Tuesday, April 23, 2024

Construction at the Mass+Main site in Central Square hints at the steel and aluminum needs of large projects, and both are weapons in a trade war launched this year by President Donald Trump. (Photo: Marc Levy)

It’s too early to say what effect President Donald Trump’s tariffs on lumber, steel and aluminum will have on construction in Cambridge, development experts say, but they have the capacity to raise costs and potentially threaten not just large commercial buildings, but to raise costs on municipal projects such as Tobin School reconstruction and private and public affordable housing.

“It’s not really clear what the impacts are going to be,” said Iram Farooq, assistant city manager for community development, speaking to such wide-ranging impacts as tariffs’ effect on costs of city projects such as the Tobin as well as on the budget, where building permits make a nice way to bulk up the budget: $20 for every $1,000 of construction costs. 

Iram Farooq, head of the city planning department. (Photo: Ceilidh Yurenka)

The first indicator of how tariffs are hitting Cambridge is likely to be the “nexus study” beginning this fiscal year on how much big residential construction is required to be set aside as affordable. After idling unchanged since 1998 at 11.5 percent of projects with 10 or more units being built, the number of “inclusionary” units nearly doubled to 20 percent since a 2014 study was debated and accepted by the City Council.

“I wouldn’t call [nexus] a canary in the coal mine, but I would say we are going to be going to be faced with the question of what recommendations look like for changes or a halt or an increase or decrease or whatever it may be,” Farooq said.

The analysis is done by consultants, and is not public, but “once the study is done we’ll have some public process around it,” she said, with conversations expected to start in late winter or early spring of next year. “That should give a little bit of time to understand how the market is playing out and what the implications are of the tariffs.”

In considering a citizen-proposed “green factor zoning” law that would require developers to build with climate change in mind, the knife-edge nature of affordable housing construction was raised repeatedly, with the argument going that builders have essentially no margin for additional costs – and the Trump administration is signaling steel tariffs of 25 percent and aluminum tariffs of 10 percent, with some analyses saying the move could trim 28,000 construction jobs from an industry where workers have been in such demand that Massachusetts projects have languished as a result of competition.

Affordable housing construction

Other players in affordable housing agreed the picture was, at this point, unclear.

Peter Daly, executive director of the nonprofit Homeowners Rehab Inc., called tariffs “a big concern,” but said the details are still evolving and the impact unclear. “We will need to see how the tariffs are set and what alternatives might be available before we can judge,” he said.

At the Cambridge Housing Authority, which is undergoing a massive overhaul of stock citywide that has has been threatened by surprise federal and state limitations at every turn, executive director Michael J. Johnston said his staff was bracing for more challenges.

“Our estimators are showing higher costs than we would expect, but it is difficult to attribute that to tariffs,” Johnston said. “We do expect some fallout, but I’m not sure how we might quantify it at this point.”

The authority could know as soon as September, when the four-story, 21-unit St. Paul’s Residence at 34 Mount Auburn St.,Harvard Square, goes to bid as a federal Rental Assistance Demonstration project – in which the CHA transfers its developments to investors who buy 15-year tax credits from it, paying for improvements while the agency continues to manage the housing.

Municipal projects

At the Tobin School/Vassal Lane Upper School in Fresh Pond, the third of three big campus projects, the most recent estimate given was for a $220 million revamp with a fall 2024 opening, up from a very rough estimate in 2012 of just over $100 million. Teardown wouldn’t start until July 2019. “We’re still working on the King Open School,” .Farooq said, “so there’s a little bit of time before that goes out to bid and a little bit of time for us to understand and determine whether any changes are needed on that project, and whether it’s on the project or the budget side will become clear.”

More broadly, “if the city needs to make any modifications to our policies, that’s a conversation we’re going to have once we understand the context a little bit better,” Farooq said.

Sue Reinert contributed to this report.