Housing, Economic Development, and Smart Growth in New England Barry Bluestone Dean, School of Social Science, Urban Affairs, and Public Policy, Northeastern University Carsey Policy Leadership Institute Portsmouth, New Hampshire December 3, 2007

The Economic & Demographic State of New England

Change in Total Non-Farm Employment (Seasonally Adjusted) (January August 2007)

Population Trends in New England

Between 2000 and 2006, the population of Massachusetts increased by only 74,000 (1.2%) – the slowest increase in New England. Since 2000, Massachusetts has suffered a net domestic out-migration of over 280,000 residents. This outflow of people has been softened only somewhat by the arrival of about 186,000 foreign immigrants. Population Trends: Massachusetts

Immigration & Net Domestic Migration: Massachusetts

Who’s Leaving Massachusetts?

Where did they go?

Housing Costs in New England

: +156% : -6% Slow Growth … But Housing Costs Remain High: Greater Boston Median Price of Single Family Homes and Condominiums : +61%

Effective Rents – Rising Again: Greater Boston : +58% : +1% Q 2007: +6%

(Un)Affordable Communities in Greater Boston In 2007, only 6 communities out of 161 in Greater Boston – Bellingham, Blackstone, Bolton, Southborough, Stow, and Townsend – are affordable for a typical first-time homebuyer in 2007 Back in 1998, affordable housing was available in 116 Greater Boston communities

Housing Affordability in Greater Boston Renter Households paying >30% of Income 39.2%50.1% Renter Households paying >50% of Income 18.4%25.0% Owner-Occupied Households paying >30% of Income 26.7%39.3% Owner-Occupied Households paying >50% of Income 9.0%13.9%

Housing Costs and Economic Development

Top Decile: Metro Area Cost of Living Boston $ 64,656 Washington (D.C. portion) $ 61,440 Nassau-Suffolk, NY $ 60,780 Stamford-Norwalk, CN$ 60,720 Lawrence (Mass. portion) $ 59,280 New York, NY$ 58,656 Barnstable-Yarmouth, MA $ 58,236 San Francisco, CA $ 57,624 Worcester (Mass. portion) $ 55,704 Springfield, MA$ 55,320 Minneapolis-St. Paul, MN$ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA$ 53,808 Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288 Monmouth-Ocean, NJ$ 50,736 San Diego, CA $ 50,088 Newark, NJ$ 49,992 New Haven/Meriden $ 49,848 Honolulu, HI $ 49,824 Philadelphia (Pa. portion) $ 49,716 Boulder-Longmont, CO$ 49,596 Bridgeport, CN$ 49,272 Manchester, NH $ 49,152 Santa Rosa, CA$ 48,924 Albany-Schenectady-Troy, NY $ 48,900 Hartford, CN$ 48,684 Trenton, NJ$ 48,576 Rochester, NY$ 48,540 Economic Policy Institute: Family Budget Calculator Universe: 304 U.S. Metro Areas

A Tale of Two Cities Basic Budget 2 Parents, 2 Children Boston Monthly Housing$1,266 Monthly Food$ 587 Monthly Child Care$1,298 Monthly Transportation$ 321 Monthly Health Care$ 592 Monthly Other Necessity$ 500 Monthly Taxes$ 824 Monthly Total$5,388 Annual Total $64,656 Raleigh-Durham- Chapel Hill Monthly Housing$ 779 Monthly Food$ 587 Monthly Child Care$ 866 Monthly Transportation$ 358 Monthly Health Care$ 368 Monthly Other Necessity$ 369 Monthly Taxes$ 350 Monthly Total$3,677 Annual Total $ 44,124 A Tale of Two Cities Source: Economic Policy Institute, “Family Budget Calculator, 2005”

Low PriceHigh Price Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics Universe: 245 U.S. Metro Areas 0.95% 2.91% 2.29% 0.86% 1.53% 0.68% -0.68% 0.12% -0.62% 1.49%

Low CostHigh Cost Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics -0.21% 0.93% -0.02% 0.84% 1.06% 0.50% 1.09% 1.98% 0.62% 2.53% Universe: 245 U.S. Metro Areas

-2.12% 0.16% 1.54% 1.40% 2.19% 1.04% 0.60% 0.41% 0.19% 0.39% Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census Universe: 304 U.S. Metro Areas Boston

NET IN MIGRATIONNET OUT MIGRATION

Key Point  Housing Costs – and more generally the cost of living – is a key economic challenge in parts of New England … and perhaps the #1 barrier to a full economic recovery in Greater Boston and in Stamford, Connecticut

Progress on the Smart Growth Housing Front: Chapter 40R/40S New laws in Massachusetts to encourage the production of affordable housing in smart growth locations

Housing to Serve Many Purposes  Provide housing for new young workforce  Provide affordable housing for low- income households  Provide denser housing on small lots to discourage sprawl, transportation congestion, and reduce cost

The Culprits: Why So Difficult to Build Affordable Housing  Zoning Multiple Academic Studies Extensive permitting delays  Shortage of appropriately zoned land for homes  Perverse Fiscal Interaction Prop. 2 ½ Overreliance on Local Property Taxes Chapter 70 School Financing

It’s no Surprise  Local communities do all they can to discourage the production of housing.  They are remarkably successful  The economy shows the results

Finding Solutions Smart Growth Housing

Smart Growth Zoning in Massachusetts  Chapters 40R and 40S  Goal: a surplus of zoned land  Incentives if: Smart Growth Locations 20% of units affordable Minimum Densities

Chapter 40R Incentives  Initial Payment - $1,000 per unit  Construction Payment - $3,000 / Unit  School Cost Hold Harmless  Design Standards

Public Policy Ingredients  A good idea  Institutional Support - CHTF  CHTF Funding for Research and Outreach  Intense effort  Broad and deep process

How Did it Happen? 18 months from concept paper to legislation The Commonwealth Housing Task Force The Center for Urban and Regional Policy The Boston Foundation The Legislature and Administration

How has it worked?  Zoned land for 6,000 units 3,000 more in the pipeline Diverse developments and communities  17 of 17 communities have approved A cooperative dynamic  But, all multifamily.  Starter Homes still not being built

Conclusion  Much Success, but, more to be done.  The Process can be replicated Working in Connecticut