Boston's Sluggish Affordable Housing Development Pace Leading To Mounting Frustration

Boston’s development boom in the past decade hasn’t delivered affordable housing results to match. 

Affordable housing projects in Boston small and large can take years from inception to construction, leaving idling sites amid a worsening housing crisis. The Boston Planning and Development Agency’s lengthy approval process for projects is frustrating both developers and residents.

The headaches for developers don’t end after approval amid the affordable housing industry's wide-ranging financial challenges, including rising construction and insurance costs and parking requirements.

“In Chelsea, Somerville, Cambridge, approvals can happen in a month, two months or three months,” said Matt Grosshandler, vice president at Bald Hill Builders, on Tuesday at Bisnow’s Affordable Housing and Community Development event. “In Boston it can be a year, two years, three years.”

In Cambridge, a year-old zoning reform to promote 100% affordable housing projects has already added 350 affordable units to the development pipeline. In neighboring Charlestown, the first 358 units at the $1.4B Bunker Hill Public Housing Development will break ground in December, five years after developers made their first filing to the BPDA in 2016.

Even for the smallest projects, the time from proposal to delivery stretches on in Boston; the BPDA-sponsored Compact Living Pilot Program, designed to speed up the approval process to encourage the building of micro-units, has failed to deliver a single home since its 2018 inception, despite 18 projects being approved. All this is happening as the city works toward a goal of adding 70,000 new housing units by 2030.

“I don’t like wasting time,” Boston City Councilor and mayoral candidate Andrea Campbell said at Bisnow's event. “I do think the 2030 plan is a great start, but we need more meat on the bones.”

Campbell, a lawyer and city councilor who has represented Dorchester, Mattapan and parts of Roslindale and Jamaica Plain since 2015, is one of five candidates, including interim Mayor Kim Janey, vying for former Mayor Martin Walsh’s seat ahead of a September preliminary election.

Affordable housing is a top issue among voters, according to a June Boston Globe and Suffolk University poll, and the field has touted their own affordable housing solutions for Boston’s expensive market. On the event, Campbell singled out the length community engagement process as one source of delay.

“We don’t need 55 community meetings,” Campbell said. “One of the things I pride myself on is that proactive civil engagement. In my district, there are 45-50 civic organizations … they want to have a say in what's in their community. What I have been stressing, though, the system as it operates right now, doesn’t just hurt residents. It hurts developers, too.”

As an example, The HYM Group expects to deliver the first affordable housing units at its 161-acre Suffolk Downs development in 2023, six years after it purchased the property. The developer said it has held more than 450 meetings with the community since 2017.

“​​Change is hard for a lot of communities,” PCA principal Laura Homich said. “It’s a mini political campaign you put on in order to build a project these days."

Boston has approved more than 35,000 affordable housing units ahead of a 70,000 benchmark by 2030, but just 7,348 have been permitted for occupancy, a city report found.

The sluggish construction pace has come amid an increasingly expensive housing and rental market. Greater Boston’s home prices averaged nearly $785K in July, a 12% rise over the past year, according to the Greater Boston Association of Realtors. Boston has the third-highest median one-bedroom rents in the country at $2,300, according to Zumper research.

Mayoral candidates have called for reform at the BDPA and advocated for the creation of a comprehensive citywide master plan. Councilor at large Michelle Wu has proposed abolishing the BPDA to create a new, streamlined development process, while former city chief of economic development John Barros has called for more city intervention when a community and developer are at odds over affordability.

An issue that developers focused on at the event: minimum parking requirements. Developers are required to build below-grade parking lots at high-density projects, including affordable housing, a major factor in construction costs. 

“It costs less to build in NYC, we see that for a lot of our projects. A part of that: They’re not building underground parking,” Community Builders Executive Vice President Patricia Belden said. “How much are we spending extra because we want to put parking underground?”

The expenses are piling up with fluctuating material costs after a spike in the first half of the year gave pause to investors, said Gayle Manganello Ellis, PNC Real Estate senior vice president and manager of originations. Her firm has seen developments die in the past six months because of a lack of gap financing and as investors are scrutinizing supply costs more than ever, she said. What's more, she said insurance costs have increased an additional $50 per unit per year. 

“We’re doing a lot of what-ifs, prices come 20%-50% higher,” Ellis said. “We’re working that into the mitigation, and I’d say that’s the biggest concern.”

A newly proposed federal bill would reward block grants for zoning updates to encourage affordable housing development and spur tax credit updates. In Boston, Mount Vernon Co. Chairman Bruce Percelay said affordable housing developers need relaxed zoning hurdles. 

“The current permitting process in Boston is so cumbersome that it gives housing developers the incentive to focus their efforts elsewhere,” he wrote in an op-ed in The Boston Globe last month. “Building in Watertown, for example, is dramatically easier than building in Brighton, yet the two are geographically connected.”

Walsh, now the U.S. secretary of labor, made affordable housing a major part of his platform and upped developer contribution fees for affordable housing in one of his last acts as mayor. Still, he left office with a developer-friendly legacy — but a less-than-stellar record on building new affordable housing — that mayoral candidates want to flip.

“The city of Boston has really incredible plans, but this is the time for action,” Campbell said. “I can’t stress that enough. This city government has to shift its culture from planning and ideas to implementation and action.”