NAIOP Supports Privatization of MBTA Services

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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.

ViewPoint: A new stretch energy code is not justified

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This OpEd appeared in the Boston Business Journal on June 3, 2016.

In March 2015, Governor Charlie Baker signed Executive Order 562, initiating a comprehensive review process for all regulations. Only those regulations which are mandated by law or essential to the health, safety, environment, or welfare of the Commonwealth’s residents would be retained or modified, making Massachusetts a more efficient and competitive place to live and work.

Agencies must demonstrate, in their review, that there is a clearly identified need for governmental intervention; the costs do not exceed the benefits; a regulation does not exceed federal requirements; less restrictive and intrusive alternatives have been considered and found less desirable; and the regulation does not unduly and adversely affect the competitive environment in Massachusetts.

Based on these specific criteria, the business community is concerned that the Board of Building Regulations and Standards (BBRS) is currently considering a new Stretch Energy Code as it develops the 9th edition of the statewide building code. Besides the fact that this Stretch Code undermines the statutory requirement that there be a uniform State Building/Energy Code, there is no good reason for it. This proposed energy code is unnecessary and fails the regulatory review standards, and the Baker Administration and the BBRS should not advance it.

The Stretch Energy Code was originally adopted in May 2009, despite strong opposition from the business community.  The code required commercial and residential construction in those communities that voted to adopt it to be approximately 20% more energy efficient than the statewide code. The new stretch energy code would require a 15% increase in energy efficiency over the current code. The Stretch Code has caused confusion among local building inspectors and developers.  Due to this and several other reasons, a new version of the Stretch Energy Code has never been adopted, even when the statewide code changed.  In fact, at the close of the Patrick Administration, the BBRS voted not to advance a new draft of the Stretch Energy Code.  However, in April 2015, this decision was reversed.

Massachusetts is already the most energy efficient state in the nation, with the most aggressive energy efficiency targets.  Furthermore, Massachusetts will be one of only a handful of states in the nation to adopt the 2015 International Energy Conservation Code (IECC) statewide.  Since the Green Communities Act requires the adoption of the latest IECC (every three years), the Commonwealth’s position as a national leader in energy efficiency will be ensured even without a Stretch Code.  Anything beyond that is overly burdensome and creates a significant competitive disadvantage for Massachusetts.

It is important to note that there is no statutory requirement to adopt or update a Stretch Energy Code.  There is no mention of it in any statute, and it is only the Department of Energy Resources’ (DOER) policy that encourages the creation of this code.

According to DOER, the changes to the Stretch Code would take effect automatically in stretch code communities without any local vote.  Many municipalities had no idea they would be subject to an automatic upgrade.

The business community continues to support a uniform statewide building and energy code.  We believe a new Stretch Energy Code is unnecessary, will hinder economic development, and would impose an unfair and difficult burden on local building officials and the construction industry.  We urge the Baker Administration and the BBRS to eliminate the Stretch Energy Code, once and for all, and acknowledge the latest version of the IECC as the only energy code in Massachusetts.

David Begelfer is the CEO of NAIOP Massachusetts, the Commercial Real Estate Development Association.

Federal “Tenant Star” Report Promotes Energy Efficiency in “Next Gen” Commercial Leased Spaces

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The U.S. Department of Energy (DOE) just published its Energy Efficiency in Tenant Leased Spaces feasibility study that highlights both opportunities and barriers to implementing energy efficient technologies in multi-tenant commercial spaces.

The study was required by Congress as a part of the Energy Efficiency “Tenant Star” legislation that was passed into law last April. The hope is that this voluntary program will encourage higher energy performance in leased spaces in commercial buildings. Market driven branding incentives have worked well with building owners through the voluntary Energy Star program. Now, this program will attempt to motivate building tenants to increase their energy efficiencies and reduce their energy consumption.

The DOE study finds that “American businesses can occupy more energy-efficient spaces that help improve their bottom line, attract and retain the best workers, and increase their competitiveness.” About half of commercial real estate is occupied by tenants, who could directly benefit from greater energy efficiency. The study further finds that tenant space can be built to save 10-40% energy compared to a typical space.

The study also examined the persistent problem of a lack of energy data. It was determined that a significant increase in sub-metering of tenant spaces would help overcome this barrier. Another persistent problem is the “split-incentive” issue between owners and tenants, with owners paying for the improvements and the tenants benefitting. Accelerated 15-year depreciation of leasehold improvements, can potentially provide real estate owners with greater certainty to undertake property improvements over the typical lease term and economic life of those assets (7-10 years).

Furthermore, the DOE report also encouraged the creation of a federal tenant space recognition system, similar to Energy Star.

The real estate community is supportive of these voluntary, market driven programs that have already shown tremendous results across the country.

Water: It’s Time for MassDEP to Take Control

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Now is the time for the Massachusetts Department of Environmental Protection (MassDEP) to be given delegated authority by EPA over National Pollutant Discharge Elimination System (NPDES) programs, along with the funding needed to adequately administer the program.

