Planning for a Changing Climate is a Shared Responsibility: Private, Public and Philanthropic Sectors Must Work Together

The following column was published in the July 7 edition of Banker & Tradesman.

NYC CLIMATE TRIP JUNE 2019In June, a group of business leaders, philanthropists and environmental advocates joined Boston Mayor Marty Walsh and his environmental team on a “City to City” trip to New York hosted by the Environmental League of Massachusetts and the Greater Boston Chamber of Commerce. As the CEO of an organization that has made climate change resiliency one of its top policy priorities, I was honored to be part of this distinguished group.

The trip was designed to provide attendees with an inside look at how Lower Manhattan responded to Hurricane Sandy and how the public and private sectors are planning for the future. During the walking tour, it quickly became clear that building owners and developers were the “first responders” post-Sandy. Whether through the installation of flood protection measures, nature-based solutions, the elevation of mechanical systems or innovative design measures, the commercial real estate industry is spending millions of dollars on climate change resiliency.

While these types of investments are critical, having a “climate–proof” building in the middle of a neighborhood without power or transportation provides no real public or private benefit.

During Hurricane Sandy, a 9.5-foot storm surge flooded the Hugh L. Carey Tunnel, which connects Brooklyn and Manhattan, with 60 million gallons of contaminated salt water, causing extensive damage. After the storm, the city installed 50,000-pound steel flood gates to protect against a 500-year flood event. Watertight flood walls were installed around the tunnel’s ventilation shafts. Hundreds of millions of dollars in FEMA funds were spent on the project.

If that was the cost for just one project, then one thing is very clear – addressing climate change through mitigation and adaptation will require massive amounts of funding and collaboration between federal, state, local, private and philanthropic entities.

What Does This Mean Locally? 
Boston is taking this issue very seriously.

In October, Walsh released the Resilient Boston Harbor Plan, which is designed to protect the city against the impacts of rising sea level and climate change. The plan includes elevated landscapes, enhanced waterfront parks, flood–resilient buildings and increased access to the waterfront. The city of Boston also became one of the first cities to set a target of carbon neutrality by 2050. Flood overlay zones are being developed, which will affect new construction and existing buildings.

At the state level, aggressive goals for reducing greenhouse gas emissions have been set, new energy efficiency codes have been adopted and comprehensive adaptation and mitigation plans are now being implemented. Nearly all of these policies and plans will affect the real estate industry.

For commercial real estate developers in the Boston area, climate change resiliency is a top priority. Extreme weather events, eroding shorelines and sea level rise have the potential to impact properties and tenants. As a result, new development projects are the most climate resilient. They are designed to take on the storms of the future and often include measures that will protect surrounding neighborhoods from the impacts of climate change.

Recognizing that while climate change cannot be ignored, economic realities still apply. If one sector of the market is overly burdened with new regulations and costs, resiliency measures will fail.

What’s the Solution? 
As the state and cities move forward with their climate resiliency efforts, flexibility is required so that the real estate industry can effectively address climate change without restricting future housing and economic development, which produce crucial property tax revenue. Regulations should provide owners and developers with the ability to make decisions based on the needs of the individual properties, tenancy and product type. Both costs and risks must be evaluated when considering climate change-related investments or regulatory changes.

Given the impact of climate change on all residents of the commonwealth, the burden for addressing this issue should be shared equitably. While an increase in the transfer tax has been proposed as a solution, it’s not the right approach. It only targets a subset of the population and may have the unintended consequence of driving up the cost of housing.

Lowell’s Rep. Thomas Golden, with the support of House Speaker Robert DeLeo, recently filed H3846, An Act Relative to GreenWorks. This proposal is a $1.3 billion energy and resiliency bill designed to offset climate change, creating a new grant program for cities and towns throughout Massachusetts to fund projects focused on climate resiliency. It is modeled after the successful MassWorks infrastructure program and builds on the Environmental Bond Bill passed in 2018.

Given the magnitude of this issue, no one piece of legislation can fully address climate change, but the GreenWorks legislation will set the commonwealth on a path towards improved resiliency. Its passage, combined with public-private partnerships and innovative solutions, will ensure continued economic growth and quality of life in Massachusetts as we tackle one of the greatest challenges threatening the future of the planet.

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.

Navigating the Permitting Maze Course Highlights Continuing Education and Association’s Advocacy

On September 21 and 28, NAIOP Massachusetts University presented Navigating the Permitting Maze: A Crash Course in Environmental Permitting to 40+ students from a range of backgrounds looking to master real estate permitting fundamentals in Massachusetts. This course, led by VHB instructors and complemented by several industry experts and panelists, centered on introducing permitting basics, including development of an early permitting strategy and timeline with colleagues and state and local regulators, as well as more complex issues, such as transportation analyses, historical property concerns, climate resiliency, appeals, and much more.

Not only did this course provide valuable education for new and continuing real estate professionals, it made connections to NAIOP members’ experience with advocacy at the legislative, regulatory, and judicial level.

