Banker and Tradesman: Wu Seeks Sweeping Changes to Development Costs in Boston

Dec 15, 2022

By Steve Adams, Banker & Tradesman Staff

The following is content from an article originally published in Banker and Tradesman.

In a series of proposals affecting major developments in Boston, Mayor Michelle Wu announced her support for requiring more affordable housing and higher linkage fees for commercial projects.

Under the first update to the city’s inclusionary development policy since 2015, multifamily projects will be required to include 20 percent income-restricted units, up from the current minimum of 13 percent. The policy also would be extended to smaller projects with as few as seven units, down from the current 10.

“We are using every tool that the city has to urgently address Boston’s housing crisis,” Wu said in a statement.

But the head of the Massachusetts’ commercial developers group said the changes could come at an inopportune time, as multifamily developers already face strong macroeconomic headwinds.

“We are a bit concerned with the timing,” said Tamara Small, CEO of NAIOP MA. “It is incredibly hard to build housing right now, given construction costs and continuing rising interest rates. We certainly will be examining the potential impact on housing.”

And the state’s life science industry group, MassBIO, said it’s been warning against increasing the costs of doing business in Boston further, as demand for lab space declines from its recent record levels.

“When costs like this go up, rents go up. That being said, we also recognize that the long-term competitiveness of the Massachusetts economy depends on the affordability and availability of housing, and a strong and diverse workforce pipeline,” MassBio President and incoming CEO Kendalle Burlin O’Connell said.

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