[00:00:00] Joe Selvaggi: This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. The high cost of housing is often the top reason why so many people choose to leave Massachusetts or decide to live and work elsewhere. In response to this ongoing challenge, Governor Maura Healey has just signed a sweeping 5. 2 billion housing bill.
[00:00:28] This ambitious bill aims to jumpstart housing production across the state. with a focus on significant investment and zoning reforms. It allocates 2 billion for the modernization of over 40, 000 public housing units and provides funding for innovative green housing initiatives. Notably, the bill also introduces statewide zoning changes, such as allowing accessory dwelling units in single family zones, which will override local regulations where such restrictions currently exist.
[00:00:54] While the bill’s passage is a step forward, some proposed measures didn’t make the final cut. such as the local option transfer fee for high value real estate transactions, which could have made developing property in the Bay State more costly and less attractive. As the dust settles, supporters and critics alike are left to assess whether this comprehensive legislation will truly address the long-term cost of housing in Massachusetts.
[00:01:17] Did this bill strike the right balance? And does it go far enough to put the state on a more competitive trajectory? To help us unpack these questions, I’m joined today by Pioneer Institute’s Senior Housing Fellow Andrew Mikula. Mr. Mikula has written extensively on the high cost of housing in Massachusetts and the policy interventions that could address it.
[00:01:35] Together we’ll examine the features of the newly passed housing bill and discuss whether its likely impact on residential zoning and supply will be enough to contain and perhaps reverse the troubling trend of ever-increasing housing costs. When I return, I’ll be joined by Pioneer Institute’s Andrew Mikula.
[00:02:04] Okay we’re back. This is Hubwonk. I’m Joe Selvaggi and I’m now pleased to be joined by Pioneer’s Senior Housing Fellow, Andrew Mikula. Welcome back to Hubwonk. Andrew. Thanks so much for having me back, Joe. Well, it’s great. Like, last time we met, we had the webinar on housing, and I want to drag you back to the podcast to talk about the topic again, largely because we’ve just passed a very, very large housing bill, and I want our listeners to know that.
[00:02:29] To get into it, because you and I talk often about theory, how we could make housing a little more affordable for us here in Massachusetts. It’s a huge challenge, perhaps the number one challenge on everyone’s mind of how to afford their rent or their next house. And hopefully the legislature is doing things that might help everybody at every level.
[00:02:45] From higher income, middle income, and particularly low income in this particular bill. So, you’ve written extensively about what you, and perhaps thought would be wise to put into this bill. And now we’ve got a, uh, it passed on, I think it was August 1st, 5.2 billion. It spans over the next five years. So that’s a lot of money, $5.2 billion. So, for the benefit of our listeners that want to understand more about this, let’s talk about how the sausage was made. We’ve got a sort of a compromise between the governor’s vision of this, the house’s vision of this. The Senate’s vision. How does this process work? Before we get into the particulars, how does a bill become a law, you know, to do schoolhouse rock?
[00:03:29] Andrew Mikula: Right. So, very basically, the governor proposed an initial version of the bill last October for the legislature to debate that reflected her priorities, her administration’s priorities. As usual, it took until pretty close to the end of the legislative section on July 31st to move the bill forward. The House passed their version of the bill in early June, and the Senate passed a different version in late June.
[00:03:55] Um, and then the two branches of the legislature spent another They actually went beyond their own July 31st deadline. They kind of suspended their own rules so they could pass the final version of the bill on August 1st, like you said, and then a week later, Governor Healey signed it into law on August 8th.
[00:04:18] Joe Selvaggi: Okay, all right, so we’ve got everybody, you know, that’s how it’s supposed to work. Maybe if it’s just a little bit late. So, let’s, let’s take it apart a little bit. Again, everybody had their input and what finally passed was a compromise amongst the people. Those three, uh, uh, groups. Uh, so let’s talk about what made it in and then perhaps towards the end of our conversation, we’ll talk about what was left out.
