Boston Mayor Marty Walsh recently released his first official housing plan. The report calls for more developers of middle-class housing projects and includes several strategies for attracting them, such as property tax incentives and land deals.
The local administration hopes to spur more construction of middle-class housing based on recent real estate trends. According to the report, developers have focused on downtown luxury developments, squeezing condos and apartments at more moderate price points out of the market. Without affordable housing options, the middle-class may be forced out of downtown living.
Yet even prices in Boston suburbs are rising. In the neighborhood of Dorchester, for example, the report estimates the price of a single-family house at between $600,000 and $700,000.
A real estate attorney knows that unique challenges can face developers of affordable housing. A lot of work goes into putting any kind of real estate development deal together, starting with an estimate of potential revenues and costs. That estimate might then be shopped to investors and lenders until a developer has enough equity to proceed with building plans.
Public-sector incentives, like tax breaks, may be available to affordable housing developers and help them in the process of securing financing. Other options might be subsidized government-issued mortgages or bonds to private developers, as well as federal Low Income Housing Tax Credits.
However, it is important to examine whether those incentives will come with a “catch,” such as restrictions on whether housing units must be sold or leased at below market rates for a period of years. An attorney can help a commercial real estate developer understand all of the consequences of a proposed deal — hopefully while there is still time to make changes.
Source: boston.com, “New Report Calls For More Affordable Housing,” Scott Van Voorhis, Oct. 9, 2014