Landers: Housing affordability crisis threat to city's growth, establishing roots
Worcester has a housing affordability crisis that is threatening the city’s impressive growth over the last decade and limiting the ability of people to establish roots in the community.
In trying to deal with this crisis, the city administration has come up with a plan that will address the affordability problem head-on by creating both more affordable and more market-rate units. Unfortunately, that well-intentioned plan has been derailed by the city’s Planning Board, which has freighted it with conditions that will likely prevent the construction of new housing units at a time when they are desperately needed.
When done right, so-called inclusionary zoning can boost the affordable housing supply by having builders set aside a small percentage of new, multifamily residential construction for families earning below the area median income and charge rents no more than 30% of their income.
The city administration’s inclusionary zoning proposal would require that builders constructing more than 12 units set aside 15% of their development to renters or buyers who earn up to 80% of AMI, or 10% of the development for those earning up to 60% of AMI. If the builder chooses not to build affordable units, they can pay 3% of the project cost into the city’s Affordable Housing Trust Fund.
The city has wisely created incentives so that developers who take on the public need of constructing more affordable units will be able to include more units in the project than would otherwise be the case. The proposal also included some parking incentives for developers.
At a recent meeting, affordable housing advocates called on the Planning Board to go further and presented a specific proposal for doing so. The board then recommended passage to the City Council – but added some troubling caveats to the draft ordinance. They recommended adoption of a mandatory 50/50 split between the 60% AMI and 80% AMI units, with 10% of units set aside as affordable. The board also recommended increasing the pay-in for developers opting out of building affordable units to 5% of the project cost.
Worcester is in the midst of a development boom. Hundreds of units of housing have been constructed and hundreds more are proposed. Even still, that will not be enough to meet the need for new housing, due to years of low building activity not only in Worcester, but statewide.
The Planning Board’s recommendation, if adopted by the City Council, will have what Worcester Business Development Corp. President Craig Blais called a “chilling effect” on the production of new housing in Worcester.
Builders who are forced to follow a rigid formula as has been proposed by the Planning Board will have a harder time making their projects economically viable, risking their chances at getting the financing needed to make the new homes a reality. For those opting out, taking 5% off the top for the contribution to the affordable housing fund is altogether unsustainable. Contrary to frequent misperception, home builder margins are quite modest.
The practical effect of a broadened inclusionary zoning proposal is that projects won’t get built and Worcester’s housing stock will not grow. Builders looking to meet the need for more housing will go instead to neighboring communities where the cost of doing so is lower.
The housing affordability crisis is very much a supply-and-demand problem: The demand for housing is outstripping the supply because there has been an underproduction of housing for decades. The only solution to the problem is, clearly, more housing – and lots of it.
The City Council should pass the original inclusionary zoning proposal from the city administration because it will boost housing stock of all types.
Joe Landers is the executive officer of the Home Builders & Remodelers Association of Massachusetts.
This article originally appeared on Telegram & Gazette: Landers: Housing affordability crisis threat to city's growth, establishing roots
