Hey, there! Log in / Register
How a developer is putting up a building with all affordable units right downtown
By adamg on Sat, 07/08/2017 - 12:12pm
Next City takes a look at the Beverly, Related Beal's 239-apartment building atop the Big Dig that doesn't have a single luxury unit.
Neighborhoods:
Topics:
Ad:
Support Universal Hub
Help keep Universal Hub going. If you like what we're up to and want to help out, please consider a (completely non-deductible) contribution.
Comments
But what about my constitutional right to avoid poor people???
Naive real estate developers don't understand that working-class people simply can't live downtown. Living downtown is reserved for yuppies and above. This is basic Econ 101, even if you liberal bleeding hearts disagree.
Name ONE historically working-class community that was in or very near downtown Boston. I can't think of a single example - I mean, look how nice Chinatown and the West End are! Poor people could have never afforded to live there!
Harumph!
Move to Brookline. I think you'd be more than happy there.
I suspect there was an implied <sarcasm> tag there
Smart, Sens... explicitly mentioned the West End and Chinatown, so I think it's pretty clear he's being deliberately ironical.
Just FYI...
...at least in my browser, your handle gets cut off at "Smart, Sensible Guy Who Just S... "
Not just your browser ...
The software limits the display of characters for a user name. I increased it enough so that "Turkey Liberation Front" would show up entirely, at least.
S/he should register anyway!
But I confess to being curious about the rest of it :-)
Interesting
Interesting article, thanks Adam!
I don't see how this would be feasible as policy rather than one off deals due to the complexity of the financing, but it's nice that the effort is being made. It be interesting to know how much money the city put up in total, and how much they stand to get back from increased tax revenue and economic activity.
The city need to get very serious on revamping zoning and quick, otherwise we'll be the next San Fransisco / Seattle. People are moving back, and if there's no where to live they'll buy that row house / tripple decker and convert it.
Boston is already a more
Boston is already a more expensive real estate market than San Francisco, Seattle or NYC.
Citation?
Just did a quick google and articles from Money, NYT, Business Insider, et al - none of them have Boston above NYC and SF, both of which are typically described as about 150% as expensive, housing-wise. Only a couple even have Boston in the top ten.
More expensive than Seattle
NYC and SFO are still a thousand dollars a month ahead of us, thankfully.
https://www.google.com/search?q=most+expensive+rental+markets&rlz=1C1CHF...
There's no amount of housing
There's no amount of housing that you can reasonably build that will keep prices down over the long term. It's not a requirement than any region squeeze in as much housing as possible. That's not sustainable or desirable. Not everyone has to move here.
There's been nothing that's done to put fees on non resident owners.
This isn't even deed restricted affordable, like the housing units are out in the suburbs, so they will revert back to market rate.
How much will you pay
1. cities are vastly more sustainable than sprawlburbia and even ruraltopia. That's because driving around is very inefficient, as is the infrastructure to support driving around.
2. The jobs are in the cities or near them. Commuting is very inefficient, so people want to live near to their jobs. Are you willing to pay enormous amounts of taxes to pay people to not live in cities? Because that is the economic reality.
Nothing you said explains why
Nothing you said explains why larger numbers of people have to be located in any one particular location, and not other regions.
Maybe if you read #2
Which is why this is happening.
I can completely get behind
I can completely get behind the sentiment to add fees to non-resident owners, but your 'no amount of housing' statement needs a citation and your last statement is somewhere between a full out lie and a half-truth.
These aren't condos that are for sale, so I'm not sure why you are bringing up deed-restricted affordable units? These are affordable rentals and cannot be sold OR rented at market value until the period given in the deed is over (In the case of the Beverely, 50 years-- which is pretty standard for Boston's affordable housing). The land IS deed restricted on a 99 year lease via the department of transportation to the developer.
I'm also confused why you say 'like the housing units in the suburbs are,' I live in a deed restricted affordable unit in Boston proper. They have more in Boston than any suburb I've ever heard of. The city of Boston still owns the land, they just let a developer build a building on it on something like a hundred year lease. Even when you purchase you do not typically own the land it is on, so the city can keep it affordable and/or boot you off I guess if some major project came up.
You really should not speak about topics you clearly seem to be lacking insight on, it does the rest of us a disservice and seeds doubt about important affordable housing projects that the city direly needs.
GOOGLING IS NOT THAT HARD:
https://nextcity.org/features/view/boston-downtown-affordable-housing-re...
Many innacurate assumptions
The "no amount of housing" does not need a citation. If demand keeps going up, then logically prices are going to keep going up, but there's limited room to build on.
