A Housing Crisis is a Terrible Thing to Waste

Today is National Housing Day in Canada.? Twenty-five years ago, our neighbors to the north recognized the related emergencies of homelessness and housing affordability and established November 22 as an annual awareness-raising day.? Here in the United States, we have no such “holiday.”? Sure, the traditional end-of-year celebrations of Thanksgiving, Hanukkah, Christmas, Kwanzaa, and New Year’s Day give us pause to think of those in need and motivate us to contribute our charitable resources to ease these crises.

Of course, there are countless housing advocacy organizations who do their critical work throughout the year, and there are those public sector, private sector, non-profit, and institutional actors who actually develop the housing that’s needed to meet the insatiable demands of the market.? That’s not easy work at all, especially if you have to navigate the constant headwinds of tax credit competition, rising interest rates, spiraling construction costs, supply chain challenges, and the ever-intractable permitting processes with unhealthy doses of NIMBY-ism.?

In Massachusetts, there isn’t a day that goes by without a media story about our own brand of the housing crisis that we face in the Commonwealth.? Over the past several years, there’s certainly been significant attention paid to the issue by the legislative and policy priorities of Governor Baker and now Governor Healey.? With the 54-year-old Comprehensive Permit Act (Chapter 40B) as a foundational tool, Governor Baker championed the Housing Choice Legislation passed in 2020 that now, among other measures, requires “MBTA Communities ” to adopt zoning districts that allow by-right multi-family development with certain criteria.? The stick for not doing so is the withholding of discretionary grant money from scofflaw communities.? More recently, Governor Healey and Lieutenant Governor Driscoll have been out on the stump touting their newly unveiled Affordable Homes Act (aka “Housing Bond Bill”) which promises to spur and leverage new investments in the affordable housing market with public funds.

These are all laudable initiatives.? But something seems missing.? And here’s where I’m going to get a bit wonky, so bear with me.

For all the solutions to the housing crisis coming from Beacon Hill, almost all of them are aimed at local zoning reform (mostly deserved) or enhancing the pool for capital and financing resources (badly needed).? Perhaps the most wide-reaching of the two policy prongs is local zoning reform, with the hope of loosening and streamlining the arduous permitting and approval processes of our 351 cities and towns so that housing starts are delivered more rapidly to meet critical demand in real-time.?

There is no doubt that time is money in the real estate development world, and nothing costs more than a protracted battle in front of a Town Meeting, City Council, Planning Board, Zoning Board of Appeal, Board of Health, and/or Conservation Commission – not just in the costs for attorneys, engineers, architects, and other consultants, or in the carrying costs of the investments, but in the astronomic escalation of construction costs and interest rates that accrue for the duration of these dramas that can take years to conclude – sometimes after lengthy legal appeals and litigation.? When a pro-forma tilts out of balance and the delivery of the project misses the market because of these dynamics, the housing project won’t get built.? Period.? For ill-sited and ill-conceived housing proposals (yes, there are some), perhaps that’s an appropriate result (and I fully recognize the subjectivity of the terms “ill-sited” and “ill-conceived”).? For well-sited and well-conceived housing proposals, however, that's not an appropriate result and is Exhibit A of why the crisis exists.

Setting local permitting aside for the moment, I have another idea that I think can help, but it requires leaders in the executive and legislative branches on Beacon Hill to glance in the mirror as they contemplate handing down zoning reform mandates from on high.? And here’s where I really get into the wonky part:? In addition to local zoning requirements, state government itself also plays an essential and sometimes outsized role in permitting real estate development projects across the Commonwealth, including housing projects of all types.? Most notably, the process requirements of the Massachusetts Environmental Policy Act (MEPA) loom large over any housing project that requires a State Agency permit and triggers relevant thresholds for review.? A typical modest-sized housing project that’s subject to MEPA is allowed to proceed with State Agency permits after an initial screening and public comment process concludes through the review of an Environmental Notification Form (ENF), which typically takes a few months.? Okay, fine.? A larger housing project that’s subject to MEPA review is allowed to proceed with State Agency permits only after much more comprehensive analyses, documentation of impacts, and negotiation of proposed mitigation measures on wide ranging scopes of issues.? Such a project is reviewed rigorously through Draft and Final Environmental Impact Reports (EIRs) – sometimes with multiple iterations – that can stretch for many months to a year or more.? These MEPA process scenarios are well-trodden and “part of the price of doing business” in Massachusetts for housing developers.? And it’s all well and good.? Except when it’s not.

There’s another fairly recent twist to the MEPA review process for housing projects that is objectively counter-productive and perverse.? Remember that relatively simple scenario where a housing project only needs to be reviewed through an ENF?? You know, the scenario that takes just a few months, and the sunlight of state-level public review makes it a better project as a result (in theory)?? Well, if that housing project is located within one mile of a mapped Environmental Justice (EJ) population, the review of the project is automatically elevated – by regulatory definition and geography – from a fairly simple ENF review process to the more complicated full-blown review of both a Draft and Final EIR.? A few months then turn into many more months, a year, or longer.? And after the MEPA review process is completed, only then can the state agencies act on their respective permits on their own respective timelines.

Now, I’m not arguing the efficacy of enhancing EJ considerations for impactful infrastructure or industrial projects – especially noxious ones like landfills, treatment plants, power plants, highways, rail yards, or “dirty” manufacturing.? But why should a modest housing project located in proximity to an EJ population (which are disproportionally concentrated in and around our economically challenged Gateway Cities ) be subject to months or perhaps years of state review process where it otherwise would not be subject in another location?? What is equitable about that? ?And what exactly is so noxious and acutely impactful about a housing project that the MEPA process needs to interpose in such a drastic way?? Can’t the respective state agencies – MassDOT or MassDEP, for example – be trusted to use their judgment in their own highly-regulated permit decisions?? Aren’t these projects supposed to be part of the solution to the housing crisis by delivering units of all types – market-rate, affordable, and low-income alike – and providing construction, management, and service jobs as well as property and sales tax revenue to the host community and the Commonwealth?? Especially in places like Gateway Cities?

I’ve heard directly from several housing developers that they simply won’t invest in or advance modest housing projects that are subject to MEPA in proximity to EJ populations because of the cumulative costs of the elevated MEPA review that's now required.? That’s not out of any elite bias or anti-regulatory spite.? That’s just plain and simple math and economics.?

So, I propose this as state government’s part of the housing crisis solution:? Suspend the MEPA regulations – by Executive Order or by amending the statute or regulations altogether – for any proposed project that includes 600 or less multi?family housing units of which at least ten percent are made available for households earning eighty percent or less of the applicable area median income and the monthly rental rates for these units are limited in accordance with applicable federal, state, regional, or local laws, regulations, policies, and guidelines.? The 600-unit number isn’t arbitrary.? It’s about the density at which 2,000 vehicle-trips will be generated in an urban transit-oriented environment, which is the normal threshold for requiring an ENF-level of review if the project requires a MassDOT access permit.? If it’s much larger, it deserves more scrutiny.? If it's not, it deserves to be permitted expeditiously.? If the suggested suspension of the MEPA regulations is accomplished by Executive Order, let it take effect immediately and have it continue for at least seven years and beyond until the Governor determines that substantial progress has been made towards achieving the production of 200,000 housing units statewide by 2030 (the consensus policy goal) from the date of the order.

Solving the Commonwealth’s housing crisis requires a partnership among all actors – developers, citizens, municipalities, and state government itself.? We’re in a crisis right?? Let’s not let it go to waste.