A NPDES permit is required for any discharges of pollutants from a point source into navigable waters of the US. As required by law, EPA or the state must set limits on the amount of pollutants that facilities may discharge into a waterbody.

To date, 46 states have been authorized to administer the federal NPDES permit program. Massachusetts is just one of four states in the nation (along with Idaho, New Hampshire, and New Mexico) where the federal government is in charge of the permit issuance, compliance and enforcement (with 2,990 NPDES permit holders in Massachusetts).

However, MassDEP is better equipped than EPA to concentrate on Massachusetts specific issues and develop permits with a more complete understanding of local conditions.

Currently, MassDEP jointly issues NPDES permits with EPA. Having MassDEP as the sole permitting authority, with EPA limited to an oversight role, would result in a more efficient permitting process. In addition, as the NPDES program continues to evolve in response to increased concerns over issues like nutrient loading and stormwater impacts, MassDEP would have greater control over policy decisions. These could be more effective with a program redesign, the heightened use of science, and coordination on managing all pollution sources in a watershed.

For this delegation to succeed, appropriate resources would be needed (estimated at under $10 million per year) to ensure a carefully coordinated approach to watershed management.

Massachusetts has an excellent national reputation as a leader in environmental protection, permitting, compliance and enforcement. MassDEP has implemented many successful environmental regulatory programs, with some being the models used by other states.  After years of discussion, Massachusetts needs to assume the responsibility for wastewater permitting by taking NPDES authorization over from EPA.

As Boston Proposes CPA, Issues to Consider

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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.

6 Steps to Building a Career in Commercial Real Estate

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100_0642On February 24th, NAIOP Massachusetts hosted a career panel where dynamic young professionals from the Developing Leaders program offered helpful advice on how to jumpstart or further a career in Commercial Real Estate. Speakers included Molly Davis, Associate Director at Newmark Grubb Knight Frank; Katie Grimes, Business Development Associate at Red Thread; Chris LaFrance, Associate Director of Acquisitions at Intercontinental Real Estate Corp.; Tucker McCrabb, Research Analyst at AEW Capital Management; Jennifer Price, Assistant Vice President at Colliers International; and Sarah Weatherbee Walker, Senior Director at Keller Augusta Partners, who moderated the program.

100_0652At the event, Keller Augusta Partners shared these tips below for college students who are interested in a career in Commercial Real Estate.

The Commercial Real Estate industry is very competitive. Successful candidates must be able to demonstrate experience and interest in the CRE field early and often. Here are some helpful ways to break into the industry:

  1. Coursework
    • Be sure to do exceptionally well in real estate classes (impress your professors!) and maintain high GPA
    • Highlight significant projects or case work from your courses on your resume
  1. Internships
    • Full time summer positions
    • Part-time /semester opportunities
    • Contract work
  1. Industry Professional Organizations
    • Seek out a student membership or student rate for attending events
    • Join committees to make more meaningful connections, don’t just attend events
  1. Leadership Roles within On-Campus Organizations
    • The event planning process is a great reason to reach out to industry professionals
    • This becomes an excellent resume talking point
    • If your school doesn’t have a group, create one!
  1. Networking
    • Utilize your Alumni, Personal & Professional network to build up your industry contacts
    • Be specific about your job search & career objectives during networking/outreach conversations
    • People want to help but being vague puts more work on them
    • Create your 2-minute elevator speech and practice it!
  1. Skills
    • Academic performance (GPA/Test Scores) is highly regarded at top firms
    • Strong emphasis on quantitative skills across many positions

100_0659Below are some additional resources available from NAIOP Massachusetts.

Student Association Membership (SAM) program
Open to any full-time student who is not otherwise employed in the industrial, office, multifamily, mixed-use or related commercial real estate industry. Must present a valid school ID and current full-time schedule.

Benefits include: free admission to networking events and educational programs, opportunities to meet industry leaders and decision makers, access to NAIOP’s national database, special Student Association Membership (SAM) Career Dinners and informational interviews.

University Membership
Available to colleges and universities offering undergraduate programs in real estate and includes up to 25 student memberships.

NAIOP Massachusetts Job Board
Includes full-time jobs and internships. Open to all, NAIOP Members can post jobs for free.

100_0657View all photos from the event.

MassDOT Wants You!

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MassDOT logo

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.

Speaking of Real Estate

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NAIOP Massachusetts is kicking off a video series we will be calling “Speaking of Real Estate”.

The idea behind this effort is to interview leaders in the commercial real estate industry, including developers, owners, investors, as well as some of the heads of the major professional service firms that support our business.

We are starting with a very candid discussion between Tom Alperin, President, National Development and Marc Margulies, Founder and Principal, Margulies Perruzzi Architects. They cover a range of topics that include affordable housing, new design considerations, shared economy, and looking to the future for the industry.