"These aren't condos that are for sale, so why bring up deed-restricted affordable units?"
Income restricted housing can be rentals or ownership units. If you don't know that, then you are the one who doesn't know what you are talking about. Both kinds exist.
The post never said that there weren't affordable units in the city, but there's a lot of income restricted housing in the suburbs, and the are commonly deed restricted.
Limited room to build on?
Open those baby blues (browns or whatever) and look around. Boston isn't Manhattan - not that it ever should be - but there is an enormous amount of room to build - and it doesn't even have to be that tall. In most neighborhoods a storefront with 3-4 story apartments above would quadruple the housing stock - especially the studios, 1 and 2 bedrooms young people need and want.
OK, now you can notice all the congestion
Great. Then you will quickly realize that you can exactly accommodate more congestion. Most people living there don't want four times the density. Also, you are being highly selective in who you think actually should have housing.
Congestion?
Maybe on a few highways at rush hour. You need to get out more if you want to experience congestion. I can stand on the corner if Boylston and Dartmouth at noon and see a dozen cars go through a light cycle. Hell, I crossed there at 8 am and maybe 2 dz cars went by. Imagine if we had a transit system that didn't stall for 3 hours in the middle of the day, almost nobody would drive.
Bottom line, Boston's population grows at about 1% a year. That's a good thing because it means we have a strong economy. These people have to live somewhere which means the city needs to build almost 3000 units per year just to keep up. That's arithmetic. They can't all live downtown and in the seaport. Where do you suggest we build 3000 units per year if not in the less dense parts of the city?
No fees on non-resident owners?
Have you ever heard of the residential exemption? That's exactly what that is - it shifts the tax burden from resident owners to owners of rental units - and to a lesser extent to owners of high end housing.
sheesh - pay attention already! :-/
Clarification
It should said fees on people who aren't at least permanent residents like investors. Those exist in other locations.
There is no deed so it cannot
There is no deed so it cannot be "deed restricted." It is a land lease
A lot affordable housing is though
That was the point.
This is good news. Why is a
This is good news. Why is a "luxury" apartment the new standard? Why does it seem that all new apartments need to be built with expensive kitchens, etc? Is the cost of building not so much the furnishing materials used but everything else (labor, structural, etc)? Can't developers just make standard economy apartments/condos? Is it "impossible" to make affordable units or are developers just maximizing profits?? I'm curious to know from anyone who is more knowledgeable on this.
It's extremely expensive due
It's extremely expensive due to labor costs, land acquisition costs and the years of zoning and BPDA meetings before you can even build, even small-scale developments. This makes financing difficult and high risk. Risk is compensated by high returns, hence mostly high-end development.
With the Beverly, they are getting huge tax credits and incentives to build. Without which they would never be able to finance this type of development.
There is no free lunch.
This is the bulls*** answer
This is the bulls*** answer developer and real estate agents give you.
A Greater Boston Housing Report Card put out last year by the Dukakis Center and the Boston Foundation found that the percentage of construction permits issued annually by the city for affordable units has declined sharply in the last 20 years. Between 1996 and 2003, nearly 40 percent of all permits were for affordable units. Between 2004 and 2010, affordables accounted for about 25 percent. And from 2011 to 2016, the proportion shrank further to just 18 percent
so either we've gained more land, or labor cost have doubles since roughly ~2000. Boston was already 12.5k per square mile then were 13.8k per square mile now. It not like there were THAT many vacant lots in 2000. What your saying doesn't add up. Never has. They simply want the money of people that ARE WILLING TO MOVE THERE-NOTHING MORE, NOTHING LESS.
What?
What?
No, and you missed my point entirely. It's not labor costs or land costs exclusively. But what's changed is the lending and tax-credit environment. Financing for large projects has already pulled back in the past 12 months. Experienced, quality developers are already tapping out of this market, leaving the inexperienced and the well-connected with tax breaks to swipe up whatever is left in this upswing. Developers rarely use their own money. It's the financiers that are pulling the strings. A developer, generally, doesn't really care what is built as long as someone will bankroll it. Getting lenders to bankroll unsubsidized low-income housing housing is like finding an unicorn.
And skilled labor costs are up significantly in the past 17 years. There is a skilled labor shortage in almost every major market in the country now thanks to societal pressure to "go to college and get a degree."
I don't know
I'm not sure I understand your comment but that paragraph in the report card sticks out to me, too.
I think it's a bit deceptive, however. It's "percentages", not raw numbers, and that's not necessarily a great way to show trends in this case.
