Denting the housing problem with dorms

HOW CAN GOVERNMENT impact the high cost of housing?    

The current debate in Massachusetts so far has focused on supply-side solutions: zoning reform to allow creation of new, multi-unit housing, especially near public transit, and incentive programs and subsidies for developers to build new units.   

There’s also talk of tilting the legal system towards tenants, with legal aid, eviction protections, and sealing of eviction records. These are valiant and necessary efforts, but courts of law are no match for the laws of supply and demand. Rent control looks unlikely, and in any event is the policy equivalent of a tourniquet: it can slow the bleeding, but it can’t repair damage already done.  

There is a significant step, outside of what we normally consider the housing field, that could have an impact relatively quickly.   

One reason the rent is so damn high is that so much of the housing stock is taken by students.  

There are over 100 colleges and universities in Massachusetts, and some are offloading significant numbers of students to the private housing market. US News says 53 percent of Northeastern’s nearly 16,000 undergraduates live off-campus. This is not just a Greater Boston phenomenon; Worcester Polytechnic Institute reports a majority of students live off-campus, for example.  

Sure, some universities house almost all their undergraduates on campus. At Harvard, for example, 98 percent of undergraduates live in on-campus. MIT and Boston College also report percentages well above 90 percent.   

But there are also graduate students. Many, many thousands of them.   

In many communities, these off-campus students are a large portion of the rental market. Student impact on rents is magnified to the extent they are backed by their parents, financial aid, or student loans. This somewhat artificial boost to demand pushes rent levels far beyond where the market would be without students.   

If these short-term tenants were back on campus, it  would free up housing stock, lower the demand pressure on rents and put many more housing options within reach for lower-income workers and families.   

Dormitories can be built faster than other forms of housing. Institutions of higher education enjoy a special status under Massachusetts law that enables them to build more densely and more quickly than other developers. Popularly known as the Dover Amendment, Chapter 40A, Section 3 of the Massachusetts General Laws exempts educational institutions from most zoning requirements.    

In terms of carrots, one way government could incentivize construction of student housing is to get back into the business of helping colleges and universities finance new construction.  

A state authority called HEFA, the Health and Education Finance Authority, used to issue tax-exempt bonds to support educational and health care construction. In a 2010 consolidation, HEFA’s  bonding functions were rolled over to the Massachusetts Development Finance Agency, or MassDevelopment, which retains the legal capacity to fund campus buildings but has mostly focused on broader  economic development strategies, like redevelopment of Fort Devens.     

The administration could direct MassDevelopment, in the name of the housing affordability agenda, to make new student housing a top priority. With financial backing, and the Dover Amendment’s leverage against delays, a substantial amount of student housing could be built in the first four years of the Healey administration. 

Municipalities could help as well, by considering dormitory housing as a factor in Payment In Lieu of Taxes (PILOT) calculations, and maybe steering under-utilized office buildings towards student housing. This is not as hard as it sounds: Emerson College’s campus residence halls are a good example of converted office buildings.   

Would this effort require sticks as well as carrots? 

Some have advocated conditioning non-profit status on providing housing for students, but that’s a pretty blunt instrument, and would likely cause much disruption if applied across the board. Certain segments of the higher education sector are in fragile financial condition, as the recent failures of Pine Manor and Mount Ida colleges demonstrated, and policy makers will be anxious to avoid further stress on those colleges.  

There would be brutal pushback from some schools, and from many landlords who are benefiting from the artificially high rents.    

However, the housing market is already brutal. Absurd prices for starter home and ridiculous rents are already frustrating the dreams of  young people, forcing unmanageable commutes on workers, and leaving some families “unhoused” – our new, politer term for homeless.   

Jack Corrigan is a lawyer and longtime political activist who served as chief of operations for the governor in the Dukakis administration.