Boston Mayor Marty Walsh pledges $500M to combat affordable housing crisis, but funding isn’t guaranteed

Boston Mayor Marty Walsh on Tuesday night pledged to commit $500 million over five years to alleviate the city’s affordable housing crisis, but funding the investment relies on the sale of a below-level parking garage and the implementation of a real estate transfer tax that isn’t yet law.

Walsh introduced in his State of the City plans for a five-fold increase in funding for several housing initiatives designed to increase housing supply and subsidize housing for some renters and first-time homeowners.

The funding, however, relies on the sale of the Lafayette Garage downtown and on the successful implementation of the transfer tax, a proposed tax of up to 2% on private real estate sales over $2 million. The funding is contingent on the Legislature passing the transfer tax.

“I urge the legislature to let us take this step, so we can ease housing pressures in neighborhoods like Brighton, Chinatown and East Boston,” Walsh said Tuesday night.

Walsh announced plans for a pilot program to offer hundreds of city-funded housing vouchers -- one of the first in the country -- and the creation of three funds to speed up the creation of 1,500 units for low- and middle-income residents.

The first is a seed fund to approve low-cost loans for buyers planning to turn vacant or underused properties into housing for low- and middle-income residents. The city would seek seed funding in part from businesses and foundations.

The second is an infrastructure fund to subsidize development costs in return for affordable units for low-and middle-income households.

The third fund is for pre-development activity, including financial and technical assistance for women- and minority-owned businesses.

Walsh also called for creating or acquiring 1,000 units, which would go to older adults, regardless of income level, or to residents who qualify for income-restricted housing. He vowed to create or preserve an additional 3,000 units of public housing and update the city’s federal portfolio to preserve housing resources for elderly and disabled residents.

For homeowners, Walsh proposed creating 500 new units for low-and middle-income buyers and offering low-interest mortgages and downpayment assistance to first-time buyers.

The series of initiatives appear to answer the call housing advocates have made for years. Advocates not only argue that the city is short on housing, but that new units start off way too expensive for the average renter. Nine Boston city councilors signed a letter in 2016 urging Walsh to create a city-funded voucher program in his fiscal 2017 budget, the Bay State Banner reported.

Among large metropolitan cities, Boston is considered the third most expensive city for renters, behind San Francisco and New York, according to Zumper, a real estate company that tracks rent prices.

The company’s January 2020 report listed the median rent for a one-bedroom apartment as $2,590.

The city currently allocates $18.7 million a year, or approximately $93.3 million over a five-year span.

Under his proposal, Walsh said $100 million of the new funding would come from the current operating and capital budgets. The other $400 million for the five-year plan would rely on new funds: revenue from the sale of the Lafayette Garage and the real estate transfer tax.

If the plan is implemented, the city would allocate a total of $593.3 million over a five-year period, averaging out to $118.7 million a year.

“We will preserve public housing in our city--from Whittier Street in Roxbury to Mildred Hailey in Jamaica Plain,” Walsh said Tuesday night.

But the sweeping proposal relies on funding that hasn’t yet been secured.

It is unclear how much the city could make off of the Lafayette Garage, the subterranean garage below the Hyatt Regency Boston. The city plans to publish a request for proposal in the spring.

“We don’t have an estimate for the disposition of the Lafayette garage yet, although we do expect to receive, I think, a significant amount of resources from that disposition,” said Emme Handy, the city’s chief of administration and finance.

While garages have sold for hundreds of millions of dollars, including the $102 million Winthrop Square purchase, those have largely involved parcels with promise for future development. The Lafayette Garage is a subterranean garage below the Hyatt Regency Boston, which would offer no additional development opportunity.

The main source of funding would be the transfer tax, which remains at the State House.

Massachusetts Gov. Charlie Baker proposed the transfer tax in January 2019 as a way to fund climate resiliency projects. But housing advocates and lawmakers suggested allocating the revenue to both climate change responses and affordable housing.

When asked in June about using the revenue for housing initiatives, Baker said he was “really interested in this climate initiative.”

Walsh described housing as the biggest economic challenge the city’s residents face. Despite the thousands of units that have been added or preserved, he said more work needs to be done and touted his housing proposal as the solution.

“These investments are transformative,” Walsh said Tuesday night. “I invite housing advocates and residents to help us bring them to life.”

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