[00:04:38] First, there’s about 2 billion in public housing. Again, that seems like a lot of money. How many people in Massachusetts are in public housing? I, you know, if you asked me, I really wouldn’t know with any, you know, even a range. And then what is this 2 billion intended to do?
[00:04:57] Andrew Mikula: Yeah, so that’s the biggest spending item in the bond bill, is intended to fund maintenance and upkeep of public housing units, home to about 70,000 Massachusetts residents, so that’s 1 percent of the state’s population.
[00:05:10] Housing activists have fought for a couple years now to improve living conditions in these units. Like, they’ve, they always have, but they’ve been really focused on it in the past couple years. Most of these units were built in the 1970s or earlier and haven’t been particularly well maintained over time.
[00:05:28] Some of them have safety hazards. I, I personally think we should keep the promises we’ve already made to residents of public housing in terms of the safety and quality of those units. But in the long term, they might be easier to maintain if we redeveloped more of them into mixed income properties with more units.
[00:05:45] It’s just hard and inefficient for a lot of small, local housing authorities to take on projects like that. So that’s why the state needs to step in the meantime and help maintain them.
[00:05:57] Joe Selvaggi: Yes, I tend to agree. I know of the public housing units in the South End, they’re not in a good state of repair. I know doors don’t work.
[00:06:04] Elevators don’t work. People with special disability issues can’t get up and down stairs. So, as you say, I think we owe it to people to keep the promises we’ve made in the past and rehabilitate those units. Say more about how these whole things, these are managed. You and I have talked about public housing, but there’s a range of housing and how they’re managed.
[00:06:23] So, let’s take it apart, how they’re managed, there’s some are managed by small housing authorities, some by larger, describe for me the range of everything from units that are built and managed entirely by the state and perhaps some sort of, you mentioned the word hybrid, describe to us what that looks like.
[00:06:41] Andrew Mikula: Yeah, so I mean, there are a lot of, there are a lot of local housing authorities in Massachusetts that are managing these units. Some of them are very small, only have maybe a hundred or so. Others have thousands. I think the Boston and Cambridge housing authorities are the largest, and some of them are particularly aggressive at finding creative ways Financing and redeveloping their housing units to update them.
[00:07:09] Cambridge in particular has a bunch of creative solutions for that. I won’t get into it. That might be beyond the scope of the podcast, but in general, the bond bill doesn’t, isn’t changing how public housing is built or managed, but it does include 200 million dollars. To help finance a so-called demonstration program to revitalize public housing in a way that reduces the need for future state funding.
[00:07:35] So I think that’s potentially a good use of bond bill money. You’re funding the redevelopment of public housing in a way that raises the quality of the units, adds supply, and is designed to make the operation of public housing more self-sufficient in the long run. And like I mentioned, that’s, a lot of it is about mixed income units. More units to take advantage of economies of scale.
[00:07:56] Joe Selvaggi: Right, so if I’m hearing you properly, big cities have big resources and perhaps can tackle these problems, and they have more resources, so they might be able to come up with more creative ways. I want to throw you a curveball. I would love to hear, have you read something where we talk about innovation in public housing?
[00:08:14] Three cheers for that. Any ideas on like, major breakthroughs or new innovation that you’ve read of in your research? Again, I didn’t. I didn’t let you know I’d be asking such a question, but I’d love to know, and I’m sure our listeners would like to know what other than these, what I say, not very attractive brick Blocks. They look more like military bases than they do homes. What innovations have you seen that you find encouraging?
[00:08:38] Andrew Mikula: Well, I think when it comes to redeveloping some of them, you could partner with private developers, often nonprofits. I think a lot of the kind of financing related innovations happen around, so public housing authorities, I believe, have separate funding streams for operations and kind of capital projects that they pursue, and essentially, a lot of the innovation, and I would probably need to do more, you know, taking myself to understand exactly how this works, but my understanding is a lot of the innovation comes when they find ways of blurring those lines, basically. Between capital spending and operations funding.