We plan on bringing you the opportunity to hear from individuals that are in the forefront of creating our new urban and suburban “live, work and play” environments. Who are some CRE leaders you would like to hear from in this series? Let us know in the comments section below.

A Little Late, But Welcome to Massachusetts, Steve!

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WynnEverettIt appears that the lengthy, sometimes contentious, legal battle between Wynn Resorts Chairman Steve Wynn and Boston Mayor Marty Walsh is over. A “surrounding community” agreement was reached by both parties for the development of an Everett casino. The agreement includes:

  • $31 million over 15 years for community impact
  • $25 million over 10 years for Sullivan Square infrastructure improvements
  • $11 million for traffic mitigation in Charlestown
  • $250,000 for a regional working group on a “long-term fix” for Sullivan Square
  • a “good faith effort” to purchase $20 million annually over 15 years from Boston businesses
  • $1 million for reimbursement of Boston’s professional (legal) expenses.

Wynn Resorts Everett will be a $1.7 billion, five-star, premier destination resort with a 600 all-suite room hotel in Everett, located off Lower Broadway, at the site of the heavily contaminated, former Monsanto Chemical plant. Millions of dollars will be invested to clean and remediate the site and to construct infrastructure and traffic betterments.

The Commonwealth will receive a licensing fee of $85 million, along with 25% of gross gaming revenues, which are estimated to be $260 million annually.

There will be 4,000 full time jobs, as well as over 3,600 construction jobs.

For Everett:

  • $30 million in advanced payments for a Community Enhancement Fund payable during the construction period
  • $5 million Community Impact Fee, increasing annually
  • $20 million for real estate taxes, increasing annually (almost 25% of the city’s tax base)
  • $250,000 contribution to Everett Citizens Foundation
  • $50,000 annual payment to purchase vouchers/gift certificates from Everett businesses to be distributed by Wynn as part of its loyalty programs
  • An estimated $2.5 million per year in hotel and restaurant taxes
  • An active waterfront park with a winter garden and harbor walk will be created

That’s quite a financial commitment by an out-of-state company to the Commonwealth. In case you haven’t heard it before, welcome to Massachusetts!

A Great Start for Economic Development Under the Baker/Polito Administration

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BakerGovernor Charlie Baker and Lieutenant Governor Karyn Polito just filed the administration’s Economic Development bill with $1 billion to be invested over the next five years into economic development, housing and job training across the Commonwealth.

A core principal of this legislation is to take various existing programs and make enhancements to them so that they become more widely used, more effective, recapitalized, and more user-friendly:

  • MassWorks ($500 million proposed capital authorization): Reauthorizes a capital grant program that provides municipalities and other public entities with public infrastructure grants to support economic development and job creation.
  • Brownfields Redevelopment Fund ($75 million proposed capital authorization): Moves funding for the state’s Brownfields Redevelopment Fund to the capital program, providing a reliable long-term funding stream for a fund that is the Commonwealth’s primary tool for facilitating the redevelopment of contaminated properties.
  • Housing-Related Tax Increment Financing: Supports housing production in town centers by reforming a seldom-used local-only smart growth tax incentive program, removing onerous regulations, and allowing communities to set their own affordability requirements.
  • Housing Development Incentive Program (HDIP) Reform: Supports the development of market-rate housing in Gateway Cities by allowing credits to support new construction, and by raising the formula that sets housing development incentives.
  • I-Cubed Reform: Reforms the I-Cubed infrastructure program by removing unnecessary program requirements (such as eliminating the per-municipality cap on the number of projects that may participate and raising the aggregate limit of funds from the I-cubed program that may be used in any one municipality from 31% to 50%) building flexibility into the program, and aligning program requirements with the demonstrated project pipeline.
  • Economic Development Incentive Program (EDIP) Reforms: Builds accountability in the state’s primary job-creation incentive program by strengthening the link between the issuance of tax credits, and job creation that would not otherwise occur; adds flexibility to the incentive program by eliminating obsolete formula-driven incentive categories, and by creating a new Extraordinary Development Opportunity designation.

In addition, the bill creates two important provisions:

  • Site Readiness Fund ($25 million proposed capital authorization): Advances regional job creation by creating a new fund for site assembly and pre-development activities (including site assessment and cleanup) that support regionally significant commercial or industrial development opportunities.
  • “Starter Home” Zoning: Incentivizes the creation of smaller, denser, and more affordable single-family homes by creating a new starter home option under the Chapter 40R smart growth housing program. These projects will also allow the municipality to be eligible for school reimbursements under Chapter 40S.
  • Parking Management Districts: Aligns local parking policies with broader economic development priorities by enabling municipalities to opt into creating demand-based parking fees, and allowing parking fees to support capital improvements in designated districts, like downtowns.

In addition, there are new programs with a Massachusetts Innovation Initiative, Workforce Development, and Economic Competitiveness.

We are very supportive of the bill, which contains many of NAIOP’s priorities. This legislation will be one of NAIOP’s top priorities for the remainder of the legislative session.