OT Boston Mayor announces Residential Conversion Program for downtown offices

[Phatguysrule]

Mayor Wu announces Residential Conversion Program for downtown offices

Mayor Wu announces Residential Conversion Program for downtown offices
Jul 10, 2023
Mayor Michelle Wu today announced the City will launch a new “Downtown Office to Residential Conversion Pilot Program,” a public-private partnership program to incentivize the conversion of underutilized office buildings to residential use in Downtown this fall.

The program, which is anticipated to begin accepting applications this fall, will be administered jointly by the Boston Planning & Development Agency (BPDA), Mayor's Office of Housing (MOH), and the City of Boston Finance Cabinet to help meet City goals of creating housing units Downtown and having more consistent foot traffic throughout the week to support Downtown businesses. This program may be modified to acknowledge and respond to changing market conditions.

“We must take every possible action to create more housing and more affordability so that Boston’s growth meets the needs of current and future residents,” said Mayor Michelle Wu. “This program will help us take advantage of the opportunity we have to rethink Downtown as a space where people from all over come together to collaborate, create, live, and play.”

“Through this conversion program, we seek to incentivize lenders, property owners, downtown stakeholders, and the State to partner with the City to increase the production of much needed housing in our downtown core,” said Chief of Planning Arthur Jemison. “This public private partnership opportunity is the right tool to unlock new housing and shape a new, mixed-use neighborhood Downtown.”

“By converting office space into residential homes, we can fulfill the housing needs of our thriving City, while revitalizing and stabilizing our downtown neighborhood," said Chief of Housing Sheila Dillon. “New residents will enjoy the advantages of living in a neighborhood with many amenities, including shopping options, recreational spaces and multiple transportation hubs. This initiative aligns with this administration’s dedication to creating accessible and equitable housing in every neighborhood, strengthening our small businesses and commercial centers.”

The program would offer owners of commercial office buildings Downtown reduced property tax rates in return for immediately converting their buildings to residential uses. Based on studies prepared for the City as part of PLAN: Downtown, a rate reduction by up to 75% of the standard tax rate for residential for up to 29 years could provide a strong incentive to encourage conversion. This would be implemented through a public-private partnership that will enable the BPDA, the City, and the proponent to enter into a payment in lieu of taxes (PILOT) agreement. These terms were developed with the assistance of outside experts in order to make residential construction economically possible in the short term given the high cost of such conversions. These projects will also receive the support of the new Ombudsperson’s office at the BPDA to help with streamlining the approvals process from other City departments following BPDA Board approval. Final program parameters will be defined when applications are made available this fall.

The program is planned to be time-limited and will only accept applications through June of 2024. To be eligible, projects must comply with the proposed Inclusionary Zoning standards when approved; and the new Stretch Code’s energy efficiency standards. Applicants will be encouraged to maintain ground floor retail or other public uses. Projects will be required to start construction by October 2025, and will be subject to paying any forgone taxes if these commitments are not met. In order to recoup the forgone tax revenue over time, the City will also require a 2% payment on future sales of the property.

Following the release of a Downtown Revitalization Report released in October of 2022 that showed post-pandemic commercial office space vacancy rates are approximately 20 percent, Downtown neighborhood planners facilitated several conversations with developers to gather information on interest in residential conversions and possible pathways to achieve more housing Downtown. The BPDA also contracted HR&A Advisors Inc. to produce a report on the feasibility of office conversion in Downtown Boston and the Financial District. This research all suggested that partnership from the City was the only financially feasible path forward for private development to complete residential conversions. The study was conducted alongside PLAN: Downtown, the BPDA’s ongoing Downtown planning initiative, a draft of which will be released in August 2023. This program furthers the Plan’s goals to increase residential growth downtown and revitalize the area through a greater mix of uses while also preserving the historic urban fabric that makes Boston’s Downtown so unique.