Basics of Environmental Permitting, and Trends from State and Local Directors

During the first day, students started the morning with sessions led by Kyle Greaves and Lauren DeVoe of VHB, on the Massachusetts Environmental Permitting Act office (MEPA) review process which coordinates public review of a development’s environmental impacts. Next, students received instruction on the Boston Planning & Development Agency (BPDA) Article 80 regulations and process. Over the last five years, MEPA has analyzed about 1,300 large developments, with the majority (60%) culminating the review process with an Environmental Notification Form, and the remainder split between needing an Environmental Impact Report or a more in-depth process. For developments in Boston, Jonathan Greeley, Director at BPDA, which has approved over 11 million square feet for development in 2018 alone, emphasized that successful projects start with community outreach early in the process. Jonathan served on a trends in development panel with MEPA Director Deidre Buckley and moderator Greg Peterson of Casner & Edwards LLP during day one of the course.

greeleypresentsIMG_0504-cropJonathan Greeley, Director at Boston Planning & Development Agency

Permit Extension Act Protects Developments During Great Recession

Mary Marshall, Partner at Nutter McClennen & Fish, presented the final session on Day 1 on the Post Entitlement Permitting Stage. Mary made a connection between NAIOP’s legislative advocacy and environmental permitting, stating that during the recession, when many developments stalled due to the economy and financing, NAIOP formulated the Permit Extension Act, which was signed in 2010 by Governor Patrick (and expanded in 2012) to allow projects to maintain permits so that they could be “shovel-ready” when the market improved – avoiding several years spent reapplying for permits. Tamara Small, Senior Vice President of Government Affairs, added that a more recent advocacy connection with permitting is that NAIOP successfully changed the railroad-right-of-way statute in the 2018 economic development bill signed by Governor Baker this August. This means that developers will have more clarity about whether and when they must coordinate with MassDOT on building on former railroad rights of way.

Commercial Real Estate Professionals Advocating for Industry

On the second day of the course, individual sessions were designed for “deep-dives” into more technical areas. Jamie Fay, a waterfront planning expert at Fort Point Associates, a TetraTech company, led a session on the Massachusetts waterfront planning Act (Chapter 91) and how it affects development. Jamie is an active member of NAIOP’s government affairs committee and served as an advocate for reasonable regulation of the waterfront when the legislature worked on the issue and passed legislation in 2007 — and in the years following, as the Department of Environmental Protection promulgated regulations. New developments like Clippership Wharf and Encore Boston Harbor are subject to Chapter 91 rules. Stephanie Kruel, a climate resiliency planning expert at VHB, walked through climate resiliency checklists and analysis during the project planning phases. Stephanie serves as co-chair of NAIOP’s climate resiliency committee – a subcommittee of the government affairs committee.

To bring the areas of waterfront issues, historic resources issues, climate resiliency and environmental permitting together in a real-life example, the course ended with a project spotlight and panel presentation by four individuals from the General Electric Innovation Point team: Elizabeth Grob, VHB, Jeff Porter, Mintz Levin, Peter Cavanaugh, GE and Todd Dundon, Gensler.

GEpanel4IMG_0529-cropJeff Porter (Mintz Levin) moderates Project Spotlight Panel on GE Innovation Point joined by Peter Cavanaugh (GE), Elizabeth Grob (VHB) and Todd Dundon (Gensler)

NAIOP would like to thank all of the many experts whose time and energy made this course such a success. Due to popular demand, the permitting course will return in 2019.

Make sure to check out all of the NAIOP Massachusetts University offerings including the upcoming Real Estate Finance Fundamentals course on October 26, 2018. Have ideas on other courses NAIOP could offer? Let us know!

 

 

Choosing Massachusetts for Business: Key Factors in Location Decision Making

Zakim_SkyA study commissioned by the non-partisan economic development organization, MassEcon, and conducted by the UMass Donahue Institute‘s Economic and Public Policy Research group, was recently released. The good news is that the vast majority of companies that chose Massachusetts as a place to expand their business would do it again. This consensus was largely based on Massachusetts’ innovative economy, industry clusters, and skilled workforce.

As with all good news, there are some troubling challenges and concerns that were voiced by the businesses about future growth in the Commonwealth:

  • TRANSPORTATION: Companies in Greater Boston are concerned about highway congestion and public transit capacity, while businesses outside the urban core worry about a shortage of public transportation. MBTA reliability is vital to the ability to attract and retain workers, expressing concerns that not enough is being done to accommodate a growing population.
  • HOUSING: The availability and affordability of housing was a significant concern statewide, a challenge to attracting and keeping employees, especially younger employees. Costs in Greater Boston, in particular, are inordinately high, limiting options for low and middle-income workers.
  • BUSINESS COSTS: In general, for companies locating in Greater Boston the advantage of skilled labor outweighed various higher business costs; but labor, health care, and energy costs were identified as challenges to business in Massachusetts. Business costs seemed to be of less concern to those companies that considered and compared other states than to those already doing business in the Commonwealth. Companies engaged in manufacturing were more sensitive to cost challenges of health care and energy than companies in Greater Boston.
  • QUALITY OF FUTURE LABOR SUPPLY: Although more than 90 percent of survey respondents said the availability and quality of the workforce were important to their decision to locate in Massachusetts, some companies are struggling to find enough technically trained workers and those with middle-level skills. Continuing to produce talented labor must be a priority for the state, respondents indicated.
  • ECONOMIC DEVELOPMENT ASSISTANCE: While over half of the businesses surveyed were solidly favorable about the effectiveness of economic development officials in helping them become established in Massachusetts, others reported that the system is confusing.  Some said they sought a “roadmap” with which to navigate the various economic development organizations.

