New housing in Boston

Sadly, this is the type of housing being built in Boston:

The penthouse in Millennium Tower Boston just went on the market for $37.5 million, among the priciest properties in the state. Due to open in summer 2016, the 625-foot skyscraper will be the first ultra luxury high-rise to be constructed amid a building boom that is attracting an influx of wealthy international buyers and billions of dollars of investment.

The claim is that somehow this housing will trickle down to the rest of us, but this is one reason it probably won’t:

“The wind is at their back,” said Blair, the firm’s president. In addition to local residents, she said, luxury units in Boston and other US cities have become a popular investment for international buyers looking for a place to store their cash.

With real estate prices rising, Boston is seen as a safe haven for those buyers, as well as an increasingly attractive place to own a slice of the skyline.

Mayor Walsh has said some good things:

Boston needs to build 53,000 housing units by 2030 to keep pace with rapid population growth that is already increasing prices and squeezing out low- and middle-income residents, according to a city report.

The report by Mayor Martin J. Walsh’s administration, previewed by city officials on Wednesday, calls for $21 billion in private and public construction that would increase Boston’s overall housing stock by 20 percent over the next two decades.

Walsh wants to limit further real estate price inflation by creating 20,000 units for middle-income residents, largely built by private developers. His plan would loosen zoning restrictions and provide financial incentives to encourage construction of taller buildings in outlying neighborhoods. It would offer developers tax incentives and other assistance to help reach that goal.

He also wants to increase annual city funding for low-income housing by 65 percent, to $51 million, and require developers of downtown luxury complexes to pay more and build affordable units at other locations.

Sounds ok, but there are some problems–one note the amount targeted for low-income housing and notice it’s not much more than the one condo for sale at the new luxury place. You can see the full report is here. In it we get:

The City is defining its middle class as households with incomes between $50,000 and $125,000. The range begins at $50,000, reflecting Boston’s median income of $53,000. Household income of $50,000 is also the level where eligibility for most government-assisted housing ends, so market-based solutions become critical.
Boston still has a sizable middle class, representing 34 percent of its households. Compared to the region, however, Boston’s middle class is smaller, younger, and has a lower homeownership rate (43 percent) compared to the region (69 percent).
Middle class households face unprecedented difficulties in accessing the market. Today, a household with an income at the midpoint of middle class range ($80,000) can only afford the bottom 23 percent of the homeownership market in Boston, and is priced out of seven of Boston’s 15 neighborhoods. That same $80,000 income is currently enough to afford 51 percent of the rental market; however, rents are rising at five times the rate of income, making the rental market increasingly unaffordable as well.

So, they are defining middle class as households that make more than the median–seems a funny way to define it. In any case, remember that when you see tables such as:

Production Source New Units
City Assisted Low-Income: Non-Senior 6,500
City Assisted Low-Income: Senior 1,500
Middle-Income Inclusionary/Assisted 4,000
Middle-Income Unassisted: Non-Senior 11,000
Middle-Income Unassisted: Senior 2,500
Middle-Income Units Released via Dorm Production 5,000
Market-Rate Unassisted: Senior & Non-Senior 18,500
Market-Rate Units to Support Market-Stabilizing Vacancy Rate 4,000
Total 53,000

You might notice that 8000 are for ‘low-income’ households which make up about 50% of households in Boston right now. Compare that to the 22,500 for market-rate (read luxury) units.

That’s better than what we’ve been getting:

Without financial incentive, the mayor’s report concludes, developers will continue to focus on building luxury complexes that command the highest rents and offer the best returns. More than 8,000 new apartments are expected to be completed in Boston during the next three years, but the vast majority are expected to rent for $3,500 a month or more.

but still not good enough. And now let’s look at the mayor’s comments to another luxury building:

In a statement, Walsh praised AvalonBay’s project. “We are getting the mix of housing that we really need, and it’s coming in the form of a signature high-rise that will be a great addition to the area’s historic buildings and all of our new parks,” he said.

Yeah, I’m not holding my breath that Walsh will actually follow through on his plan. If you go to the BRA’s page listing affordable units available you will find there are none.

Assembly Square

So, the new Assembly Square station on the Orange Line is now open which means my commute will now take a bit longer and be a bit more crowded (although almost no one actually got on or off from there yesterday or today). What’s interesting is that buses will replace the subway on September 14, so I guess it’s not done quite yet–they probably wanted to open it as soon as possible to make things look better. I also love how everyone talks about the new neighborhood:

“We invest in infrastructure to increase private development, revitalize urban neighborhoods and bolster growth and opportunity across the Commonwealth,” said Governor Patrick. “The new Assembly Orange Line station is a concrete reminder of what can be achieved through public-private partnership and investment in our communities.”

