‘Start A New Lane’: Developers Want To Bring More Workforce Housing To Cape Cod And The Islands

Cape Cod, Nantucket and Martha's Vineyard have always been prime vacation spots for Massachusetts residents, with their idyllic beaches and small-town charm. But like the rest of the state, they face a serious housing shortage.

Although several income-restricted affordable housing projects have been developed and delivered in the towns that make up Cape Cod and the islands, there has been a shortage of year-round housing for a critical asset to the community: its workforce.

Developers and housing advocates who spoke at Bisnow's Boston Affordable Housing Summit at the Seaport Hotel earlier this month said high costs associated with land and insurance as well as specific community priorities have made it hard to bring much-needed housing to the region.

"We're in a place where the land values, home values are extraordinarily high. Where the risk of storm damage and climate change, certainly in some locations, are worse than inland areas of the commonwealth," Nixon Peabody partner Jennifer Schultz said. 

"You have to cross a bridge to get there, you have to take a ferry to get there," she added. "You're up against all of these other barriers and hurdles."

Part of the Healey administration's sweeping $5B Affordable Homes Act, which the governor signed into law last week, was to designate parts of the Cape, Martha's Vineyard, Nantucket and the Berkshires as "seasonal communities" and to provide a series of new tools to help those areas build housing, The Martha's Vineyard Times reported.

The law would allow these communities to create a year-round housing trust fund, acquire and develop housing specifically for public employees and artists, and require occupancy restrictions to establish more year-round housing.

"There is virtually no market-rate, privately developed housing," MKA Architecture principal Michael Kim said of Martha's Vineyard. "There is housing being developed on the islands, but it is all 'capital-A' housing."

Kim has worked for the last seven years as the governor's representative for Martha's Vineyard, a supervisory zoning body that regulates development "of a reasonable impact" on the island.

"Capital-A" affordable housing is characterized as income-restricted housing, whereas "little a" affordable housing is more for that middle-income or workforce group that has long been overlooked in housing production.

Kim said his firm has been trying to partner with smaller employers to develop workforce housing projects to reduce costs to the employees living in the units without having to rely on subsidies or income restrictions that have excluded some workers from housing.

But the process of building even the smallest housing projects on the island has been a hurdle, and most of the costs have come out of his pocket to make it work. However, Kim said the work is important to create housing that doesn't exist.

"It's a way to start a new lane that doesn't exist," he said. "I think in other communities, there are other lanes that can be started. They're not going to be easy, but they need really tiny dollars compared to the amount of subsidy that's happening right now for the end users."

The housing shortage has been worse for the seasonal and year-round employees coming to the island to work in the several restaurants, shops and hotels that cater to hundreds of thousands of tourists every year. Many employees struggle to find housing each year as the number of year-round and workforce housing units continues to dwindle.

"Marginal houses are well over a million dollars, and there's been an influx of [new] year-round people taking up housing that would have gone to the established year-round community," Kim said. "That has turned a problem into a crisis."

As of May, 80% of the existing housing stock in Cape Cod's Barnstable County is detached, single-family homes, and only 2% of the land is zoned to allow housing with more than two units to be built by right, according to the Cape Cod Commission. Because of this, none of the 15 Cape Cod towns have reached the state's 10% threshold for affordable housing units, the Cape Cod Times reported.

The housing shortage is even more severe on the islands, which have limited land and have faced barriers from wealthier year-round residents that have pushed back on affordable housing development.

Martha's Vineyard has approximately 200 housing units planned for development through 2026, according to a July 10 Martha's Vineyard housing needs assessment. Across the island, there is a housing shortfall of at least 657 rentals and 2,118 ownership units.

Earlier this week, housing officials in the Vineyard voiced concern that recent attempts to bar two workforce housing projects could dampen the momentum it has seen. Two developments in the Tisbury neighborhood, 97 Spring St. and 123 Beach Road, have seen backlash from residents, sparking concern from the town administrator, MV Times reported.

Larger employers have housed staff in buildings they own or lease like the Chatham Bars Inn, which has several buildings to provide housing for the roughly 100 seasonal employees it has in peak tourism months, The Boston Globe reported.

For other developers in the capital-A affordable space, the costs associated with building in these areas have skyrocketed, with communities stepping in to boost funds to finance much-needed projects.

Patricia Belden, executive vice president at The Community Builders, said there has been a bump in the number of communities that want to invest the money to make these affordable housing projects work.

The developer is working on two developments in Truro and Provincetown. The Provincetown project includes 65 apartments on Jerome Smith Road, The Provincetown Independent reported in 2023. It was projected to cost $39.4M at the time, with the developer asking for $500K from the town's community preservation fund.

Provincetown has also pushed a Lease to Locals initiative that will provide $20K in incentive payments to property owners who convert housing units from short-term rentals into year-round rentals for employees.

"The way we make this work is that these are communities that are choosing to invest money," Belden said. "These places are saying, 'We need housing year-round.'"

Belden, who works in the affordable housing space, said the area median income levels on the Cape and the islands are higher than in other parts of the state, so the housing that qualifies as capital-A affordable serves a higher-income population.

"It can serve a wide variety of people,” Belden said.

Belden also pushed for the state to enact a proposed transfer fee tax, which was struck from the final version of the Affordable Homes Act after real estate and business communities argued that it would add to the housing crisis rather than help it.

"There's this idea that it was just Boston that needed a transfer tax," Belden said. "Places on the Cape also need to do that. … It's incredibly important that our localities who want to build housing have the flexibility to be able to do that."

The cost of building on the Cape has also been exacerbated by the high insurance costs the region faces due to storm damage and rising impacts of climate change.

Throughout the Northeast, torrential flooding has become the biggest threat to coastal and inland properties in recent years. These issues have impacted homeowners and businesses on the Cape that could see pricier insurance premiums as carriers assess risks.

"The biggest issue with the Cape and islands is the full conversation about catastrophes within the United States," said Abigail Kilgore, senior vice president of client relations at USI Insurance. "That's driving the cost of insurance, and the Cape and islands, unfortunately, have usually gone to the carriers of last resort."