Mayor Wu's planning chief under fire for saying 'it should be' hard to build in Boston

Mayor Michelle Wu’s planning chief said the city knows it’s hard for developers to build in Boston and plans to keep it that way.

Chief of Planning Kairos Shen said the city won’t lower the costly affordability requirements that critics say have stalled housing production, when battling with developers at a forum hosted by the MIT Center for Real Estate on Oct. 16.

“It’s hard to develop here. It should be,” Shen said. “We’re developing good stuff, you know? You guys want us to lower our standards. Part of my job is to hold those standards and try to still make them work.”

Wu has remained committed to the inclusionary zoning requirements that have increased under her administration, though she began to administer tax breaks this month to select housing projects that have been approved but lacked the financing to get off the ground.

The number of income-restricted units developers are required to set aside in Boston housing projects increased from 13% to 20% in October 2024.

Opponents claim inclusionary zoning requirements have made it more difficult for developers to obtain financing, and have been counterproductive by reducing affordability.

“Twenty percent of zero units is zero,” Boston City Councilor Ed Flynn said last month.

Critics have pointed to Cambridge, where the city is considering lowering its 20% inclusionary requirement to 10%, and San Francisco, which cut its rate from 15% to 5% in July, to kickstart construction.

Banker & Tradesman reported roughly 30,000 housing units have been approved in recent years in Boston, but have not been built due to financial constraints.

“We’ve had historic inflation, so the cost structure today to build anything is very, very high and the cost structure of actually building taller is some of the worst, less pencil-able deals that we have out there today,” Melissa Schrock, the Davis Companies’ managing director of mixed-use development, said at the forum.

The Davis Companies was approved in 2023 to build 450 apartments, 93 condos, and a 195-room hotel on Soldiers Field Road in Allston, but has yet to break ground, per Banker & Tradesman.

“I do think through a combination of reducing some of the sticks and offering more carrots, we could achieve the policy goal,” Schrock said.

Edward Stringham, an economist at Trinity College who took part in the forum, described Boston as having relatively little high-rise construction compared with other cities.

“You’ve got the Hancock Tower, the Prudential Center. Those are really it,” Stringham told the Herald Thursday. “Whereas in a lot of these other cities that I’ve observed, there’s just new units going up left and right.”

He said the restrictions on new construction have reduced options for residential and commercial development, which has had the “very easily predictable effect of reducing affordability.”

“Any time we tax a particular product, in this case housing, we’re going to see less of it,” Stringham said.

He characterized inclusionary zoning as a costly way to provide housing and said its costs are borne partly by neighboring market-rate residents. Full-price tenants may pay escalating rents to allow developers required to list some units at lower prices to get a return on their investment, he said.

“It’s unfair, and it’s basically a tax on the other market-rate buyers that the price of the subsidized unit is paid for by their neighbors,” Stringham said. “Just from an economic perspective, it’s a very costly way of providing housing to people of lower income.”

He said that while he would “love to have a price-controlled unit at the penthouse level of a high-rise in Berkeley,” there’s better options to create more housing.

“When (politicians) refer to price-controlled units as ‘affordable housing,’ it sounds attractive, but in most areas of the economy, we don’t have price controls, and we let supply and demand supply our needs,” Stringham said. “We don’t say, ‘oh, let’s make more affordable groceries by putting price controls on them.’ Instead, we allow Costco and Walmart … to provide the groceries that we need.”

He sees stalled development as continuing unless affordability requirements are eliminated, which the Wu administration pushed back on in a statement Friday.

“In a challenging economic environment, Chief Shen, the mayor, and our city teams have been working alongside developers and neighborhood leaders to find every way to accelerate housing production,” city spokesperson Marcela Dwork said.

The mayor’s office said those efforts have included “rezoning and streamlining development approvals for the first time in decades, creating new financing mechanisms such as the city’s accelerator fund, and offering targeted tax and regulatory relief to move important development projects into construction.”

“The city’s office-to-residential conversion program has led the way nationally in reducing commercial vacancies while boosting housing and downtown foot traffic, with 2,400 units built or in the pipeline. Boston has added nearly 16,000 new homes over the past five years and approved 23 million square feet of commercial space since 2022,” Dwork said.

The city defended remarks from Wu’s planning chief that have left developers fuming.

When Shen said it should be hard to develop in Boston, he was saying the city has high standards for development here in Boston, and believes it is important not to compromise the need for climate resiliency and affordability for the future of the city, Wu’s office said.

The city’s climate reference was to net-zero energy requirements approved last year that ban fossil fuels for new construction.

“Rather than joining a race to the bottom by lowering standards to chase quick profit, we work to accelerate development that continues to improve quality of life in our city as a safe, beautiful, welcoming home for everyone,” Dwork said.

But Stringham pointed to when Schrock said developers can invest anywhere in the country and will begin to reject Boston for areas with more feasible conditions.

He said he took Shen’s remarks, that he would “bet on Boston and invest in Boston over Anywhere, USA,” to be “implying that he wants people to invest in Boston, even if it’s less profitable.”

That line of thinking by the city “just is a non-starter,” the economist said.

“If you have a monopoly and say, oh, everybody needs to be here, then one maybe could get away with that,” Stringham said. “But we live in a global world, and Boston can prevent development and get left behind.”

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