Boston Real Estate Leaders React To Gov. Healey's $4B Housing Bill

Gov. Maura Healey Wednesday morning unveiled a new comprehensive bill to fill in the gaps of the state’s housing shortage through new funding, policy initiatives and more, a plan that commercial real estate leaders — for the most part — are backing.

The Affordable Homes Act, a $4B bill that aims to ramp up housing production and preserve affordability throughout the state, includes a variety of approaches to address the state's housing crisis and bring on a mix of affordable options throughout the state.

Several commercial real estate leaders Bisnow spoke with Wednesday said the bill is a step in the right direction to addressing the state's dire housing crisis, though some had concerns about the use of real estate transfer tax hikes to fund affordable development. 

“From Day 1, the Healey-Driscoll administration has made it clear that housing production was a big focus,” NAIOP Massachusetts CEO Tamara Small told Bisnow. “This bill is, I think, the largest proposed investment in housing in the state’s history. That’s pretty significant and exciting.”

The proposals in the bill, combined with housing tax credits that Healey enacted as part of her tax relief package earlier this month, would fund the creation of more than 40,000 new homes across Massachusetts, including 22,000 low-income and 12,000 middle-income homes, according to the press release. Provisions in the bill will also help to rehabilitate, support and improve 27,500 homes.

Massachusetts was ranked No. 41 on a list of states with the highest housing production last year, according to a Construction Coverage report. There were 17,697 new units authorized in the state last year, a 3.9% jump from 2020.

The bill would also provide support to the state's own housing portfolio by infusing $1.6B for repair, rehabilitation and modernization of more than 43,000 public housing units, as well as $150M in efforts to decarbonize 3,000 units.

“The cost of housing is the biggest challenge facing the people of Massachusetts,” Healey said in a statement. “We said from day one of our administration that we were going to prioritize building more housing to make it more affordable across the state.”

The bill also is pushing accessory dwelling units as-of-right across the state, estimating 8,000 of these units could be produced over a five-year period. In the past, the state has struggled to implement such guidelines for the units, leaving local governments to enforce those policies, the Boston Globe reported.

Boston Mayor Michelle Wu pushed forward with ADUs, most recently in the PLAN: Mattapan planning guide, and, as of 2018, 68 towns legally allowed them. The bill would allow units less than 900 SF to be built as-of-right, though communities could make “reasonable restrictions.”

“The accessory dwelling unit provision should be an instant success,” Nubian Square Development Managing Director Richard Taylor told Bisnow in a statement. “Other elements that should be applauded include the new Homeownership Tax Credit, the $100 million for Mixed - Income Housing and $100 million for the Commonwealth Builder program.”

Boston Communities principal Phil Cohen, whose firm develops mixed-income housing, said another major win for the affordable housing sector is the funds targeting homeownership development.

“This bill has many different types of [state] funding in it that can supplement tax credits and make those projects work,” Cohen said. “It's pairing those with the tax credits that, when combined, allow us to pay for land and construction prices, which have gone up, and interest rates have gone up a little bit as well.”

Another $1.8B in the bill would go toward programs that would further help to fund and preserve affordable housing creation, including $800M toward the Affordable Housing Trust Fund, $425M toward the Housing Stabilization and Investment Fund, $175M for HousingWorks Infrastructure Program, $100M for CommonWealth Builder, $100M for Mixed-Income Housing and $50M for the Momentum Fund.

“The Healey-Driscoll Administration has and continues to exhibit their commitment to promoting development and safeguarding the current affordable housing stock,” Ralph Parent, managing partner at Parent + Diamond, said in a statement to Bisnow. “Their tireless efforts signal a promising future for housing security and accessibility across our region.”

In addition to proposing the spending and policy changes, Healey announced three executive orders as part of the package. The orders will create the Housing Advisory Council to develop a statewide housing plan and the Unlocking Housing Production Commission to develop recommendations to streamline the process, and they will direct state agencies to create an inventory of state land suitable for housing development.

Urban Land Institute Boston/New England Director Catherine Rollins said the three executive orders are a positive addition as they will help to streamline the housing creation process.

“By developing a statewide plan, which we haven't done in some time, if ever, then we're going to have a shared vision and understanding that I think will actually go a long way to actually developing and building housing,” Rollins said.

One area of concern lies with the bill's proposed real estate transfer tax changes, which would allow local jurisdictions to tax 0.5% to 2% of property sales over $1M, or a county's median home sale price. The money would be used to fund affordable housing developments in communities, but some commercial real estate leaders said they don't think it will help support homeowners and the housing crisis.

“Our concern is that those homeowners that would be hit with the tax are just going to mark up the price of their homes, only worsening our housing crisis and making it more expensive to buy a home in Massachusetts,” NAIOP’s Small said. “I think if there's something in there that could, in fact, worsen the housing crisis, you might wanna reconsider that one.”

Greater Boston Real Estate Board CEO Greg Vasil said the organization applauds the administration for taking action on housing, but it also has concerns about the tax aspect of the bill. 

“While we support the goals of the bill, we have deep concerns about the inclusion of a sales tax on real estate,” Vasil said in a statement. “It’s an unstable source of revenue that would cause more harm than good at a time when people and businesses are leaving the state because it is just too expensive. We look forward to analyzing the details of the bill and working with the administration on our shared goal of creating more housing for the residents of this state.”  

CORRECTION, OCT. 19, 4:40 P.M. ET: A previous version of this story inaccurately described Cohen's comments on the state's funding proposal. The story has been updated.