As addressed in our prior advisory, Boston is reforming the impact review process in Article 80 of its zoning code. This process is analogous to “site plan review” outside of Boston, involving public review of a project’s potential impacts with respect to matters such as transportation, environmental protection, urban design, historic resources, and infrastructure systems. 

A key theme of the reform initiative is early community engagement. The current public process starts with a Project Notification Form filing to summarize a project proposal for a site and to study potential impacts. The proposed new starting point would be an Engagement Plan filing to describe how the developer would canvass the community about the site itself before pitching a conceptual design. In other words, the current process asks: what do you think of this project? The proposed process asks: what would you do with this site?

Consider a scenario where the community responds to canvassing about the future of a parking lot with a request for a public park, while the developer intends to pitch a mixed-use project (perhaps with a pocket park) at a later point in the impact review process. It may not be a winning strategy to push back against the community: “Open space is nice, but what about economic growth?” Still, is the point of public review: 

(i) to urban plan within the neighborhood context?

(ii) to address negative externalities of a proposed project with a few perks added in?

(iii) to calibrate neighborhood development with the basic understanding that growth is good?

The Engagement Plan correlates with (i). As to (ii), the range of expected commitments based on impact review typically encompasses mitigation, community benefits, and enabling infrastructure. What about (iii)? This typically gets a passing nod in project filings: “new permanent and construction jobs”; “new property tax revenues.” 

As projects are pressure-tested for neighborhood consistency with adequate mitigation, benefits, and infrastructure improvements, the social impact of economic growth can be underappreciated. Except Boston runs on growth—greater awareness of that might help communities, developers, and governmental authorities all feel on the same team as impact review proceeds.

Here’s how new property tax revenues play out: Between FY23 and FY24, Boston’s budget increased from $4B to $4.29B, covering the costs of public school, public safety, streets, salaries and benefits, pensions, state assessments, and debt service. Of the total increased revenue of $290M needed to balance the budget, a third of that was collected as real estate taxes on new commercial development. Without new commercial development, Boston would need to find other ways to plug a third of its annual budget growth. 

This dynamic is playing out in Boston’s spend down of American Rescue Plan Act (ARPA) funds, which became available during the pandemic. The Boston Municipal Research Bureau noted in a recent report that “some cities with diverse revenues [i.e., less reliance on real estate taxes compared to Boston], such as San Francisco and Philadelphia used 100.0% of their ARPA funds to replace lost operating revenues and offset budget deficits.” Boston only tapped 17% of its ARPA funds to plug the budget, and the rest went to “new programs and services.” 

One impactful ARPA-funded initiative is free buses. Routes 23, 28, and 29 (from Ruggles Station to Ashmont Station and Mattapan Square) have been fare-free since March 2022, with additional ARPA funds allocated to keep them fare-free through March 2026. Did real estate taxes pay the bills, so Boston could give free public transit a test run (among other things)? Partially, yes—aside from new development covering a third of Boston’s increased spending as described above, Boston’s overall real estate portfolio funded 71% of Boston’s FY24 budget.

Back to impact review reform—in addition to bespoke Engagement Plans, the Boston Planning Department envisions training Community Advisory Teams (CATs) to “[b]uild up a cohort of new community leaders who can effectively participate in detailed project review.” CATs would be trained in the topic areas of “mitigation, urban design, planning principles, etc.” Adding the social impact of economic growth to this topic list would empower CATs to consider Boston’s need for developer expertise in turning parking lots into economically viable projects.

While economic growth has its place, impact review should not be watered down for its sake. For example, to address housing affordability, increased production to overcome scarcity is important. Yet focusing solely on this growth approach to lower rents and purchase prices presents challenges, including the fact that rising rents and purchase prices are exactly what drive free market production. As one solution (among others), inclusionary housing requirements applied through impact review deliver affordable and market-rate housing at the same time by income restricting a percentage of multifamily project units in exchange for density bonuses.

The percentage needs to be dialed in. Shane Phillips with the UCLA Lewis Center for Regional Policy Studies recently ran a housing production simulator with different inclusionary zoning (IZ) percentages to test production outcomes. The simulator showed that increasing the percentage from 1 to 16% caused a moderate, progressive decrease in overall production. By 17%, the overall production was half of what it would have been without IZ. By 25%, the IZ unit production peaked, so that any further increase in the percentage resulted in fewer IZ units due to the overall depressed production. 

This suggests a tipping point at 16%, although the results are specific to a particular local market and IZ regime in LA with a compliance pathway that requires 11% extremely low-income units. At 16%, aside from dialing in production, additional rent growth of just under 1% per year (above a baseline rent growth of 4% per year) made up for the lower rents received from IZ units. This suggests multifamily projects can absorb IZ units into their budgets, without overburdening market rate residents, if the percentage isn’t too high to make projects unfeasible to begin with. 

Through the application of inclusionary housing requirements, impact review can address housing affordability in a way that the free market can’t. At its best, impact review can create a forum for communities, developers, and governmental authorities to work together, leveraging private development for public good.