to advocate for an efficient, world-class transportation system in MA.  We need the type of system that allows people to get in and out of the city and to expanding areas with ease.  We are going to be looking at that in the next legislative session to ensure we can expand on existing capacity.

BLDUP:  Reesa & Tamara what are your goals for the NAIOP in next 5-10 years and David what would you like to see continue after you retire?

David Begelfer: I do think that NAIOP is going to continue to sit on the same 3 legs of the stool, advocacy, education, programming/networking.  Every member gets something from one or all of these areas.  We need to take a look at new technology, be proactive, be entrepreneurial, be thoughtful, and stay in touch with members and their needs.  We also want to offer new platforms for information.

One thing that is NOT going to be happening, is people are NOT going to be totally virtual. They want to meet face to face. That’s never going to change.  You will always need networking.

We have also taken a look at online learning and have seen a much greater demand for face to face learning but in a tighter timeline.  We are moving into podcasts.  That seems to be a very popular way for people to get information while driving, walking, or spinning. It’s hard to plan for the future when technology is changing so quickly.  Right now we have a partnership with the MIT Center for Real Estate that enables us to see what is on the cutting edge of the industry.  We just need to continue to keep an open mind.

Reesa Fischer: It’s about expanding the information and knowledge the we can provide the members and providing them with different options of delivery. People are just so busy and not everyone can come to a site event.  Some people prefer podcasts or live webinars.  We need to expand our information and methods of delivery to stay relevant.

We have also seen a huge demand for professional development skills that are outside of the industry.  The membership is looking to be able to provide skills for their talent.  Talent is a big issue right now, retaining and obtaining.  Learning professional skills while networking and engaging with people in the industry is a unique opportunity we can provide our members.

Tamara Small:  We are nothing without members. We look forward to working with our many member-driven committees and continually seeking feedback directly from the industry.  As Reesa and I transition to our new roles, we will be sitting down with our leadership and members to do our own focus groups in order to understand what they need. We look forward to growing and expanding with them.

Reesa Fischer:  Yes, we are very externally focused!

BLDUP:  What is the last book you read that you would recommend and why?

Reesa Fischer: The Road to Recognition by Seth Price.  Seth is a local guy who runs Placester and did a keynote at one of our marketing conferences.  The book is about building your personal brand which plays into a corporate brand: being authentic, setting up expectations, meeting expectations.  Detailing ways to keep you competitive either personally or professionally. It’s how I look at our organization so that we can continue to be important in the industry.

Tamara Small: Starting Small and Making It Big: An Entrepreneur’s Journey to Billion-Dollar Philanthropist by Bill Cummings.  It is interesting to hear his rags to riches story and his unbelievable drive and entrepreneurial spirit that have helped create his company.  The book provides history about the CRE industry but also an inside look at one of the most entrepreneurial people I’ve encountered.  He is also someone who has really devoted a good part of his career now to charitable endeavors and that is very admirable.

David Begelfer: Leonardo da Vinci by Walter Isaacson.  It’s astounding the genius that was there but not just genius: the genius was combined with unbelievable curiosity.  Almost anything he saw he wanted to look further into it. It’s frightening that a lot of what he discovered was never published and lost for hundreds of years. People would rediscover these things hundreds of years later.  He discovered something about how the heart works but it was not actually verified until 1970. He was way ahead of his time. It is a very fascinating read and again it was not just intelligence but a need to be entrepreneurial and also a great observer and creative.

BLDUP:  It is important to note that despite the CRE industry being primarily male, NAIOP’s new leadership team is female.  Tamara and Reesa what are your thoughts on this.

Reesa Fischer:  Just a little history, when I started here 8 years ago, the percentage of women in the industry and in NAIOP was significantly lower.  It is really exciting to see that women have very quickly been getting involved.  Our female membership rates have gone from around 10% up to 28-30%.

About 7 years ago we started an annual event, the Women of Influence luncheon. It sells out 200+ tickets every year with wait lists of people.  I think the pipeline is filling up as young women are starting to come into the industry and seeing there are a variety of ways to get involved, not just brokerage but in the development world as well.

Women are very organized and project management focused and very collaborative and that is what this industry is.  It’s about time women recognize they can actually play an important role. We are also more women in senior roles and running companies.

Our Distinguished Real Estate Award recipient this year is Related Beal, run by Kimberly Sherman Stamler.  Our President-elect for next year is also a woman so the top 3 levels of our organization will be female.  We are very excited to feel like we are following the trend and blazing new trails for women in the industry.

Tamara Small:  Going forward we will operate under a collaborative leadership structure which we found is much more common with women.  Reesa and I have worked together for so many years and we both have our own unique strengths so we are excited to continue this and take NAIOP to the next level.

David Begelfer: We have not said we want to have women run the organization, we have put into place the best people we have for the position and they happen to be women.  They are stepping up and being chosen to lead because of their skills.

BLDUP:  David, to conclude on more of a personal note, what are your plans for your new free time?

David Begelfer:  I have a lot of interests to stay active and involved in the industry.  I love to travel, play golf, those are wonderful things, but I don’t see that as sufficient to keep me alive and well and excited about my future. I’m looking into opportunities that will allow me to keep active and participate in this active industry. I am mostly looking forward to being a member of NAIOP and getting all the value that a member gets from being involved.

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

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.

 

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.

A Housing Plan That Works

The business community is generally a bit skeptical when it comes to grand plans to cure critical deficiencies in the marketplace. One of the most pressing problems for Boston, and many other major cities around the country, is the lack of affordable housing and the inflationary pressures on existing housing stock. In 2014, Mayor Marty Walsh commissioned a new housing plan to confront the city’s problem of a population growth outpacing its production of housing.