Prior to 2000, there were "few" residential housing permits pulled in Boston, for many reasons, including that the city's population growth was flat (562k-1980, 574k-1990, 589k-2000), so there wasn't a lot of new construction. In 2001, the Ritz-Carlton towers were built and then slowly, then quickly, new construction projects began, both small (3-deckers) and large (etc.).
While "percentage" of affordable housing permits pulled went down, the actual number may very well have gone up, since the number of all permits pulled jumped. Again, it's just that the whole pie got bigger, with lots more "market-rate" units being built.
Rough numbers:
Between 1990 - 2000, Boston had an increase of 1,072 housing units (per bpda)
Between 2000 - 2010, Boston had an increase of 20,546 housing units (per bpda)
So, using the report card's info, that's 1072 times 40% for 2000 (429 units), and 20546 times 25% (5,136 units) to get the affordable number of units being issued building permits. (I know, I'm comparing building permits to actual units built .. go with it.)
Affordable units have increased in raw numbers, if not percentage.
Of course, we might think (logically) that the percentage of "affordable" would rise at the same rate as other housing, but I don't know.
It's a downtown thing
To justify the land cost and to pay for affordable housing and LEED certifications in a land of similar buildings, the only way this works is to attract rich people and make high margins.
Thisv is less of a factor as you move into the western parts of Boston and where more reasonably priced housing is getting built.
The word "luxury" is applied
The word "luxury" is applied indiscriminately to any new construction and means effectively nothing.
See also: The word "affordable" no longer means people can afford it, but that it's subsidized.
Which is why wonks talk about "midmarket" and "attainable market rate" to distinguish "expensive" from "subsidized" without using the now meaningless word "luxury."
Popular Prices
That used to show up in advertising back in the day. I used to say, "Free? They're giving it away? Cool."
Of course, it didn't say with whom the prices were popular. I finally figured out it was the seller.
Suldog
http://jimsuldog.blogspot.com
Also note that subsidies are
Also note that subsidies are available for couples making $136,000 annually.
Those luxury touches cost
Those luxury touches cost less than 20 thousand more to put in (from bathroom, to kitchen to other features) which is a drop in the bucket. If you are going to charge 500k for a condo it should have some nice touches. Even more so if you drop 1 million. If you look under the hood of those kitchens they are generally not as gourmet as they look.
Sounds like a nice project
Two things though:
It would be pretty much unnecessary if we had more reasonable zoning policies in this city.
And why did we spend a gazillion dollars on the big dig and that beautiful bridge if we were just going to wall it off from the greenway? This was arguably the most spectacular view corridor in the city and our "planning" department apparently didn't plan to preserve it.
Sounds nice prima facie but
Sounds nice prima facie but read down:
That's not really much affordable, which is essentially true of most if not all of the so-called affordable developments in Massachusetts. Also income restrictions are only for 50 years but their lease on the site is for 99 years. Neither a good model nor a unicorn, just more prevaricating.
Yup, it's a lost cause.
Reasonable rents, that is. I mean, when $2,500 a month for a one bedroom is considered affordable, and "couples making $136,000 annually" need subsidies to afford rent, we truly are in a whole new world.
We are. I don't understand
We are. I don't understand why the media always focuses on the cost of real estate in San Francisco or New York. If you look at the data, the cost of housing has increased by a greater percentage since 1980 in Boston than either of the aforementioned unaffordable markets. In addition, Boston ranks only behind Honolulu as being the most expensive metro area to develop real estate in.
Part of that is because it
Part of that is because it has already been built out for many years, it's not like other younger regions that can still expand easily.
Something else to consider is
Something else to consider is that wages and costs of lumber are more expensive in some markets, so it's not all land costs.
Citation (again)?
Methinks you are the same anon who said pretty much the same thing above.
Yeah, Boston is expensive, but I could find no evidence that Boston market housing prices/increases are top-of-list, or even near top for major US metros.
Can you point to any legit reference for this claim?
Your GoogleFu needs a tuneup
This popped up immediately upon googling "most expensive rental markets": http://time.com/money/4287132/most-expensive-cities-to-rent/
The US Census has quite a lot of data if you are willing to pick through it:
https://www.census.gov/prod/2013pubs/acsbr11-07.pdf
That's for starters ... try searching "American Community Survey" for more recent information.
https://www.census.gov/housing/
https://www.census.gov/programs-surveys/ahs.html
Housing costs in Boston and all of MA are quite high compared to national numbers, but this is somewhat offset by the high wages.
The fact that it's not deed
The fact that it's not deed restrictive permanently affordable means it's not like a lot of the other affordable housing.
Seaport
They need something like this down the Seaport. All the beautiful people cannot have the waterfront to themselves.