[00:09:21] Joe Selvaggi: Right. Sure. Okay. All right. I saw quite a few references to entities I don’t quite understand. You may not go deep on any of these either. I saw literally hundreds of millions of dollars going to these trust funds. One was labeled Affordable Housing Trust Fund, Investment Trust Fund, Housing Innovations Trust Fund, Middle Income Trust Fund. How do these entities contribute to creating or sustaining affordable housing? And again, I’ll jump ahead and say, by your estimation, do these things work?
[00:09:48] Andrew Mikula: Yeah, I mean, it depends. So, some of those funds will lead to some housing creation, but in general, pouring money into public subsidies to facilitate new home construction is not really a scalable solution to the housing crisis in my mind.
[00:10:06] Using that funding to buy or renovate or preserve existing housing would be more cost effective, but most of the money is going to Go to building new housing. I’m not familiar with the allocation plan for all of these funds in the bond bill, but I know that there’s a cap of 30 percent on the low-income housing tax credits in Massachusetts going towards preservation projects.
[00:10:31] Um, to be clear, we do need to build a lot more housing. It’s just that we need that new construction to happen in a scalable and efficient way. So, income restricted housing costs. More on average than market rate housing to build, because it’s harder to get financing, and the financing sources that are available for it come with a ton of programmatic and administrative requirements that tend to raise costs.
[00:10:57] So really, the private sector is best equipped to build the new housing, and the non-private sector and some government agencies are best equipped to keep existing housing affordable, renovate it, refinance it, de restrict it, et cetera. But these bond bill items don’t really tell us how much new production is and how much is preservation in and of themselves.
[00:11:18] Joe Selvaggi: That’s a profound statement. The idea that private building costs substantially less than public, I guess I might intuitively say, yeah, of course, when the government gets involved, things get really expensive really fast. But just, I want to put an underline on that, which is to say, A lot of the obstacles to more, let’s say, livable public housing is government imposed, right, with all the conditions, A, it’s hard to get financing, but B, all the conditions that are imposed on the people building this make it less likely to happen.
[00:11:46] I also want to tie in, it’s actually an article or a research that you had sent to me saying that in some cities, I think the research you sent me was, it was Denver. Their observation was for every new affordable unit built, two had essentially, in a sense, been abandoned because of poor state of repair.
[00:12:02] So in a sense, we’re holding back the tide with a broom. We’re building over here and losing it over there. It seems like a losing battle. Say more for our listeners. Why is it that we are building only half as fast as we’re losing public housing?
[00:12:14] Andrew Mikula: Yeah, I’m not totally familiar with the situation in Denver, in terms of losing it to poor state of repair. I think in Greater Boston, what’s probably a bigger issue is that we’re losing naturally affordable, naturally occurring affordable housing that’s not subsidized, but just as older, maybe smaller in kind of B market locations. Um, we’re losing that sort of housing to general price appreciation faster than we can build kind of capital A subsidized new housing.
[00:12:44] That’s affordable. And so, I think that this, so much of the kind of zeitgeist around housing affordability, especially when it comes to, say, Massachusetts politics or the legislature, is geared around creating new affordable housing. When really, it’s like there’s a leak in a fish tank and the legislature is taking an eyedropper and putting water on top of the fish tank to keep the water in. When really, we should be plugging the hole and finding ways of preserving affordability in this existing housing stock.
[00:13:17] Joe Selvaggi: Yeah, indeed. And that’s an interesting concept to say, well, we built some housing because of the nature of supply and demand. It’s a constrained supply. So affordable housing isn’t affordable for long if everybody wants it. Right? So, it’s almost like upward filtering rather than downward.
[00:13:32] Andrew Mikula: Assuming it’s not deed restricted in some way.