“A demand for enhanced access to transit, for smart development centered on transportation access and for livable, workable communities has been heard loud and clear by this Administration,” said MassDOT Secretary & CEO Richard A. Davey. “The opening of the new Assembly station today is a direct response to that demand that will provide easy, affordable access to rapid transit in this new neighborhood of Somerville.”

“The first new MBTA station in 27 years is a testament to the key role that access to transportation plays in the growth and redevelopment of our cities and towns,” said MBTA General Manager Dr. Beverly Scott. “Assembly is a modern, fully accessible, environmentally-friendly Orange Line station that will serve this blossoming new neighborhood and the City of Somerville well for years to come.”

“Assembly Row is an excellent example of a well-rounded development project that aligns our jobs, housing and transportation needs to better serve our residents,” said Housing and Economic Development Secretary Greg Bialecki. “Through these types of collaborative efforts we are making our communities great places to live, work and play.”

“The opening of the Orange Line Assembly Station is a win not only for Somerville but for the Commonwealth, and I want to especially thank Gov. Patrick for his deep commitment to this project and to forward-looking transportation policy overall,” said Somerville Mayor Joseph A. Curtatone. “The smart, transit-oriented development taking place around this T-stop that our community outlined in our SomerVision plan will not only connect more workers and residents to sustainable and healthy transit. It represents tens of thousands of construction and permanent jobs, more than a billion dollars in private investment into our local economy, and a commitment to the infrastructure we need to thrive in a 21st century economy. As we get projects like this moving forward, we get the entire state moving forward.”

“The development of an Assembly Row T station has been a true public and private partnership as Federal Realty, the Commonwealth of Massachusetts and the City of Somerville have come together to improve a city’s economic future and connect a region through public transit investments,” said Don Briggs, President of Federal Realty Boston. “Assembly Row is a neighborhood unfolding that is now more accessible to all of Boston and beyond. From nationally known outlet retail to locally loved dining, interstate access to corporate campus amenities, Assembly Row is quickly becoming one of the region’s top destinations for the next-generation of work, live, shop, eat and play. ”

The new Assembly station is a true public-private partnership, funded through a combination of federal, state and private investment. The total cost of the station is $56 million with the Executive Office of Housing & Economic Development contributing $25 million through a MassWorks grant, $16 million in federal funds and a $15 million investment from Federal Realty Investment Trust, the developers of the Assembly Row project.

What no one mentions, an oversight I’m sure, is that this is pretty much exclusively luxury housing–so all this work, public money, and private-public partnership is to help the rich get some nice housing on the T. Great job guys.

It would have been nice if they had upgraded the system before they added the extra traffic, but since ridership is up it’s not really a priority.

The new Kenmore and the new Rat

From the mid to late 1980s, I went to the old Rat in Kenmore Square many times. It was a great place for me for a few reasons:

  • it was close–I lived in the West Fenway
  • it had good music (on the punk end of rock mostly)
  • it was cheap–Friday night was usually $8 for three or four bands

The old Kenmore Square was a great place for a college student for similar reasons:

  • it was pretty close to NU and close to BU
  • it had cheap food, cheap records, cheap other stuff (Army-Navy)
  • it had a great variety of music–there were 4 or 5 clubs in Kenmore itself and at least another 5 within a few blocks

Now it’s a sterile, boring upscale place. But it’s going to have the Rat again:

Early next month, the spirit of the grungy basement bar will be revived at the luxury hotel when the Commonwealth unveils a suite in its honor. Memorabilia from the club will fill every nook and cranny of the 600-square-foot room: the mirror that hung in the Rat’s dressing room, covered with band stickers; the duct-taped keyboard that belonged to club mainstay Willie “Loco” Alexander; drumsticks signed by Marky Ramone; a Cars guitar pick. And, of course, a papier-mâché rat.

With a $40,000-plusdecorating budget and a rate that will set guests back$500 to $900 a night, the opulent suite will be a far cry from its gritty namesake.

There’s a famous quote by Marx: History repeats itself, first as tragedy, second as farce. I don’t think the first run of the Rat counts as a tragedy, but this certainly counts as farce.

Class warfare

This isn’t exactly something to be proud of:

Boston has the fourth-largest gap between rich and poor among the nation’s 50 largest cities, according to a  study released on Thursday by the Brookings Institution, a Washington, D.C., nonprofit. Only Atlanta, San Francisco, and Miami had wider income divides between the top 5 percent of earners and the bottom 20 percent.

If you go to the study, you find the numbers: the 20th percentile for household income in Boston was $14, 604 in 2012 while the income for the 95th percentile was $223,838. The city of Boston mandates that 15% of the units of new housing is ‘affordable’–there’s not even enough affordable housing being made for the bottom 20%. It’s pretty obvious why inequality is so bad in Boston, almost all of the housing is being made for the rich and near rich–some of the poor can find housing through federal and state subsidies (which are being cut) but the middle-class is out of luck.

