B'nai B'rith Housing

BBH is a nonprofit developer whose mission is to ease the housing crisis in the Greater Boston area.

  • About Us
    • Meet our Executive Director & Staff
    • Board of Directors
    • Real Estate Council of Advisors
    • Our Corporate Sponsors
    • Nonprofit Partners
    • Distinguished Achievement Award Honorees
    • Our Impact
  • Our Properties
    • The Coolidge at Sudbury
      • The Coolidge at Sudbury, Phase 2
    • Covenant House Communities – Brighton, MA
    • The Fairways & Carriage House at 33Comm – Newton, MA
    • The Machon – Swampscott, MA
    • Residences off Baker – West Roxbury, MA
    • 1201 River Street – Hyde Park, MA
  • News
    • Construction Updates
    • From Our Executive Director
    • Our Newsletters
    • Media Releases & Announcements
    • Housing News We’re Reading
  • Get Involved
    • Subscribe to Our Enews
    • Become a Donor
    • Become a Sponsor
    • Gen2Gen
    • Upcoming Events
    • Sign A Support Letter
    • Volunteer
    • Career Opportunities
    • Contact Us & Subscribe
  • Donate
Home / Housing News / Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

December 21, 2018 by B'nai B'rith Housing News Service

Click here to view original web page at www.bisnow.com

Want to get a jump-start on upcoming deals? Meet the major Boston players at one of our upcoming events!

Massachusetts may have 138 areas designated as opportunity zones, but regional real estate experts aren’t banking on them being the only tax incentive needed to move projects forward in the new year.

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

Perkins + Will principal and Managing Director Robert Brown, Normandy Realty founder Jeff Gronning and Federal Realty Investment Trust Vice President Bryan Furze

“This is a tool in the toolkit, but you’re not going to get very far with just that tool,” Federal Realty Investment Trust Vice President Bryan Furze said.

While developers are still figuring out how to proceed with opportunity zones and the new tax code, Massachusetts commercial real estate players aren’t expecting a huge development boom to accompany the program’s rollout in their state. Programs like a $1.8B affordable housing bill signed by Massachusetts Gov. Charlie Baker and the Low Income Housing Tax Credit are easier to navigate, and Furze notes not all opportunity zones are the same.

“Thirty percent of them are in very-low-income areas, and I don’t know if opportunity zones alone are enough to fuel an economic return,” he said.

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

Massachusetts leaders identified 550 census tracts deemed low-income that would likely qualify for the Opportunity Zone program, a tax incentive created by the 2017 Tax Cuts and Jobs Act. The state's 138 opportunity zones signed off by the federal government enable a developer to defer, and even be exempt, from capital gains taxes depending on how long they hold onto an asset.

Furze and others at Bisnow’s Boston 2019 Forecast and The Future of Opportunity Zones event Tuesday still expect the program to combine with other economic tools to enable projects to pencil out.

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

“It will be essential to combine programs that already existed with opportunity zones so that we don’t end up with just white papers about how great it would be to have more housing,” Winn Cos. President Larry Curtis said. “This could actually create the middle-income, workforce housing that will keep the engine of the state going.”

The Opportunity Zone program comes with little oversight, and it bundles well with other programs, except for a 1031 exchange, Saul Ewing Arnstein & Lehr partner Sally Michael said. That is good news in Massachusetts, which is facing a housing shortage and requires a variety of tax incentives to offset high construction costs to make middle-income housing work financially for developers.

Addressing the common critique that there are too many luxury multifamily developments under construction, Curtis said that stems from the high cost of construction.

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

Bernkopf Goodman partner Peter McGlynn, Spaulding & Slye Investments Managing Director Daniel St. Clair, incoming Massachusetts Secretary of Housing and Economic Development Michael Kennealy, Colliers International co-Chairman Kevin Phelan and U.S. Bank Senior Vice President John Roach

It costs developers in the ballpark of $400K to build a single residential unit in Boston, and that requires a rent of $4K per month to recoup development costs. Considering someone who makes $80K annually would only be able to afford $2K each month without being rent-burdened, incentive plans like historic tax credits, Low Income Housing Tax Credits and now opportunity zones are the only current way to try to close the gap, Curtis said.

“There’s a further disconnect when you go to communities like Fall River, where the market rent may be more like $1,200 or $1,500,” he said.

Opportunity Zones Aren’t Enough To Fuel A Bigger Boston Development Boom

Federal Realty Investment Trust Vice President Bryan Furze, Winn Cos. President Larry Curtis, Hackett Feinberg partner Kimberly Martin-Epstein and Saul Ewing Arnstein & Lehr partner Sally Michael

While panelists Tuesday didn’t expect opportunity zones to stand on their own as development tool, they do see them playing a role in spurring development when used in tandem with an array of existing programs — especially at a time when Massachusetts needs hundreds of thousands of new units of housing.

“If we don’t do that, opportunity zones will be a disappointment for Massachusetts,” Curtis said. “If we do it, we can get some fabulous housing being built for people who need it.”

Filed Under: Housing News Tagged With: affordable, housing, senior

Subscribe to Our E-News

  • I agree to B'nai B'rith Housing's privacy policy and consent to receiving periodic communications.
  • This field is for validation purposes and should be left unchanged.

Follow BBH on Twitter

Tweets by bbhousing

In Their Own Words…

Being able to stay in my hometown, near friends and family was great. And now I have a whole new community at The Coolidge to socialize with, too. It is wonderful!
~ Resident, The Coolidge at Sudbury

Contact Us

34 Washington Street
Brighton, MA 02135
Phone: 617-731-5290
Fax: 617-739-0124

Follow Us

  • Facebook
  • Twitter
  • YouTube

Support BBH – Your Gift Matters!

Image of GuideStar and PayPal logos.

Thanks to Our 2019 Lead Sponsors

  • Jobs
  • Past Events
  • Donate
  • Subscribe to Our Enews