Boston Adds Teeth To Longstanding Rule Requiring Developers To Fund Childcare

A 32-year-old rule that requires developers of large projects in Boston to invest in childcare facilities hasn’t been consistently followed, but a new effort from the mayor aims to fix that. 

Mayor Michelle Wu last week signed an executive order to standardize the amount that developers must pay, an attempt to create a more consistent flow of funding to address Boston’s undersupply of childcare facilities. The change is one of a series of initiatives the mayor campaigned on that could add more fees or regulations for developers in the city. 

“We are creating consistency here for all parties and securing more predictable funding for childcare programs across our city at a time where our economic recovery depends on our families to access that care,” Wu said at a press conference last week. 

The Inclusion of Daycare Facilities ordinance was passed in 1989 under then-Mayor Raymond Flynn as a way to create more childcare facilities in business districts for working parents and to spur investment in additional childcare facilities throughout the city. 

The zoning regulation required developers with projects spanning 100K SF or more within a series of 14 zoning districts to either build on-site childcare or invest in facilities to be created off-site. The districts include the Midtown Cultural District, North and South Station Economic Development Areas, Chinatown and Bulfinch Triangle. 

Wu was vocal on this issue during her time as a city councilor, and in March 2021 she and another councilor wrote an order calling for a hearing to re-examine the IDF policy.

The order stated that it was unclear if all investments made were going toward the Capital Resources for Early Educators Fund, which was created in 2013 solely for IDF funds. It also highlighted that the ordinance didn’t apply to some fast-developing areas in the Financial District and the Seaport. Her latest executive order doesn’t change the districts that qualify under the IDF ordinance. 

While some projects such as Fallon Co.’s Fan Pier project did build childcare facilities on-site, the majority of projects reviewed in a 2020 report didn’t add new childcare options on-site. The report, from a partnership of Tufts University and Community Labor United, found multiple examples of projects that should have been included in the program but made no financial contribution and didn’t mention the IDF program in their development filings. 

The report named four specific projects that didn’t make the contribution or mention the IDF program: the Parcel P-7a project at 230 Tremont St., Suffolk University’s project at 20 Somerset St., the Government Center Garage redevelopment at 50 New Sudbury St. and the South Station Air Rights project at 700 Atlantic Ave. 

“Our initial findings show that IDF has fallen short of its goals,” the report stated. “We discovered apparent inconsistencies in enforcement from the ordinance’s first passage in 1989 to the current day.”

Devin Quirk, the deputy chief for development transformation at the Boston Planning & Development Agency, said at last week’s press conference that the lack of clarity in the program created a situation where developers weren’t being forced to comply with the regulation.

“Over time, we realized that the existing regulations are a bit vague, which led to difficulty enforcing them as well as difficulty complying with them,” Quirk said. "This is a theme that lies across too many of our development regulations in Boston.”

Wu’s order is now creating a standard formula for how much developers of qualified projects must pay if they choose to invest in off-site childcare rather than build it themselves. The developers will be required to pay $100 for every square foot of childcare space they would have built under the zoning rule. 

With 3M SF of qualified development under review today, the program could generate at least $3.5M in funding for childcare facilities over the course of those projects’ timelines, according to the mayor’s announcement. She said at the press conference that an estimated $800K to $1M each year would go toward the Office of Early Childhood to supplement childcare creation efforts. 

Developer Richard Taylor, the chairman of Taylor Smith Group, told Bisnow he thinks the order is a good way to clarify the process and help create more affordable childcare options in the city. He said the high cost of childcare today is “putting crushing expenses on young families” and is leading some parents to exit the labor force to stay home with their children and avoid the cost of full-time childcare. 

“At this point, there is clarity for developers in terms of a formula for payment of funds,” Taylor said. “And now, increasingly, we might have more financial support for those who want to go to the labor market. So I think families benefit and the job market also benefits."

John Gahan, a partner at law firm Sullivan & Worcester, said that when he served as zoning chairman in Belmont, he tried similar efforts to use zoning regulations to address the growing need for childcare for working parents and has followed the program in Boston. He said he thinks the idea of creating a formula for the childcare fees is “great.”

"It makes a process which has heretofore been a negotiation — I'm not necessarily saying there's anything wrong with negotiations; I'm just saying this makes it a little bit easier for everybody to understand what they're supposed to do because it's equal, because it's it's not hidden, because it's transparent,” he said. 

But Gahan said he is concerned that developer fees alone won’t solve the issue of a lack of affordable childcare options, and more attention needs to be paid to ensuring new facilities are built. 

“A person who is developing housing, let's say in Boston, can spend the money to have it go to benefit someplace else where we either track or we don't track or we don't track adequately what's done with that money,” he said. “The reality is what we want is childcare. … Sometimes money is a very adequate substitute, but in this case, what we want is actual childcare.”

The changes are part of a larger platform that Wu campaigned on and has begun moving forward as mayor to revamp the development and planning process in Boston, in some cases with policies that impose fees or taxes on developers.

She proposed hiking the “linkage fees” that developers of large commercial projects must pay toward affordable housing, and she has considered increasing the percentage of units that residential developers must set aside as affordable.