Who should fund more housing in Cambridge, and why they won't
In the previous email I argued that we need more physical units of housing in the Boston area, including Cambridge, separate from affordability.
It's worth keeping in mind that building more housing cannot lower housing costs beyond a certain point. One of the ongoing affordable housing projects in Cambridge has a projected cost per unit (land + construction + other costs) of $600,000 per unit. There are ways to lower these costs (building taller to amortize the land cost, new technologies, possibly efficiencies if we ever started building at scale, regulatory changes in some situations) but still, there will be some lower limit. So if you want housing to cost a lot less than that, you need government subsidies in one form or another.
But, again, I think building more housing is valuable, just not sufficient. Who will pay to build this housing, though?
Potential sources of funding
Federal government: we elected a kleptocratic fascist, oops
The Federal government is the ideal source of funding: they have inconceivably large amounts of money, and unlike cities or states they don't need to run a balanced budget. Unfortunately it seems unlikely that a Trump administration will be helpful.
Deficits aren't necessarily a problem. For one thing, since the US issues its own currency, it can't go bankrupt. Too much spending on non-productive things like F-35s can cause inflation, because it increases demand without creating new resources. But building housing will reduce inflation long-term, because housing (~34% of the CPI) will be cheaper.
State government: care more about low taxes
They have a lot of money compared to Cambridge, and state funding supports most of the affordable housing projects built in Cambridge. The legislature recently passed a housing bill, which has the goal of building or repairing 65,000 housing units over the next 5 years. There are currently 3 million housing units in the state, so that's 2% of units... and some of those are just going to be repaired, not added! And, of course, that's over 5 years.
Unfortunately:
- It's harder to get the state to spend more money when elected officials' main priority is low taxes for rich people. The first thing Gov. Healey did after being elected was push the legislature to implement massive tax cuts for the rich, and the legislature was happy to oblige. (Here's a letter from Rep. Connolly, who represents parts of Cambridge and Somerville, explaining why he was opposed.)
- More broadly, the legislature is really bad at passing legislation.
City government: care more about low taxes
The City allocated $24 million to affordable housing this budget year, enough to pay for 40 units of housing. There are currently around 53,000 housing units in the city so that's good but very insufficient.
Cambridge could raise taxes quite a lot—our property taxes are far lower than neighboring cities. And 2/3rds of the taxes comes from commercial property, so raising residential property taxes allows for a 3× multiplier in revenue. To make this more concrete: if taxes were raised such that every housing unit had to pay an extra $12/year, just $1/month, the City would in total get an extra $1.8 million in revenue (12 * 53,000 * 3).
Unfortunately, many (probably most?) of the City Council have a top priority of low taxes for massive corporations (two of Cambridge's top taxpayers are Alexandria Real Estate, which has a stock market valuation of $18 billion, and BioMed Realty Trust at $5 billion), and low taxes for the richest people in Cambridge. In fact, right now they're in a middle of a collective freakout over the fact that these wealthy entities and people might have to pay slightly more in taxes, leading to cutbacks in City capital spending.
Non-profits: get their money from the government
Non-profits that build housing get their funding from the government, often gathering grants from multiple sources to build affordable housing projects. So we're back to government.
Property developers: constrained by zoning
We are left with for-profit developers, whose sources of funding aren't tied to rich people's deep hatred of paying their fair share. If there are more than 10 units in a new building, 20% of floor space needs to be subsidized affordable housing, so new construction can also increase affordable units. (This does mean buildings are less profitable in certain configurations, to the point where some buildings simply won't get built as a result.)
One of the main constraint on property developers building more units is zoning: it's not legal to build apartment buildings, with only single family homes or duplexes allowed in much of Cambridge, and the Boston area more broadly. The result is expensive single family homes being rehabbed into even more expensive single family homes, instead of 10 or 20 slightly-less-expensive units being built.
Why is limited building size and height a problem?
- We want more units in places where there's decent public transportation or other alternatives to cars like bike infrastructure. And the closer you are to the urban core, the less land is available, so the only option is to build upwards.
- Apartment buildings are less expensive per unit because land is so expensive in Cambridge, so by building higher you can spread the cost of the land across multiple units.
What should we be doing?
The City Council is currently discussing getting rid of "exclusionary zoning", the various zoning limits (single-family-only, height limits, and more) that prevent building more housing. It's called "exclusionary" because, as one report explains:
... over the past 100 years, zoning has been used by cities and towns across Greater Boston as a tool for excluding certain groups of people, including:
- Racial minorities, especially Black residents
- Lower-income and working-class residents
- Families with school-aged children
- Religious minorities
- Immigrants
- And, in some cases, any newcomers/outsiders at all
The specific plan being discussed would legalize building up to 6 stories across the city (there's a very detailed FAQ). The City estimates this would create an additional 4900 housing units by 2040, of which 900 would be affordable (see this presentation, page 57).
There are also other discussions ongoing about making it possible to build even higher in places like Central Square, or along Mass Ave in general. This is a good start!
But we should also have government building more housing, and in particular building a lot more affordable housing, which is difficult to do without government support. On a Federal level, there's not much you can do in the short term. But on the state and especially city levels, you can help elect people who are actually willing to raise taxes on property owners (like me!) in order to build the affordable housing we need.
A bit more
- Take action: Write to the City Council (and CC clerk@cambridgema.gov so it goes on the public record) telling them you support getting rid of exclusionary zoning and building more apartment buildings.
- Take action: Invite your Cambridge friends to join this newsletter, to help spread these ideas farther!
- Song of the day: Tantsuyushchiy Ostrov, by Angelina Petrosova