The recent announcement by Boston Mayor Thomas M. Menino to issue an executive order addressing inclusionary zoning has sparked mixed reaction from real estate industry officials and affordable housing advocates.

For years the city has had an unwritten rule that at least 10 percent of all new housing units constructed in the city qualify as affordable housing or have money set aside for affordable housing in lieu of building affordable units. But after criticism over luxury units being built in the city with no affordable housing component, and with Boston playing host to rising rents in a hot real estate market, earlier this month Menino said he would put the promise to paper.

If we want to make room for new workers with new skills, then every town in Greater Boston will have to do more, Menino said during his state of the city address. For years the federal government has walked away from its responsibility to housing. It’s time for us to get back to demand they get back to it. In conjunction with going to the federal and state level for assistance, Menino outlined three goals for the year.

In addition to signing an executive order that requires one in every 10 new housing units to be affordable, Menino said he would ask the City Council to set aside one-third of the city’s property surplus fund – about $13 million – and put that money toward affordable housing.

Also, Menino said the city will grant special tax status for new buildings with 25 or more units that pledge to keep 10 percent of those units affordable. We’ll provide the tax relief, if you provide the housing, he said.

Though the idea of mandatory inclusion of affordable units may not sit well with real estate developers in Boston, Greater Boston Real Estate Board CEO Edwin J. Shanahan said the prospect of tax incentives proves to be promising, as does setting aside $13 million of the city’s own funds.

Inclusionary zoning provides a disincentive to develop housing in the city, Shanahan said. But the important difference here is Mayor Menino’s acknowledgement that it is a disincentive. That’s why he included the tax relief with the inclusionary zoning requirement.

He added that with the promise of tax relief and its own funds, the city has become more of a partner with developers. It brings [developers] to the table knowing the city has some money with which it’s going to participate.

In a report issued by GBREB several weeks ago entitled No Time to Lose in which it looked at possible solutions to the housing crisis in the area, inclusionary zoning was labeled as a disincentive. But, Shanahan said, other recommendations like tax incentives proposed by the mayor go along a similar line to what we proposed. He said the tax incentive would most likely be a Chapter 121A agreement, where the city forgoes the tax liability on a property, but the owner makes annual payments to the city in lieu of taxes.

I think developers will be much more likely to go ahead if they know exactly what their flat payment in lieu of taxes is going to be for the next 30 or 40 years, he said.

Not Far Enough
While developers may think an executive order addressing inclusionary zoning may be taking the issue a step too far, others maintain that step may not be far enough.

Generally, I think it’s a good idea, said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association, the non-profit umbrella organization for affordable housing and community development activities throughout Massachusetts. I think our preference would be for [inclusionary zoning] to be put in the zoning code. An executive order is never as strong, he said, adding that the orders could change from mayor to mayor. I think overall we’re supportive.

With projects like Trinity Place already under construction and other luxury housing developments in the works, Gornstein said the plan could be more aggressive in terms of securing funds in lieu of 10 percent affordability on high-end projects. But even with that sentiment, he added that the city would have to use discretion.

Gornstein said in most cases, more emphasis should be placed on getting 10 percent of the proposed units set aside as affordable instead of payments in lieu of units so the city’s affordable housing stock can be increased.

If someone’s trying to do a middle-income rental housing project, they should look very carefully at whether to accept in-lieu-of payments, he said. It’s a little different from when you’re talking about luxury buildings where the units are selling for over a million dollars. In those situations, it might make more sense to accept payments.

Like Shanahan, Gornstein agreed that having the city step up to the plate with a $13 million commitment was the right thing to do. The money will demonstrate the city’s commitment to the issue, and it will help when [Menino] goes asking the state for money, he said.

Also, both said their feelings about the proposed inclusionary zoning policy at City Hall are preliminary thoughts and reserved further judgment until the final version of the executive order is released.

A spokesperson from the city’s Department of Neighborhood Development said Menino is currently taking the views of both developers and housing advocates into consideration as he begins to formulate his executive order. There was no word on a date when that order will be issued.

Menino’s focus on housing is good news in and of itself, Shanahan said. When you look at Menino’s reign as mayor, he’s shown that he can follow through on his priorities.