[00:13:35] Joe Selvaggi: Right. Okay. Fair enough. Most isn’t. Yeah. So, I also saw some reference to environmentally conscious housing projects. This makes my spidey senses tingle, because I think to myself, we want more, uh, look, we all love the environment, but as soon as you put environmentally conscious as your adjectives, the cost of these affordable units goes up substantially, which is by definition, it means the quantity goes down. Do you want more? I’m not saying you have to be, you know, gratuitously harming the environment to do that, but when you put these conditions, just as you described earlier, you have to have heat pumps instead of ordinary air conditioners. It may be greener, but it’s going to be more expensive and therefore less available. What would you say? What do you know about those conditions?
[00:14:20] Andrew Mikula: Yeah, I think provisions like this in the bond bill are a good example of how legislators have a myriad of different goals they’re pursuing when they pass bond bills like this. Like other spending items in this bill, the funding for environmentally conscious housing could go to several different types of projects, new developments, renovations, et cetera.
[00:14:41] My research doesn’t usually focus on the best way to reduce housing omissions. But if the ultimate goal is affordability, then hypothetically, these kinds of green energy retrofits could help lower utility bills for existing affordable housing residents, and the state or other government entities could also see those cost savings if they use the money for retrofits in public housing, for example, that they own and pay the utility bills for, hypothetically.
[00:15:11] But it’s also possible the state is going to use this mostly for new construction of energy efficient homes. Which is probably not the most cost-effective solution in my mind. As for the first time homebuyers’ program, I think down payment assistance, programs that need a kind of marginal influx of capital to get individual buyers over the hump, is preferable to using public financing to build new units specifically for first time homebuyers.
[00:15:37] Right, that’s an analogous situation to the environmentally conscious housing provision in the bill, because it’s, again, it reflects the fact that there’s a lot of goals beyond just broad-based affordability here.
[00:15:51] Joe Selvaggi: Yes, indeed. Again, I didn’t hit on the first-time homebuyers, but again, we have a lot of young people starting out. They want to get that first rung on the housing ladder. They want to buy. And what you’re suggesting is, rather than try to design and build some public Housing design for first time homebuyers is far more effective, perhaps, to provide financing for first time homebuyers to buy in the market rates. Is that what you’re saying?
[00:16:18] Andrew Mikula: Yeah, the intervention from the state should come on the demand side rather than the supply side for issues like that.
[00:16:25] Joe Selvaggi: Indeed, I know some people who’ve taken advantage and it’s actually quite good for the city for first time homebuyers. The problem is the byzantine process means, you know, you have to have an advanced degree to be able to navigate the system to be able to take advantage of those first-time homebuyer programs.
[00:16:41] But that’s a subject for another podcast. So again, I want to talk really very positively about this for the first part of our show and then pivot to what I don’t like, or perhaps you don’t like about this bill. But one thing I really was encouraged by, perhaps my favorite part of it, it was the approval of something we’ve talked about, ADU’s accessory dwelling units, which, I think it seems like it’s a statewide legalization of these ADUs, wherever you want them, and all kinds of other provisions that say, look, if you own a property, and you want to put a, what do they call it, an in law unit, or whatever friendly word we want to put on there, this can help a great deal. I mean, essentially one, one home can become two homes, or what does this bill say about it, and what do you have to say about approval of ADUs?
[00:17:24] Andrew Mikula: Yeah, so first of all, for those who don’t know, Accessory Dwelling Units, or ADUs, are basically small rental units of housing that can be found in the same lot, the same property, as a principal dwelling, single family home.
[00:17:38] Oftentimes they’re in backyard cottages, or basement, detached garages, or what have you. The bond bill basically preempts municipalities from outlying ADUs up to 900 square feet. Or half the size of the main house, whichever is smaller. So, municipalities can’t ban them. They have to let them under the same rules that they have for, by the same dimensional standards, et cetera, they have for, say, a pool house or another type of structure on your lot.
[00:18:11] Um, they also can’t make owner occupancy requirements for them, which could help make it easier to finance them if you’re a homeowner who wants to build one. Um, and municipalities can only require one additional parking space. So, I agree that this is a great idea, Joe. I think ADUs are among the most incremental, non-disruptive, flexible in use, low-cost type of housing that fits in almost any Anywhere, almost any existing neighborhood.
