During Monday night’s city council meeting, councillors signalled that they planned to act quickly on policy proposals from the Community Development Department (CDD) to spur residential development along major corridors.
At issue is whether the city’s inclusionary zoning requirement is too large and has dampened construction. The zoning specifies that 20 percent of gross floor area in residential buildings of a certain size be used for affordable units. The CDD memo along with a report commissioned by Boston-based consultancy RKG Associates indicated that the current rate isn’t feasible for many projects due to high interest rates and construction costs.
“The report is very clear that the city does not have the ability to make every project feasible,” Councillor Patty Nolan said, but she noted the city could prevent development from slowing further. “Let’s very quickly discuss the various options in front of us in order to make some difference”
It’s the first time members of the city government have openly discussed reducing the rate this term. The current rate is the subject of two lawsuits from local developers – one in Superior Court, the other in Land Court – leaving many discussions about the policy behind closed doors.
Current CDD proposals only target projects six stories or higher, leaving areas most affected by the Multifamily Housing Ordinance (MFHO) the same. According to the RKG report, these taller buildings require steel frame construction materials, which are more expensive to build, dampening investor interest.
Lowering the affordable housing percentage could allow developers of new residential properties to make higher revenues by charging market-rate rent on more units. Other options proposed by CDD cut costs by reducing the cost of borrowing through a revolving loan fund or shielding projects from property tax increases. Another idea on the table is allowing developers to buy their way out of the up to half of the affordable housing requirement by contributing to the city’s affordable housing trust.
Councillors kept their remarks relatively brief in favor of discussing the options at length in the Ordinance Committee. But some councillors hinted at where they stood.
Councillor Ayah Al-Zubi was skeptical that lowering the rate would have much of an impact. “The biggest problems lie in the interest rates and the construction costs, which we don’t really have control over,” Al-Zubi said. “I will be focusing my time on helping our constituents directly [rather] than helping larger corporate-style developers.”
Councillor Cathie Zusy said multiple ideas were interesting, and that she had long favored creating a revolving housing production fund. “If we can help developers … pay less to borrow money, that would be a great thing,” she said.
Councillors unanimously voted to send the memo and report to the Ordinance Committee for further discussion. According to the city’s website, a meeting has yet to be scheduled.
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