Wu Defends Push For Rent Control, Higher Development Fees In Front Of Real Estate Audience
After pushing forward proposals that would have a major impact on commercial real estate development in the city, Boston Mayor Michelle Wu spoke to the industry Tuesday to explain her vision for the policies.
Wu, speaking in front of a 400-person crowd at Bisnow's Boston Multifamily Conference Tuesday, discussed her proposals on rent stabilization, the Inclusionary Development Policy and affordable housing production.
The mayor commended the industry and assured audience members that although some of her policies may seem to work against the development community, they are meant to help bring more housing to the market and protect renters.
“I want to thank all of you because you are the solution and the key to making sure we can get to where we need to go,” Wu said at the event, held at the Westin Hotel Seaport District.
At the end of 2022, Wu announced a proposal to expand the city's Inclusionary Development Policy from 13% to 20% required affordability in multifamily developments of seven or more units. The proposal still needs city council approval before it can go into effect next year. A comment period for the proposal ended June 8, the Boston Business Journal reported.
Also in December, she proposed changes to the city's Linkage Policy that would double fees for lab developments and raise them by 50% for all other commercial development. After the announcement of the two proposals, real estate leaders expressed concerns that both policies would significantly slow development and push investors into other markets.
Wu said that the average affordability rate for developments that are approved through the Boston Planning & Development Agency is around 17% anyway and that the hike is ultimately just setting a standard across the city.
"The reality is that the vast majority of projects were ending up at greater than 13% affordability through a negotiations process of approvals," Wu said. "The goal is just like updating zoning code and setting the expectations so that it is predictable.
"The goal is truly not to establish a baseline for more haggling or negotiation but to say, 'Here, we are removing this out of the conversation.'"
Wu also answered a question from McDermott Quilty & Miller's Joe Hanley about concerns over her proposed rent stabilization plan, which was approved by the city council in March and is awaiting review on Beacon Hill.
The proposal would limit rent hikes by setting an annual maximum for rent increases between 6% and 10%, with the exact cap based on the consumer price index.
Her rent stabilization plan prompted backlash from the development community, with the Greater Boston Real Estate Board launching a $400K lobbying campaign against the proposal.
"I understand that in a perfect market and situation where supply and demand can just adjust to what people need that rent stabilization doesn't solve the challenge that we are talking about, which is boosting housing production," Wu said. "What it does is help a very specific set of challenges for residents who are not able to benefit from the fast increase in supply."
Wu said that the housing supply is so far behind that at the time being, rent control can work as a protection for renters who have been disproportionately affected by increased rents.
Wu assured the crowd that the proposed rent stabilization was not like the "old model" that drove up market-rate rents and disincentivized landlords in the process. She said the approach was specific to the Boston market and is an effort to protect renters from 20%, 50% and even 100% rent hikes.
"The idea is to not use this measure to depress rents overall," Wu said. "We are not trying to prevent anyone from making money. The idea is to prevent people from being immediately uprooted from their lives by egregious and unnecessary rent increases."
Wu also mentioned the city's efforts to approve new planning and design initiatives to help take the pressure off of the developers. Four planning processes are underway in East Boston, Charlestown, Mattapan and downtown, with plans to be codified in the Boston zoning code.
"Historically, the burden has been on each individual developer to do all of the work," Wu said.
Wu closed her keynote by emphasizing the importance of developer partnerships and by saying she is committed to making sure development continues to happen in the city.
"Developers are longtime partners for the city," Wu said. "We have to provide that extra value-add for you all to be able to chase investment in a very competitive global situation right now."
