Builder Offers Ways to Create Middle-Income Housing

The Boston Globe, to its credit, published an op-ed by housing builder Bruce Percelay, who proposed nine ways Boston could generate more modestly priced, new middle-income housing. Given the cost of new construction, newly constructed housing is mostly either luxury housing or subsidized housing.

SPOA has talked about Percelay’s ideas in the newsletter on many occasions in the past. Several of his ideas will raise the hackles of some groups.

The first and most important idea is to liberalize zoning so that landlords are allowed to divide large three- and four-bedroom apartments into more smaller units. The infrastructure – walls, floors, ceilings, electrical, plumbing, etc. – are already mostly in place, making these conversions very economical. The smaller size of the units reduces rents, and the greater number of units increases density – another one of his ideas.

Next, much like dividing up big apartments, allow owners to convert basements into legal living space, another way to create more lower-priced units. A tragic basement fire years ago has put a de facto moratorium on basement conversions. It’s time to change that policy.

Percelay next recommends a 10-year property tax exemption to stimulate new construction.

Another possibly controversial idea is to reduce off-street parking requirements. Neighbors don’t like the competition for scarce parking spaces if new construction does not include off-street parking, but it’s very expensive to create, especially if it has to be underground. Percelay thinks building one parking space for each bedroom is antiquated in this “green” age. He believes we should move towards being a pedestrian, bicycling, and public transportation age. Easier said than done.

Next, labor unions need to reduce their rates for residential construction outside of the downtown high-rise luxury market, a change that would “significantly increase the production of workforce housing.” Percelay says. That would be nice but highly improbable.

Boston has “affordable housing” requirements for new housing construction. That means some units need to have reduced rents, which pushes up rents on the market-rate apartments in affected construction projects. Percelay suggests dropping that requirement if new housing is targeted to the middle-income market. It’s a reasonable suggestion that makes the cost of new housing a lighter burden on middle-income renters.

Besides changing some of the city’s housing regulations that drive rents up, Percelay recommends a no-cost option for the city: streamline the design and permitting process. It costs builders a significant amount of money if they have to wade through a long approval process.

Lastly, builders need to “exercise their own restraint in rental pricing.” Percelay thinks it is cost-effective to keep rents lower. Apartments rent more quickly and have fewer vacancies