Building new homes is not the only solution to Massachusetts’ housing crisis. Read more about how rehabbing vacant properties could help meet demand.
If you’ve tried to find an affordable apartment in Massachusetts, you know it can be overwhelming. There are the hours of scrolling through listings, calling realtors and reluctantly agreeing to credit checks. If you do secure a unit and muster up the thousands of dollars in up-front fees, then there’s the struggle of actually making rent every month.
The main reason for the high costs? You know it by now ... there just aren’t enough homes. That leaves renters with few options.
Experts say the solution to Massachusetts’ housing crisis is to build, build, build.
But by the time the ribbon’s finally cut on a new building, a developer may owe millions in loans they took out to help fund the project. They often have little choice but to charge high rents because the development process takes a lot of people, time and money.
Finding land suitable for housing
There are several hurdles to deciding where to build a new apartment complex. Developers usually want it to be somewhere folks want to live.
“We really like to build around transit, convenient to retail services, access to major highways and thoroughfares to get to employment centers,” said Rich Mazzocchi, principal at Tremont Development Partners.
Still, Massachusetts is one of the most densely populated states in the country , so good luck finding vacant land around Boston or Worcester that’s construction-ready.
One alternative is to buy a property and demolish what’s on it — obviously, not cheap. Another common option: convert old, underused commercial buildings into housing. But that can also be expensive, especially if the property’s a contaminated former shoe factory.
All this to say, developers have limited choices. They might be left wishing they could build in the harbor.
Drawing up the blueprint
Next step? If only it was as simple as deciding the building’s color or whether the roof is flat or sloped — or, you know, has a giant slide.
The design phase involves hard choices. The developer and architect have to consider how many one-, two- and three-bedroom units it will have. Will there be commercial space on the ground floor for restaurants and shops to attract more people to the area? How many parking spots? What about restricting the income levels of tenants?
These decisions all come down to … money! Capping rents and designating apartments as affordable housing gives a developer access to government subsidies and tax credits that help fund the project. And fewer parking spots means more room for additional units, which means more rental income.
Oh, and by the way — it’s probably best to collaborate with other residents and businesses in the area. If future neighbors aren’t happy with the plans, they can make life quite difficult.
An intimidating approval process
Now’s the time for arguably one of the most frustrating steps: hiring attorneys and going before the almighty planning and zoning boards.
The local planning board reviews the project and accounts for any community opposition. Board members can demand changes to everything from the building’s landscaping to the roads around it to mitigate traffic.
The zoning board has similar power, but focuses more on granting or denying exemptions to the local zoning code.
If a developer wants to include fewer parking spaces at a Worcester apartment complex than the code mandates, the zoning board needs to OK it. That can come with conditions.
“Maybe we’ll allow for fewer parking [spots], but only if you actually increase the number of handicap-accessible spaces,” said Worcester Zoning Board member Jordan Berg Powers. “So you’re doing a dance with people.”
Sometimes that dance is more like a grueling ballet rehearsal. Mazzocchi noted a developer may appear before a zoning board half a dozen times as each side wrangles over changes. It took four years for one of his apartment proposals in Boston to get approval.
“It’s not uncommon for projects just to get scrapped,” he said.
It’s finally time to build!
Well, not exactly.
Before cranes and bulldozers rumble onto the property — and scare the neighborhood turkeys — the developer has to secure building permits. This step can take months and cost tens of thousands of dollars.
Then they have to hire contractors, navigate a nationwide shortage of construction workers and purchase building materials.
If the costs of lumber and steel are especially high — as they were during the COVID-19 pandemic — the developer may have to alter the design or even pause the project.
As construction comes to an end, it’s time to accept rental applications. Given the ongoing affordable housing shortage, there are usually a lot more applicants than apartments in the building. A developer may hold a lottery to decide who gets to move in.
And after people move in ... stuff starts breaking
Face it, clogged sinks and overflowing toilets are inevitable, regardless of whether the complex is brand new or decades old.
The building owner also has to pay for insurance, property taxes and sometimes utilities. Mazzocchi said the cost of paying a property manager and other expenses can amount to more than $7,000 per unit annually. Add that to the developer’s debt payments at high interest rates, and, yeah … you get the idea.
“We’re in it for the right reasons — to address the housing crisis,” Mazzocchi said. “But the way that the projects are put together financially, we need to have enough revenue to cover all of our expenses.”
For tenants struggling to make rent, it may not be helpful to know why there’s a housing shortage. They can’t afford to wait years for more apartment buildings to go up and rents to come down.
