Boston Mayor Michelle Wu’s State of the City speech last week generated consternation in some corners of the real estate community, as much for what she said as for what she didn’t say.
The decision not to move ahead – for now, at least – with any incentive program aimed at unsticking the city’s housing production pipeline created its fair share of disappointment.
As Scott Van Voorhis reports in his column, some in the real estate world are taking the mayor’s decision in stride. A report prepared by an expert team led by Harvard economist Ed Glaeser noted that too small of a program simply risked frittering away money on subsidies for the small number of units that could get built, anyway. In a city staring down the barrel of a major tax revenue problem, that’s hard to justify – especially when a vocal part of the mayor’s base would balk at anything perceived as a “giveaway” to developers.
Wu did not shut the door on any such tax or subsidy program in the future, either, stressing in remarks to reporters after her speech that she’s keeping a weather eye on interest rates, and could reverse her decision if they drop enough later this year.
But perceptions mean a lot in politics and in business, and the mayor’s reluctance to spend even a limited amount of political capital on even a small gesture of a program came across to some as an unwillingness to support market-rate building given that her speech also pledged to introduce a mysterious new “zero net carbon zoning.”
The mayor’s green building initiatives so far have piled big, expensive mandates on housing developers – many of whom are just trying to meet the city’s vast need for middle-class and affordable housing – at the same time that their expenses have skyrocketed due to increased affordability mandates, materials costs, construction labor costs and the price of capital needed to fund it all.
This mayor and the development community should be in alignment on so many things. Their values and goals – a fairer, more prosperous Boston that’s ready for the future and welcomes new housing with open arms – are generally shared. And to her credit, Wu has done real work in her second year in office to rebuild bridges burned by what business leaders say was her “stiff-arming” developers during her first year.
And most of all, she’s committed to putting a lot of political capital on the line this year to rapidly rezone the entire city and sweep away the tangle of zoning, sclerotic parts of Article 80 development review and other red tape that has historically hobbled housing production. To get a sense of the challenge she’s willingly taken on, look no further than an angry letter some of the city’s wealthiest neighborhood organizations sent her, demanding a stop to the mayor’s program. Then, remember that as-of-right development rules would gut one of the biggest political levers neighborhood groups possess.
Wu is essentially asking developers to trust her over the next year as she tries to achieve things previously considered pie-in-the-sky dreams. But it’s hard for some parts of the real estate community to give that trust thanks to what’s come before.
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