The Commonwealth has been experiencing one of the best periods of economic growth in its recent history. The problem with success is that it sometimes breeds complacency. If we are to maintain and enhance our position as one of the best locations to grow a business, we had better heed the warnings and fix our own house before it begins to lose its luster against all the many worldwide competing centers for growth.

MBTA On Track to a First Class System

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The MBTA has come a long way from the winter of 2015! With the formation of the Fiscal and Management Control Board and the waiver of the Pacheco law (regarding privatization), the T has reduced its operating expenses substantially, allowing more money to go to critical capital improvements. The growth in operating expenses averaged 5% annually over the last 15 years (against a 2% annual increase in revenue during the same period), but, for the first time, showed negative expense growth in 2016, with zero growth projected for 2017!

The reforms are working and consumer ratings are up. Here are some of the changes over the past 18 months that have been implemented to put the MBTA on a fiscally sustainable path:

  • Introduced monthly financial targets and manager accountability
  • Moved MBTA onto statewide contracts and payroll system
  • Streamlined corporate HQ/admin positions with 30% reduction
  • Strengthened and enforced overtime and attendance policies
  • Modernized cash-handling & warehouse through contracting
  • Restructured Carmen’s Union contract work-rules and wage rates
  • Launched Uber/Lyft and Taxi paratransit pilots
  • Restructured and refinanced debt portfolio; locked electricity rates
  • Rebid parking/advertising and raised system-wide fares
  • $100M winter resiliency investments / $140M in capital lock-box

In addition, the MBTA is in the process of privatizing the “cash room” operation and the manual route scheduling system. Both of these are projected to save the T over $12.2 million annually.

Another example of reforms is the pilot project for “The Ride”, providing access to the disabled community. An average ride has cost the T $46; however, the pilot using Lyft/Uber brought the cost down to $8.98. Along with that, consumer satisfaction shot to 79%. The transit industry standard is 12% and the MBTA, as a whole, has been a -1%.

The next proposal in front of the FMCB will be the privatization of Bus Maintenance.  A privatized machinists staffing is projected to be based on 200K miles per machinist versus 100k miles for the current MBTA staffing (requiring half of the current maintenance staff).

NAIOP has been a strong supporter of MBTA reforms and has been a part of a broad business and municipal “Fix Our T” coalition. We encourage the administration and the control board to continue bringing efficiency and cost savings to the T, while investing in its capital plan, providing the riders and the tax payers with a first class transit system.

NAIOP Supports Privatization of MBTA Services

Yesterday, NAIOP testified at the MBTA Fiscal and Management Control Board meeting to urge the Board to support the proposed privatization of MBTA services allowed under Chapter 46 of the Acts of 2015. As one of the organizers of the Coalition for a World-Class Public Transit System, NAIOP supported the passage of this important legislation in response to the MBTA’s complete shutdown last winter.

Many of the T’s operational impediments have originated from the inability to efficiently manage many of the non-core services. By looking at the privatized options for some of these services, the MBTA can focus on those operations of greatest value throughout the organization.  Utilizing all the tools that are available to the Board at this time is critical to balancing the operating budget and achieving necessary efficiencies.

At the hearing, NAIOP urged the Board to stay on course. There has been, and will continue to be, considerable pushback. However, getting the T back on sound financial footing and increasing the system’s reliability, should be the top priorities.

NAIOP thanks the members of the Board for all the good work they have done and their tireless commitment, focus, expertise and long-term vision to fix the T once and for all.

MassDOT Wants You!

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MassDOT has started a talent search for a range of professionals to work for the agency, as well as for the MBTA. They are looking for the right people with the right skills at the right time, and that time is now! These will be energetic individuals that are familiar with best practices and want to assist in transforming the current transportation system into a world class system.

This is a great opportunity to get involved with an agency that has problems, for sure, but also one that is on the move and seeking change with top notch leadership at its helm. The experience that these new hires will get will be invaluable as they move on with their careers. Or, for more seasoned professionals, this is a great way to give back and shape the future of transportation in the Commonwealth.

Some of the current jobs include:

  • MBTA Assistant Administrator of Contracting Strategy & Supply Chain
  • MBTA Business Analyst
  • MBTA Deputy Administrator of Customer Experience
  • MBTA Director of Cost Control & Lean Strategy
  • MBTA Director of Financial Analysis & Planning
  • MBTA Director of Revenue
  • MBTA Manager of Capital Budget
  • MBTA Sr. Operating Budget Analyst

If you know of someone looking for a new, challenging opportunity, let them know about MassDOT.