The University of Massachusetts Amherst

UMass Donahue Institute

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Call the bluff on housing

PROPOSALS to build new housing developments in Massachusetts are often met by flocks of boo birds who complain that the additional property taxes could never offset the increased cost for services, especially for schools and public safety. But a new report from the UMass Donahue Institute argues that new housing is hardly the drain on budgets that city and town officials often claim.

Some may be tempted to dismiss this important study solely because it was sponsored by an affordable housing group -- Citizens' Housing and Planning Association. But the study deserves to be evaluated on its merits. The high cost of owner-occupied housing in Massachusetts continues to drive people out of the state. And those costs are driven in large measure by strict land use regulations, such as two-acre zoning, designed to keep developers of dense housing at bay. But all that maneuvering by public officials may actually be weakening their communities.

It's time to take a deeper look at the state's "smart growth" philosophy, which rewards cities and towns for adopting zoning districts for the construction of multi-family housing. In addition to cash payments from the state, the municipalities are also reimbursed in full by the state for any net new education costs resulting from the boost in housing units. Former governor Romney earned accolades for advancing this carrot-style approach. But the findings of the UMass report suggest that the rewards, in some cases, may be too sweet.

After analyzing eight multi-family developments in seven cities and towns, the authors concluded that the housing "did not have any measurable negative impact on public services in their municipalities." In Brookline, for example, the study found that a recently built 35-unit condo development generated $86,047 in annual costs to the town while returning $148,359 in total property taxes. Even in towns with the opposite effect, such as Sandwich, the net municipal cost per unit barely exceeded the median tax payment.

Study author Eric Nakajima is not arguing for an end to incentives. But he does suggest sensibly that the payments be restricted to towns where multi-family and affordable housing are having a measurably negative impact. Nakajima offers a "fair share" formula that would allow officials to measure fiscal impact by figuring out the difference between the average cost a municipality bears to provide services to a household and the amount paid by that household in property taxes. Applying that formula, he says, will make a "transparent and rational debate" possible.

When knee-jerk NIMBYism alone is at the root of resistance to new housing, the state should be prepared to apply the stick, such as linking local aid to progress on housing. The best response to any municipal official who resists denser housing because of strains on services should be, "Prove it."

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