[00:18:46] Joe Selvaggi: Sure, and I won’t bang on about it. Of course, it also is respect for property rights of people who want to do this in their own property, but it substantially increases the number of people who can live in our wonderful state without making substantial changes to anything.
[00:18:59] Right? You’re just, it practically already exists. You’re just allowing people to house somebody else in the space you already have, or you could modify to have. All right, so three cheers for that feature. Now let’s pivot to some of the stuff I don’t like, uh, and I would love to hear your view. I’m really uncomfortable with this idea that we now and you can set me straight if I’ve got my facts wrong, we now seal the records of people who have been Legally evicted from their property so that future landlords will not know about this.
[00:19:29] Not unlike someone’s criminal record being concealed from future employers or future landlords. This is information that I assume had been public record that would no longer be public record that in a sense a landlord would not know that the person applying to rent there has been forcibly evicted from a prior home.
[00:19:48] I can understand the logic of wanting to either hide or expunge it from one’s record. But of course, there’s value in that information for the landlord. For the benefit of our listeners, how would you frame this as someone who studies this? Uh, is this a good thing? Uh, I, maybe I’m wearing my landlord hat, um, rather than my tenant hat, but what are your observations about the effect of this kind of, uh, limiting of access of, to information?
[00:20:10] Andrew Mikula: Yeah, so my understanding is it doesn’t automatically seal all eviction records. It just gives the courts more discretion to seal records in certain cases. So, I think the proponents of this policy just want tenants who were evicted for reasons that had nothing to do with their kind of personal conduct.
[00:20:31] To still be able to find quality housing. But you’re absolutely right that the tradeoff is, it becomes even harder to be a landlord in Massachusetts. You have to price the risk of, maybe this person was evicted, maybe this, maybe I don’t want them to be my tenant, into the rent now. But, yeah, so frankly, we’re going to need more people to be landlords in Massachusetts if we’re going to solve this housing crisis.
[00:20:55] But I’ll also say that I think this eviction record stealing provision didn’t go as far as it could have. And like I mentioned, the courts still have a lot of discretion in how they process these record sealing requests. So, we’ll see how it plays out over time.
[00:21:10] Joe Selvaggi: Indeed. Again, I’m sure everyone listening is thinking, oh, well, you know, I’m not going to cry a river for those poor landlords. But of course, if you make it harder to be a landlord, there’ll be fewer of them, which means there’s fewer properties to rent, which means you reduce the supply. The price of renting a property goes up, so it may not seem intuitive, but helping landlords helps tenants, and this does the opposite. But I’m glad you stipulate that it’s perhaps the court’s discretion as to which will be hidden and which won’t.
[00:21:38] Which will be public record. All right, let’s move on to another really bad idea that did not make it into the final version of the bill, which I’m thrilled about. We’ve all heard about this potential for a transfer tax, I think, as I know it. A 2 percent transfer tax on properties that are sold is worth more than a million dollars, and that goes for residential and commercial.
[00:22:00] Perhaps more commercial properties are in that over a million-dollar range, but I don’t know if you’ve kept up on current events. Andrew, but the average home in Massachusetts is knocking on a million bucks. So that’s a tax that would be incurred by everyone and make it more difficult, more painful to sell a home when we wish there were more homes for sale. So, it didn’t make it in there, but what would you say about the wisdom of a transfer tax?
[00:22:26] Andrew Mikula: Yeah, I think how it was sold is that it’s just another mechanism for freeing up more money to put towards affordable housing. And I think that the kind of reason why it was stopped is because it wasn’t just going to affect residential property.
[00:22:41] It’s also going to affect commercial property. And so, the commercial real estate industry fiercely opposed it. And they successfully argued that we’re already reeling from the aftermath of COVID and dealing with declining property values. Levying this transfer fee is going to feed this kind of urban doom loop effect that will deter people from investing in Massachusetts while evading the tax base further.
