Boston Approves $31.5M in Tax Abatements for Four Large Multifamily Projects

Boston is implementing a new initiative to stimulate large-scale housing development, offering an estimated $31.5M in temporary property tax abatements for four significant market-rate multifamily projects. The Boston Planning & Development Agency (BPDA) Board recently approved Mayor Michelle Wu's proposal, which targets over 1,400 new housing units.

The approved projects include a 424-unit building by Fulcrum Global Investors in Charlestown, a 341-unit building by New England Development at Allston Yards, a 333-unit building by Nordblom Co. in Brighton, and a 316-unit building by Hines in Allston. These developments serve as a pilot for the program, with city officials noting that large projects (over 300 units) have seen zero starts recently due to declining returns.

Shrinking profitability is attributed to a 38% increase in construction costs since 2015 and a 133% spike in mortgage interest payments, outpacing a 35% rise in rents. Developers must commence construction within 12 to 15 months to qualify. The abatements defer tax increases, spreading the post-completion value jump over several years, ensuring no net revenue loss for the city.

While some developers express uncertainty about whether the relief is sufficient to secure immediate construction financing, the city believes it will help projects that are close to financial viability. For developers, this temporary tax relief during construction and initial stabilization is critical for making projects commercially feasible in the current challenging economic climate.