Housing is critical to the viability of Middle Cities, because housing development is the ticket to bringing a younger demographic and spending power back downtown—and therefore to fiscal solvency. These cities are built for and the leadership in these cities comfortable with high-density construction, especially if funding for school costs is available.
Then why is there no 40R construction in these cities? The problem lies in the state requirement that all communities, notwithstanding the specific city or town’s attainment of the state’s 10 percent affordability threshold, deed restrict 20 percent of total 40R units to households earning no more than 80 percent of area median income (AMI).
Most of these cities easily exceed the state’s affordability goals. Holyoke more than doubles the state goal. Their problem is not that there is not enough subsidized and deed-restricted housing units, but rather that they serve as conglomerations of poverty. And 80 percent of AMI can be pretty low in Lawrence.
In these cities, the cost of construction often does not allow for even moderate profits to be made by developers—sometimes the cost of construction cannot be recouped based on expected sales prices.
The fact is, with the tight profitability in these cities, the requirement to sell a fifth of the projected units at below cost means that the numbers don’t work.
The state should opt for a policy change similar to the path it chose on locally managed pensions, basing its policy on a performance threshold: In those cities and towns that have already met the state’s 10-percent threshold, the adoption of 40R overlay zones should be permitted without any affordability restrictions and requirements.