Timeline Considerations For Boston's New RE Review Process

Attorney David Linhart dives into Boston’s evolving large project review process and its implications for developers, communities, and the city’s economic future with Law360.

Boston is working through a reimagined large project review process. This process is analogous to site plan review outside of Boston, involving public review of a real estate project's expected impacts with respect to matters such as transportation, environmental protection, urban design, historic resources and infrastructure systems.

For those in the role of land use counsel, part of the art of guiding developers through such reviews and approvals is managing the timeline — and it varies. The median large project review time period over the past decade was 10 months, except only 16% of projects found the 8-12 month window.

Some took six months and others took three to four years, or more. Perceived misalignment of community, city, and developer interests makes protracted approval timelines more likely. A developer might be caught between the community seeking to free up streetside spaces with additional onsite parking and the city seeking to reduce onsite parking in favor of multimodal transit incentives for site users.

It may take a series of public meetings to sort this and other matters out. As time elapses, the project budget may be challenged by increasing predevelopment and construction costs, changing interest rates and market conditions, and regulatory updates that mandate design changes for compliance.

A key theme of large project review reform is early community engagement, presenting an opportunity to assess how this process supports community, city and developer alignment.

The formal starting point for the current process is a project notification form filing to summarize a project proposal for a site and to study potential impacts, although most developers precede the filing with their own community outreach.

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 impact review:

• To determine appropriate uses for land within the context of the surrounding neighborhood?
• To address negative externalities of a proposed project with a few perks added in?
• To calibrate the intensity of neighborhood development with the basic understanding that growth is good?

The engagement plan correlates with the first question. As to the second question, the range of expected commitments based on impact review typically encompasses mitigation, community benefits and enabling infrastructure. What about the third question? This 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 attention to adequate mitigation, benefits and infrastructure improvements, the social impact of economic growth can be underappreciated. However, Boston runs on growth.

For example, between fiscal year 2023 and fiscal year 2024, Boston's budget increased from $4 billion to $4.29 billion, covering the costs of public schools, public safety, streets, salaries and benefits, pensions, state assessments, and debt service.

Of the total increased revenue of $290 million 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, or else cut essential services.

In some sense, project approvals could be visualized as a thermometer rising to a balanced budget for the city. Greater awareness of that might help communities, governmental authorities and developers all feel like they are on the same team as impact review proceeds.

This dynamic is playing out in Boston's spend down of American Rescue Plan Act funds, which became available during the pandemic.

The Boston Municipal Research Bureau noted in a Nov. 12 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."

Given the historical stability of Boston's revenue stream, Boston only needed to tap 17% of its ARPA funds to maintain its base spending. The rest went to new programs and services.

One ARPA-funded new service 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 cover Boston's base spending so uncommitted ARPA funds could support a test run of free public transit, among other things? Partially, yes — aside from new commercial development covering a third of the annual budget growth as described above, Boston's overall real estate portfolio funded 71% of Boston's fiscal year 24 budget.

Back to impact review reform — in addition to engagement plans, the Boston Planning Department envisions training community advisory teams to "[b]uild up a cohort of new community leaders who can effectively participate in detailed project review."

Community advisory teams would be trained in the topic areas of "mitigation, urban design, planning principles, etc." Adding the social and fiscal benefits of economic growth to this topic list would empower community advisory teams to consider Boston's need for developer expertise in turning underutilized land into economically viable projects.

Appreciation of economic growth does not have to override other public policy objectives. Impact review should not be watered down for growth's sake.

For example, to address housing affordability, fast-tracking multifamily projects to speed production in the face of 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, inclusionary housing requirements applied through impact review can 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 at the Lewis Center for Regional Policy Studies at the University of California, Los Angeles, recently ran a housing production simulator with different inclusionary zoning percentages to test production outcomes.

As described in a report titled "Modeling Inclusionary Zoning's Impact on Housing Production in Los Angeles: Tradeoffs and Policy Implications," 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 inclusionary zoning. Depressed overall production at higher percentages eventually erodes inclusionary zoning unit production itself.

This may suggest a tipping point at 16%, although the results are limited to the particular local market and inclusionary zoning regime in Los Angeles that was studied.

At 16%, additional rent growth of close to 1% per year above a baseline rent growth of 4% per year made up for the lower rents received from inclusionary zoning units. This suggests multifamily projects can absorb inclusionary zoning units into their budgets, without overburdening market rate residents, if the percentage isn't too high to make projects infeasible 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.

The sooner consensus is reached in a manner that preserves the feasibility of a project — from the mix of uses, to affordability, to parking and beyond — the sooner a project's benefits can be delivered.

At its best, impact review can create a forum for communities, governmental authorities and developers to work together, leveraging private development for public good.

Click here to read the article on Law360.