‘Affordable’

I’m on the BRA’s affordable housing email list. Here’s the latest:

Unit Size: Three studios, three one-bedrooms.
Price: $1,724/month for studios, $2,008 per month for one bedrooms.
Maximum Household Income: One person HH: 120% at $79,300; two person HH, 120% at $90,600; three person HH, 120% at $101,950.

That’s right, a studio that costs $1724 is listed as ‘affordable’. I guess I won’t be living in Boston in the near future.

Redistribution

In some ways this is refreshing:

Rosenthal said he has also approached Governor Deval Patrick’s office of housing and economic development to ask for help with his $7.8 million shortage but has not received a reply. Greg Bialecki, Patrick’s secretary of economic development, did not respond to a request for comment Wednesday.

Rosenthal said the money would fill a gap in funding needed to satisfy his primary financial backer, Bentall Kennedy Group, a major real estate investment firm that wants a 6 percent return on the project.

But by the time the deal was finalized, the project’s construction costs had risen by $48 million. Rosenthal said that increase threw off the expected return of Bentall Kennedy, requiring tax assistance to get the firm to commit money for construction.

This is always true, but usually the actors aren’t quite so direct in saying that they want a tax break so they can get bigger profits. This isn’t much better:

Participating in the event was Jeffrey Simon, the head of real estate for the Massachusetts Department of Transportation, which owns the 4.5-acre property on which Rosenthal is seeking to build, and which stands to collect $226 million in rent from the development.

Earlier this year, the Massachusetts Department of Transportation approved revised lease terms with Rosenthal, who has committed to pay rent to the state for 99 years.

The state built the highway through the middle of neighborhoods against the wish of the neighborhoods, left it open and ugly because that was cheaper, all to benefit commuters. Now they want to make lots of money off of it which is why this project is so big and so complex. Thanks state of Massachusetts.

Arbitration

The Boston Globe has really been pushing stories like this:

Under current law, arbitrators must consider what a municipality can afford. Walsh’s bill includes that same provision, but his campaign could not identify any new fiscal safeguards in his legislation.

The campaign maintained that the threat of binding arbitration could force compromise. But the campaign could not explain how the shift would better ensure that a community could pay for an arbitration award. Under Walsh’s proposal, an arbitrator’s ruling would be final, and the city council would have no say.

“That’s a major difference from current law,” said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a budget watchdog funded by businesses and nonprofits.

“Taking the city council out of the equation gives much more power to the arbitrator. It’s really a step backward for financial accountability to the taxpayer. It would seriously weaken the city’s hand.”

The idea is that binding arbitration is bad because it weakens the hand of the city, of course that means that the current system gives the advantage to cities but I guess that’s ok. In any case this is a complex situation–to decide which side we favor we would need to know how objective the arbitrators have been in the past (do they tend to favor one side) and the nuances of what happens when one side strongly objects to the decision.

What makes this interesting is that the Globe has not said much about binding arbitration that is much more common and definitely slanted to one side:

Stephanie Mencimer, noticed when she went to buy a car that there was a clause saying that she couldn’t sue for any reason, but would have to go through mandatory binding arbitration for any problems. This doesn’t sound too bad, but since the businesses hire the arbitrators there’s a built in conflict of interest. Here are a few bits:

Public Citizen found that in 94 percent of 19,000 cases, NAF arbitrators ruled in favor of the businesses that hired them. One arbitrator handled 68 cases in a single day, awarding every penny that the big companies were seeking. In one case Public Citizen looked at, the NAF also charged $1500 for a three-page document explaining the arbitrator’s decision, something unheard of in regular courts.

One reason businesses often come out on top in arbitration is that arbitrators who rule for consumers have a tendency to find themselves out of work. Such was the case with Richard Neely, a former chief justice of West Virginia’s Supreme Court, who worked briefly as an arbitrator for the NAF. In an article called “Arbitration and the Godless Bloodsuckers,” Neely reported that he had refused to award a bank arbitration-related fees that he judged to be far in excess of what a court would have charged. He never got another case. Neely is not alone. A 2000 study of forced arbitration in HMO contracts found that on the rare occasion that an arbitrator made a significant award for a patient, the HMO never hired that person to arbitrate a case again.

There have been bills to try to get this changed, but the Globe hasn’t been writing a bunch of editorials for those (though they do publish an occasional article). This has been amplified fairly recently:

The issue of arbitration fairness is front and center after a Supreme Court decision in April 2011, which allowed companies to use forced arbitration clauses to ban class actions against them.  Senator Franken recognizes the fundamental unfairness of the court decision, remarking that the decision “essentially insulates companies from liability when they defraud a large number of customers of a relatively small amount of money.”

I wonder why the Globe cares about one situation and not the other–it couldn’t be that the Globe cares more about corporations than unions could it?

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