The plan that resulted set a target of 53,000 new housing units to help rebalance the market and decrease the pressure on rents and housing prices in the city’s older (and more affordable) housing stock.

Through a cross department plan allowing for streamlined and expedited permitting, expanding the offerings of city-owned real estate, promoting innovation in housing production, and adding significant resources to housing production, the city has worked collaboratively with the development community to achieve real, measurable success.

Through December 2016, nearly 20,000 units were either completed or in construction. Over 21,000 units are currently in the permitting process. Housing unit completions have finally outpaced the city’s population growth.

Has the housing plan worked? For the first time in many years, rents in older units decreased or stabilized in the neighborhoods with the most new development in the past 5 years. The sharpest decreases were with studios and one bedrooms, with two bedroom units seeing modest decreases and three bedrooms rents stabilizing.

It is a serious challenge to develop a program to create new affordable, work-force housing without deep subsidies. However, we can now see that producing new market rate units can actually dampen the inflationary trends for the existing older housing stock. As long as the city can continue to work closely with the development community to keep the housing pipeline flowing, we may be able to keep Boston accessible to everyone.

With the Boston CPA Approved, How Should the Program be Administered?

Boston residents voted to adopt the Community Preservation Act by an overwhelming majority in November. The CPA is designed to create affordable housing, and preserve open space and historic sites through the creation of a local Community Preservation Fund. A one percent real estate tax surcharge on commercial and residential properties will go into this fund and will be administered by a nine-member Community Preservation Committee appointed by the city. Of the money generated by the CPA, at least 10 percent must be allocated to housing, 10 percent to open spaces, and 10 percent to historic preservation. The remaining 70 percent can be allocated to any one of those three uses at a different rate.

The City Council is responsible for creating the ordinance that will establish the Community Preservation Committee (CPC). The ordinance would establish the CPC’s composition, length of member terms, the method of selecting its members, and outline the responsibilities of the CPC.

NAIOP suggests that the CPC could be tasked with establishing the annual percentage allocations among the three categories of investments. Those budgets could then be provided to the City agencies best positioned, staffed, and experienced to review the proposals submitted through a “Request For Proposals” (RFP) process. The agencies’ recommendations for grants could then be reviewed by the CPC prior to submission to the Mayor and the City Council for final approval. This system would utilize the established expertise within the City agencies, rather than creating a parallel “review process” that might be limited by staffing and funding.

With respect to housing, it would be unusual for a CPC grant to be sufficient to fund new housing, rather than being a gap participant in the more complex financing structure. In that case, the Department of Neighborhood Development would be better suited to determine where these funds could best leverage the most housing (a similar arrangement exists under Somerville’s CPA). Again, their recommendations would still need to be approved by the City Council and the Mayor.

As with any new program, the devil is in the details.  For this to succeed, it is essential for the City to develop a rational, transparent, and cost effective process. Only then will the CPA be of the greatest good to Boston.

As Boston Proposes CPA, Issues to Consider

The Boston City Council’s Committee on Government Operations scheduled a public hearing for Tuesday, March 29 to discuss the city’s adoption of the Massachusetts Community Preservation Act (CPA). If approved by the City Council to move forward, the question would be put to the voters of Boston on this November’s ballot. This would result in a 1% property tax surcharge on commercial and residential properties starting in fiscal year 2018 (with the first $100,000 in value exempt as well as a 100% exemption for those who qualify for low-income housing or low or moderate income senior housing). Communities that adopt the CPA can decide on the distribution of funds across the three areas covered under the CPA, as long as each area – open space, historic preservation and affordable housing – receives at least 10 percent of the total available.

The Mayor has released a comprehensive housing plan for Boston, including objectives to produce 53,000 new units of housing. The report, Housing a Changing City – Boston 2030, estimates the CPA would generate $20 million annually, including state matching funds, of which 50% or $10 million would be dedicated to new housing funds. There is no question that Mayor Walsh and his team are very committed to providing affordable and middle income housing, as confirmed by the various initiatives the Administration has advanced in recent months.

The business community is also concerned about the lack of workforce housing.  Without housing that can be affordable to working individuals, couples and families, the region will not be able to maintain the exceptional economic growth it is currently experiencing. However, as City Council considers putting this on the ballot, a few questions should be asked and answered:

  • How much of these funds will end up supporting middle income housing? With a statutory requirement that housing produced under the CPA be for persons and families whose income is less than 100% of the AMI, it is unclear how middle income housing would be created. Furthermore, the independent CPA committee that will oversee the use of CPA funds is free to spend these funds in any of the three prescribed uses (beyond the 10% statutory requirement).
  • There is no requirement for the City to detail exactly how the CPA funds will be used to attain its goals. One would think that the days of throwing money at a problem and hoping for a good outcome are in the past. The MBTA operated like that for years, and we are seeing the results very clearly. What exactly is the plan to produce more affordable and workforce housing with this additional revenue?
  • How much of an impact will the CPA make? Preliminary estimates show that if half of the CPA funds ($10 million) were used for traditional affordable housing, there would only be 40-50 units built in a year. That is helpful, but is it worth it to impose new taxes on residential and commercial properties? The last time the CPA was proposed in Boston, it was estimated that the business community would be paying 81% of the total, as a consequence of real estate tax classification and the residential exemption. In addition, the City has also increased the requirements for new developments under the Inclusionary Development Policy and higher linkage payments for new commercial development are coming.

As a result of the recent building boom, the city’s revenue from real estate taxes is the largest in history. While having more money from the CPA for the City sounds great, the costs and benefits must be weighed before making this decision.