How to keep Gateway Cities growing

Sometime in the 1990s, our state’s 26 Gateway Cities collectively turned the corner on the postwar years of deindustrialization and population loss and began to grow again. Then something even more remarkable happened.

Between 2010-2020, Gateway Cities grew faster than the state as a whole – 8.7 percent compared to 7.4 percent.

These good times may be waning. The COVID shock, President Donald Trump’s immigration crackdown, the persistence of inflation and the high cost of borrowing have all hit Gateway Cities hard. The last two, in particular, threaten the viability of current development projects.

Here’s how we can avoid the slowdown.

Expand HDIP Again

Since the Legislature passed Gov. Maura Healey’s tax relief package in October 2023, the Housing Development Incentive Program (HDIP) has helped build about 1,000 homes in Massachusetts’ Gateway Cities each year. That represents close to 20 percent of all of the housing units produced by the 26 cities over the last three years.

The Mass Wins Act’s conference committee should incorporate the House of Representatives’ proposed HDIP increase from $30 to $40 million in its final bill. But we should be more ambitious.

HDIP produces more homes per state dollar than other programs because it provides a “shallow subsidy” (capped at $2.5 million per project), encourages smaller projects by local developers and offers just enough funding to activate private financing.

These projects minimize red-tape and public spending. Yet the rents of these market-rate units compare favorably to many of the subsidized units in Gateway Cities.

For example, the Boston Globe recently cited a Fitchburg developer whose HDIP-supported projects have helped revitalize that city’s downtown. These buildings typically charge $2,100 for a two-bedroom unit, which sounds pricey for North Central Massachusetts until you realize that a subsidized “affordable” two-bedroom unit at 80 percent area median income in the Fitchburg-Leominster area can charge up to $2,371.

We should invest $75 million to $100 million each year on this program to sustain the growth of regional cities outside Metro Boston.

Increase Administrative Capacity

Our mid-sized cities welcome investment and redevelopment, but their systems often fail to capitalize. Planning departments frequently lack the staffing levels and political support needed to proactively modernize local zoning, not to mention the review and approval process. Many developers and property owners feel like the review process starts over at each new stage.

Boston Indicators’ new report, “Delayed by Design,” offers several important ideas that could address these capacity challenges.

First, the state should dedicate funding to a planning grant program for under-resourced municipalities with high potential for growth. Awards could either support in-house staff or third-party project reviewers. Gateway Cities could hire a “development liaison” who could walk property owners and investors through each step of the process and ensure that department heads, elected officials, and board members understand the project and coordinate their response.

Second, the commonwealth should invest in modern permitting platforms for cities, along with planning and zoning board training. A library of pre-approved building plans for small multifamily buildings would also let developers skip redundant design costs while giving municipal staff designs already vetted for code compliance.

Third, the state should help cities develop clear site plan review standards and design guidelines, and hire the consultants needed to proactively re-zone for more categories of by-right construction in downtowns and growth corridors.

 Prioritize Key Permitting Roadblocks

The state building code generates additional barriers and costs for Gateway Cities, in part because of the preponderance of older buildings that need renovation. Forcing them to meet new construction standards can lead to exorbitant costs and, in some cases, owners may prefer to leave their properties in a deteriorated state.

A companion Boston Indicators report released in July, “Unlocking Small Multifamily Housing through Building Code Reform,” offers a comprehensive approach but adopting international standards on the following targeted items would make an enormous difference: smaller elevators, single-stair egress and especially fire safety systems, which can add incredible cost to three- to eight-unit buildings. We should modernize and tailor safety systems appropriately to small multifamily projects.

In addition, parking requirements continue to be excessive in many communities. The state should find ways to reduce parking minimums or institute parking maximums.

Finally, accessibility rules in Massachusetts remain out of line with other states and federal requirements. We can avoid the complexity of the state Architectural Access Board’s “30 percent rule” altogether by bringing our state in line with international building code.

These fixes – more capital through HDIP, more capacity for municipalities and codes sized for small-scale housing – would let Gateway Cities keep building on the momentum they’ve earned.