Could a fresh perspective on new construction solve Boston’s housing affordability crisis?
Boston’s Department of Neighborhood Development (DND) has a plan in store that may bring much-needed relief to the city’s housing affordability crunch.
Under the plan, which, according to a Boston.com report, is dependent on legislation recently filed on Beacon Hill, the DND would sell discounted land along the Red, Orange, Blue and Green MBTA lines to developers, who would agree to build affordable housing for middle- and low-income residents.
Sheila Dillon, Boston’s housing chief and head of DND, said the plan would yield considerable supply.
“We are talking thousands of units,” she said.
Supply and Demand in Boston’s Housing Market
The DND’s proposal comes as part of Mayor Marty Walsh’s grander affordable housing initiative, which seeks to encourage construction in Boston’s neighborhoods and ultimately add 53,000 new housing units by 2035 (20,000 of them for middle-class residents); currently, construction efforts are focused in Boston’s Downtown, with the resulting luxury apartments and condos being far too pricey for middle-class consumers.
And GBAR’s latest report certainly made clear just how badly Boston needs affordable housing options. As we reported, since 2013, the median price for single-family homes is up 17.3 percent, and for condos, it’s up 20 percent; meanwhile, housing affordability in those sectors has fallen by near identical amounts, dropping 18.3 percent for single family and 20.6 percent for condos, and worst of all, single-family inventory is down 30.3 percent and condo inventory by 39.04 percent.
In ‘Related’ News
The DND is hardly the only game in town with its sights set on affordable housing. According to a Boston Globe report, Related Beal LLC haas revealed a plan for a 14-story, $225 million building near TD Garden; the structure would feature 239 affordable apartments, with half going to middle-class residents (who make between 120 and 165 percent of median income) and the rest to low-income residents (who make between 30 percent and 120 percent).
“This is a new model we hope will be replicated in Boston and other cities around the country,” said Peter Spellios, the company’s executive vice president, in the Globe‘s article. “We had an opportunity to do something unique and creative to address the extreme lack of affordable and workforce housing downtown.”
How can Related profitably pull off such a structure, though? Unsurprisingly, the accounting behind the project is creative, to say the least. Related only owns a small portion of the proposed site for the building; the rest of the site belongs to Massachusetts’ Department of Transportation, and Related is banking on the department to lease the land for below market value. Also, Related will file for local, state and federal tax credits, and the building will include 10,000 square feet of retail space and a 220-room hotel, both of which factor heavily into the developer’s margins.
If all goes according to plan, Related could begin construction as early as December.