[00:23:05] Right, that’s their argument. And I think maybe that sort of effect is more relevant to Boston than other places. But I think Mayor Wu’s agenda in Boston was a big reason why the transfer tax was part of Governor Healey’s initial bond bill proposal. So, I don’t know if it’s in the cards for something like this to come back that’s more narrowly targeted just to residential property. But I think it was certainly the commercial real estate industry that had a huge hand in shutting it down this time around.
[00:23:35] Joe Selvaggi: Right, right. Well, again, we did cover the mayor’s idea of shifting more property tax towards commercial than to residential. Well, of course, they’re already paying two and a half times the rate that the residents are paying.
[00:23:47] And as you say, they’re a hard hit after COVID. Their property values have plummeted. Or half, imagine if any of our homes were, their value was cut in half, the pain it would cause to raise taxes or to impose a transfer fee was to add insult to injury in that case. I was also disappointed to see something that fell off that I thought was a good idea, and I’d be curious to hear what you think.
[00:24:07] There was a proposal, I think it was in the Senate, but it didn’t make it to the final version, which was to put money aside to help fund the conversion of commercial property into residential property. Again, as a resident of downtown Boston, I see a huge demand for residential, more residential property, and a surplus, perhaps, of commercial property.
[00:24:25] It would be nice. If some of those appropriate commercial properties could be used as fancy new condos, as we’ve all been to those factory, former factory buildings that make fantastic condos, what happened to that money and what are your thoughts on whether that was a good thing to leave out?
[00:24:41] Andrew Mikula: Yeah, I mean, I don’t know exactly why it wasn’t approved. I think it was the House that included it, but not the Senate. But there is a smaller pilot program in Boston right now that aims to convert office buildings in particular into housing, and the state has contributed funding to that. So, if that pilot program works well, it could potentially be scaled up.
[00:25:02] But frankly, I’m not sure that’s going to be the most cost-effective approach either, especially if the city is trying to prioritize units that have their own kind of bathrooms and kitchens, because it’s really expensive to add all that plumbing infrastructure to office buildings that. Right now, we usually only have one bathroom per floor and not really a full kitchen and whatnot.
[00:25:23] It might be better to pursue converting them into dorm style living for college counts. But I think that most of the programs I’ve seen that try to make these conversions work, that’s not who they’re targeting. They want deeper affordability, not just necessarily for someone who’s going to Harvard.
[00:25:44] Joe Selvaggi: Right. Right. That’s fair. So, I’ve vented my spleen here about what I didn’t like about the bond bill. I also said what I did like. What do you think, in your analysis, was left out? I really don’t know. Doug into what was there and what didn’t make it to the final version. I wouldn’t say this is your king for a day question, but if you had to write this, what do you think is important that was left out and then we’ll draw it back to a more generalized issue in that.
[00:26:13] Andrew Mikula: I’m going to talk about a provision that I thought was really interesting but took the wrong approach to tying housing towards to kind of infrastructure. So, there was this fascinating proposal to basically give a billion dollars to the Massachusetts Water Resources Authority, or MWRA, a quasi-state agency, so that they can expand their service area.
[00:26:38] And open up new suburban areas for development by basically expanding sewer and water lines into suburbs that previously relied on septic systems and local water sources. Um, I’m glad this wasn’t included in the bill. I think that it would take decades and billions of dollars before it actually facilitated the creation of housing at a, like, large enough scale to justify the upfront capital.
[00:27:05] I think it would make much more sense to allow for denser housing typologies and areas that are already served by the MWRA. That’s the approach that the state of Vermont took in a bill they passed last year. So even in a rural state like Vermont, you can build up to four units at a time pretty much anywhere that has public water and sewer service available, but in well amenitized transit rich suburbs like Newton or Medford, you can’t. So, it’s the sort of thing that I think would be cost effective and timely. Maybe not very politically expedient to change, but if I was king for a day, that’s probably what I would do.
