By Tamara Small | This column originally appeared in Banker & Tradesman on December 18, 2022
With a new gubernatorial administration comes new opportunities to shape the future of Massachusetts. As we look ahead to 2023, there is little doubt that it will be a difficult year for businesses. The incoming Healey-Driscoll administration must be a partner with the business community to ensure that safeguards are in place so the commonwealth can weather the economic storm. Only together can we work to secure the livelihoods and futures of Massachusetts’ residents and businesses.
Due to inflation, supply chain issues, rising interest rates and the cost of labor, it has never been more expensive to produce housing in the commonwealth. Fortunately, the administration has three big opportunities to help.
Streamlined Regulations Needed
Regulations serve the important function of protecting health and human safety in the commonwealth and NAIOP strongly supports that objective. There are significant opportunities, however, to create a more streamlined and predictable regulatory environment, which will increase the commonwealth’s competitiveness and make it easier to do business in Massachusetts.
In 2012, coming out of the last recession, the Patrick-Murray administration launched a top-to-bottom regulatory review. That effort invited the private sector to make suggestions based on their experiences and also required agency staff to suggest ideas for improving agency efficiencies. As a result, approximately 15 percent of state regulations were rescinded or streamlined. In 2015, the Baker-Polito administration promulgated Executive Order 562 that sought to build upon the prior administration’s work and further reduce any unnecessary state regulations.
However, the past four years have seen a massive increase in new regulations affecting the real estate industry – effectively undoing these important reforms. The Healey-Driscoll administration has the opportunity to reintroduce some proven strategies, such as reinstating the Permit Regulatory Office and state permitting ombudsman, to improve our business climate. While this is just the first step of many, it would go a long way in showing the business community that they are partners in securing our economic future.
Protect and Expand Housing Investments
The housing crisis has been top of mind for policymakers and the business community for years. NAIOP was proud to be a leader working with the state, municipal leaders, business groups, and housing advocates to pass the critical Housing Choice legislation, which will have a long-term positive impact on housing production across the commonwealth. Lieutenant Governor-elect Kim Driscoll was a powerful and effective advocate for this new law. However, there is more to be done.
New and creative programs targeted at developing attainable housing across Massachusetts are needed. Subsidies for middle-income housing, incentives that preserve existing affordable housing and innovative public-private partnerships are just a few ideas. At the same time, longtime programs that have an enormous, positive impact on housing production are at risk. The Healey-Driscoll administration and the state legislature must quickly reauthorize the brownfields tax credit before its expiration on Jan. 1, 2024; expand the annual cap for the Housing Development Incentive Program, which produces market-rate housing in Gateway Cities; and immediately recapitalize the MassWorks program, which provides funding for desperately needed infrastructure investments that must be in place before new housing is built.
Governor-elect Maura Healey must also be cautious before considering policies that harm the housing supply. Rent control has been shown to reduce the overall supply of rental units; decrease the quality of existing units; drive up rents in the uncontrolled market, causing all renters not in a rent-controlled unit to pay more; and limit geographic and economic mobility for residents by mismatching unit types and sizes to the needs of the household.
Combat Climate Change with Practical Steps
Climate change is an economic development, public health and environmental issue that affects every resident and business in the commonwealth. Bold action must be taken and tempered with critical short-term strategies that effectively balance our continued economic growth with our long-term environmental goals. In less than two years, Massachusetts has passed two significant climate bills with aggressive implementation timelines. As of January 2023, there will be three different energy codes in effect in Massachusetts along with a pilot 10-community fossil fuel ban. New projects are being asked to prioritize electric building systems and renewable energy as well as LEED Gold standards. While these are laudable goals, there are real costs associated with these requirements.
It is important that the Healey-Driscoll administration be sensitive to the existing regulations governing the development sector. Before layering additional requirements onto the industry, the existing requirements should be examined and allowed to demonstrate their impact. The recently released Commission on Clean Heat report identifies the challenges and opportunities to decarbonizing the building sector and offers a guide to achieving these ambitious goals. Only this approach will ensure that Massachusetts is put on a responsible, achievable path to mitigating climate change’s devastating effects.
As we prepare for the coming economic downturn, the new administration will play a pivotal role. NAIOP looks forward to working to with these new leaders to ensure Massachusetts remains a competitive, affordable and resilient place to live and work.
Tamara Small is the CEO of NAIOP Massachusetts, The Commercial Real Estate Development Association.