How Wu's incentives to build housing work
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Photo Illustration: Brendan Lynch/Axios. Photo: Pat Greenhouse/The Boston Globe via Getty Images
Boston's tax breaks for new housing construction are one of five tools the city is considering to encourage development in a sluggish market, Mayor Michelle Wu told business leaders Wednesday.
Why it matters: Housing development has slowed since the pandemic, due to higher materials costs, tariffs, interest rates and, developers say, the city's affordable housing requirements.
- The Wu administration is considering drastically lowering its housing construction target from 13,000 in her first term to 3,000 in her second term, the Boston Globe reported last week.
Catch up quick: Wu announced this week that the city would offer a combined $100 million in tax breaks for developments 100 units or larger that haven't started construction because of financing hurdles.
- She named four projects that will get a combined $31.5 million in tax breaks for creating 1,400 housing units on the condition that they break ground by next year, as long as the planning board approves the agreements.
- The city is in talks with developers behind roughly a dozen projects.
State of play: Wu outlined a range of strategies in addition to the tax abatement Wednesday morning at a Greater Boston Chamber of Commerce event.
- They range from offering funds or loans from the Housing Accelerator Fund to flexible payment schedules for developers contributing to the Inclusionary Development Policy fund (often in lieu of setting aside 17-20% of units for affordable housing).
What they're saying: "We are in a housing crisis, and we need to use every tool that we have," Wu told Jim Rooney, the chamber's president and CEO.
How it works: The city's tax relief agreements would offer to keep developers' property tax rates flat during a three-year construction period, followed by one of two tax relief options.
- The first would limit a development's property tax increases by 2.5% each year over five years after construction wraps up.
- The second would create a 10-year tax payment schedule that would save a developer 50% on average on tax bills.
- The second option has the developer making smaller tax bill payments at first and paying higher tax bills by the end of the 10-year period, a city official tells Axios
Yes, but: Wu stopped short of reducing the affordable housing requirements, despite real estate and business leaders' calls to reduce the minimum to 10% temporarily.
What we're watching: The Boston Planning and Development Assessment Board is expected to vote on the tax breaks in October, following a 30-day public comment period.