[00:27:46] Joe Selvaggi: So, what you’re saying, the normal evolution of things is you build a bunch of houses in the middle of nowhere with septics. You get so many septics, it’s like, well, wouldn’t it be great if we had a sewer? They build a sewer, and it sort of comes after, after the development, over time. In this sort of suggestion, this MWRA suggestion would be, let’s build a bunch of sewers. And let’s hope then that there’s houses that are built around it to take advantage of them. And this is essentially putting the cart before the horse. Am I characterizing your argument fairly?
[00:28:15] Andrew Mikula: So, I think the beauty of my proposal is the infrastructure that already exists. It’s just matching the level of private development to the level of kind of public investment that already is there. Right, so you have communities that are, I’d say, kind of suburban in character.
[00:28:33] Or mostly suburban character, but still have access to this, or still rely on this regional water and sewer system that’s operating substantially below capacity, and you might need to like, on a local level, replace some pipes or to make that work. But that could largely be funded by developers, and it wouldn’t necessarily require a huge influx of capital from the state, like the proposal in the House’s version of the bond bill would. In a phrase, don’t expand the infrastructure, make better use of the existing infrastructure.
[00:29:10] Joe Selvaggi: That’s great, which is a great segue for me. I’m going to pull back then from the bond bill and talk about what you and I have discussed in the past, the need for more housing in the region, and we’re free market guys, we believe the market is wise, and largely the reason we have such expensive housing is the supply is constrained.
[00:29:26] Why don’t we have more supply? Largely the, um, The boogeyman in this morality play is zoning, and so this is my long way of transitioning to a discussion about the MBTA Communities Act, which is essentially saying, look, we’ve got, as you mentioned, good infrastructure, lots of lines, lots of places to places that people want to live that are already developed, but they don’t get to develop more because they have zoning constraints.
[00:29:53] The MBTA Communities Act, uh, you know, it’s, it’s separate from the bond bill, but related. The state wants to ensure that those communities that are on public transit and have easy access to Boston can and should build more. Where are we on that? We, we’ve talked about that in, in, when you visited the podcast in the past. Where are we there? And, and is there any way to tie the two together?
[00:30:15] Andrew Mikula: Yeah. So, the MBTA Communities Act is a state law that requires most municipalities in Eastern and Central Massachusetts. To create at least one district, one zoning district, where multifamily housing is allowed by right at a density of at least 15 units per acre, 1 5.
[00:30:33] So this law is going to help legalize more housing that, if built, could contribute to solving the state’s housing affordability crisis. All while facilitating better access to economic opportunities and services via transit. Implementation is very much still ongoing. Last time I checked, about 40 percent of the community is subject to the law.
[00:30:58] have passed zoning, needed to comply with it. Maybe another 8 or 10 percent or so have rejected such zoning at town meeting. Um, and the deadline for most of the communities overall is December 2024. Some smaller communities have until December 2025. But I think if you want to make a connection here, the bond bill is relying mostly on spending, some on policy like the ADU legalization, but mostly on spending to try to facilitate the bond bill.
[00:31:29] Housing Development. This MBTA Communities Act is Not focusing as much on kind of capital A affordable housing, it does allow municipalities to require capital A affordable housing to some extent, but what it does do is creates a framework for kind of regulatory reform and making sure that communities have Some allowance for denser housing at a time when it’s very difficult to make the kind of economics of building kind of middle market, single family homes work in a lot of kind of inner suburbs of Boston.
[00:32:07] Joe Selvaggi: Indeed. Okay. So, we’re coming to the end of our time. So, so let’s wrap it up with a bow and say, given we’ve talked about the bond bill, which as you say is spending and let’s say the MBTA Communities Act, which is encouraging zoning reform so that we build multifamily homes near transit lines. Are we on track?
[00:32:23] We clearly have a problem. The cost of homes is not related to the cost of nails and wood, necessarily. It’s a constraint on supply, and we want more supply so that everyone can afford a home here. Are we on track with these measures, uh, you know, to meet the unmet demand for new homes in our, uh, great commonwealth of Massachusetts?