The program is part of Mayor Wu’s ambitious growth agenda for Boston, which is focused on advancing the City’s resilience, affordability, and equity goals in order to make Boston the best city in the country to raise a family. The agenda also includes the creation of a City Planning and Design Department operating under the direction of Chief of Planning Arthur Jemison, and the appointment of Katharine Lusk to lead the newly created Planning Advisory Council which was created to coordinate planning processes across City departments. The Mayor also committed to update Boston’s zoning code to create thousands of additional housing units in Boston’s squares and corridors and reform the Article 80 process to increase speed and predictability for development.

 

[Haakzilla]

Sounds brilliant...and perfect timing since office buildings are a dying breed these days

 

[Phatguysrule]

Agreed. People saying it's too expensive aren't thinking things through. The government can offer incentives to make it worth the initial investment.

And IMO, any city with high business vacancy rates not doing something like this is suffering from poor leadership.

 

[jonnyboy]

I was thinking this and mentioned it to my buddy months ago. We bought a fourplex last year and are almost done renovating it. We will be looking for another investment after it’s complete, commercial real estate is tanking right now and probably only gonna get worse. I told him we should start looking at some of these empty office-style buildings and how viable they’d be as multi-unit housing. We’ve got the construction and carpentry skills to pull just about anything off, people need places to live and it’d be a good use of unused space.

 

[BrianFromWA]

as neither a civil engineer nor urban planner, isn't there a bunch of work that goes into just basic plumbing and electrical things to redesign for something it wasn't designed for? I mean, on highrises where I've worked there were something like 4 sets of M/F restrooms per floor, with something like 20-30 stalls combined. Unless you're making this a college-dorm style setup where you go down the hall to a common shower/bathroom area, is there enough plumbing bandwidth to retrofit them? I imagine electrical loading is easier to amp up (pun intended), and HVAC is probably within capacity, but I wonder about those types of things. To say nothing of zoning...does the highrise or hotel next door want 2,000 formerly-homeless people living concentrated right next door, and will that cause more urban flight?
No idea, but at least creative solutions are being investigated. Good for them.

 

[Phatguysrule]

as neither a civil engineer nor urban planner, isn't there a bunch of work that goes into just basic plumbing and electrical things to redesign for something it wasn't designed for? I mean, on highrises where I've worked there were something like 4 sets of M/F restrooms per floor, with something like 20-30 stalls combined. Unless you're making this a college-dorm style setup where you go down the hall to a common shower/bathroom area, is there enough plumbing bandwidth to retrofit them? I imagine electrical loading is easier to amp up (pun intended), and HVAC is probably within capacity, but I wonder about those types of things. To say nothing of zoning...does the highrise or hotel next door want 2,000 formerly-homeless people living concentrated right next door, and will that cause more urban flight?
No idea, but at least creative solutions are being investigated. Good for them.

I think the plumbing issue can be solved without too much trouble. You can get rid of the community restrooms and run plumbing to individual units via false walls and ceilings.

HVAC is easy with mini splits, and as you say, electric isn't complicated either.

These can be high end homes as well. They don't need to be only for homeless. In fact, the homeless would likely only require a very small percentage of each building. Adding thousands of units above businesses in Portland would reduce the pressure on surrounding areas, allowing for less nice places to be used for entry level housing.

As far as zoning goes, we're going to need to update that anyway. It's gotta happen.

Your concerns are certainly valid, but they can definitely be overcome if the city truly wants to solve this problem.

 

[barfo]

I think it's all doable. Modern office buildings are designed to have their interiors easily reconfigured. And they've got plenty of all the services needed.
The question is whether it pencils out. It surely doesn't pencil out to do it for low income folks until there are heavy government subsidies.
It might make sense if you can sell them as luxury apartments to high-rollers. But how much demand is there for luxury apartments in the city core?

barfo

 

[Phatguysrule]

I think it's all doable. Modern office buildings are designed to have their interiors easily reconfigured. And they've got plenty of all the services needed.
The question is whether it pencils out. It surely doesn't pencil out to do it for low income folks until there are heavy government subsidies.
It might make sense if you can sell them as luxury apartments to high-rollers. But how much demand is there for luxury apartments in the city core?

barfo

Definitely. There should certainly be tax incentives to do this. The fact that Portland (as well as Oregon, and frankly the US) hasn't already offered significant tax incentives for this kind of development speaks to how small minded and/or dysfunctional they are.