[00:32:45] Andrew Mikula: Yeah, I think, ultimately, the answer is no, or at least not yet. Um, ultimately, the goal of that bond bill is to make sure that there is enough housing that’s affordable to lower income families and individuals. I think you’re talking about, at a broader level, moderating general price appreciation. They’re slightly different goals.
[00:33:08] But providing enough housing for low-income people would be much easier if we were simultaneously adding new supply at a rate that Greater Boston simply hasn’t done for decades. And in recent years, we’ve also faced a lot of barriers to building more housing, not just with kind of regulatory and political concerns, but also with high interest rates and construction costs.
[00:33:30] It is more expensive. The nails and the wood are more expensive. So, I honestly think this problem is going to get worse before it gets better, but a silver lining is that it’s gotten so much attention from the governor and the legislature in recent years, and the passage of this bond bill reflects that.
[00:33:51] When I was preparing for this piece, I actually looked up the value of the last housing bond bill that Governor Baker signed in 2018 was 1. 8 billion, so this is an almost tripling of money, and that reflects a kind of political consensus that this is a problem, and I think that Having that political consensus is the first step in longer, illicit reforms, or I hope it is.
[00:34:14] Joe Selvaggi: And the last question, again, this is a math issue, it’s 5. 2 billion, but it’s spent over five years, and it also has some constraints. How quickly does something like this roll out? It’s not 5. 2 billion in fiscal year 2025, rather, it’s over time. Share with our listeners, how much of this is actually going to hit a street near you?
[00:34:32] Andrew Mikula: Yeah, that’s a, I’m glad you mentioned that, because I didn’t really give that background. So, basically what the bond bill does is authorize the state to borrow the money, but what authorizes the state to spend the money, and that capital plan allocates only about 2 billion to housing, so most of this money is probably not going to get spent.
[00:34:54] It’s just a menu of options for the governor and her administration going forward to be able to adjust what they put the money towards to the moment, for the next five years. But you’re absolutely right, Joe, that there’s a big difference between putting something in a bond bill and having it in the streets.
[00:35:14] Joe Selvaggi: Right. So, they can borrow for these worthy projects. They don’t have to borrow for these worthy projects, but as you say, it’s the menu. They only can choose from the menu. They can’t order, uh, you know, you can’t order the steak in the fish restaurant, right? They have to stick to this as their framework for the next five years.
[00:35:30] Andrew Mikula: Absolutely.
[00:35:32] Joe Selvaggi: All right. Where can, where can our listeners find your, uh, your piece and your, your future research or work, uh, for, for future reference?
[00:35:39] Andrew Mikula: Pioneerinstitute.org is where I frequently post blogs, will cross list any op eds I write, and I have plenty more kind of in-depth policy briefs on the docket in the future.
[00:35:52] Joe Selvaggi: Okay, wonderful. Well, I hope you’ll join us again in the future, perhaps later. Uh, we’ll talk about the, um, uh, MBTA Communities Act at the end of the year when the deadline is passed, see how that’s going. So, thank you again for joining me, um, Andrew. This has been a great conversation, and I hope, uh, our listeners learned a few things.
[00:36:08] Andrew Mikula: Thank you so much, Joe. Always good to be back on Hubwonk.
[00:36:14] Joe Selvaggi: This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher. It would make it easier for others to find Hubwonk if you offer a five star rating.
[00:36:29] Or a favorable review. We’re grateful if you share Hubwonk with friends. If you have ideas or comments or suggestions for me about future episode topics, you’re welcome to email me at hubwonk@pioneerinstitute.org. Please join me next week for a new episode of hubwonk.
Joe Selvaggi talks with Pioneer’s Senior Housing Fellow, Andrew Mikula, about the recently passed $5.2 billion bond bill, discussing its key features and how it might impact the supply and cost of homes in Massachusetts.
Guest:
Andrew Mikula is a Senior Fellow on Housing at Pioneer Institute. Beyond housing, Andrew’s research areas of interest include urban planning, economic development, and regulatory reform. He holds a Master’s Degree in Urban Planning from the Harvard Graduate School of Design.