For hire: CEO of housing and transit
Eastern Mass. has too little housing and too much traffic. Here’s a bold fix.
EASTERN MASSACHUSETTS has a lot going for it. From the outside looking in, we’re thriving in the information economy. We can boast a talented workforce; world-class research and development; productive relations between government, business, and academia; nationally esteemed health care and education services; and access to deep capital markets.
Residents, though, see the underside of that prosperity.
Traffic is terrible and housing is too expensive. Over and over, these twin problems are identified as leading challenges by voters. They represent real and present dangers that threaten our quality of life and our dynamic economy.
Traffic and housing cannot be managed with patchwork fixes around the edges. These problems require bold experimentation and creative cooperation across sectors and agencies. We should look to the Copenhagen model for inspiration.
Championed by Bruce Katz, co-author of The New Localism and founder of the metropolitan policy program at the Brookings Institution, the Copenhagen model refers to a publicly owned, privately run corporation that raises money for infrastructure and housing by developing public land and operating transportation assets.
The model was born in the 1980s, when Copenhagen was suffering from high unemployment, a cratering economic base, and budgetary shortfalls, each of which were feeding into the others. To kick-start a more virtuous cycle, the national government, which owned the Port of Copenhagen, partnered with the local government, which controlled zoning, to sequence the development of port land with investment into better transit.
Demonstrating civic courage and creativity, leaders from government and the private sector tapped the value of public land to build housing and finance improved mobility, which then created additional public value to fund the next iteration. Copenhagen surged from its downward spiral to become one of the most prosperous, economically inclusive cities in the world over the past 25 years.
Eastern Massachusetts does not have a downward spiral of employment and economic base – it has an upward spiral of housing costs and commute times. According to a recent U.S. News & World Report ranking, we have the seventh highest housing costs and fourth longest commute times in the country.
Numerous public and semi-public bodies in Massachusetts each manage a slice of land and/or transportation infrastructure, operating at cross-purposes instead of strategically. No authority has a portfolio with the scope and the mandate to comprehensively address our housing and transportation crisis.
We need a coalition of courageous, creative leaders to break this upward spiral by strategically managing public assets to the highest collective return. Residents of Massachusetts, like those in Copenhagen, would benefit from a self-catalyzing cycle of more affordable housing and faster commutes. The first step is to charter a public corporation.
Public direction, private discipline
EMHAT would re-invest profits towards achieving its dual mandate; once that objective is accomplished, EMHAT would either be re-chartered with a new mandate or begin paying dividends to the state and local governments.
How EMHAT could work:
- State charters EMHAT with its dual mandate and invites local governments to join as shareholders.
- State and local governments transfer assets to EMHAT. These assets would include: MBTA; Massachusetts Turnpike Authority; public land owned by the state in Eastern Massachusetts, including Massport land adjacent to Logan Airport and the Port of Boston; public land owned by participating local governments, including real estate owned by the Boston Planning and Development Agency.
- EMHAT conducts an audit to determine the market value of the assets on hand, under both current zoning and zoning for highest-and-best-use.
- EMHAT re-zones land for highest and best use. Local governments can veto the re-zoning with a two-thirds vote of the special permit-granting authority.
- As assets are transferred, re-zoned, and audited, shares are continuously re-balanced amongst the state and local governments to reflect the value each one is contributing.*
- EMHAT takes out long-term loans secured by the (increased) value of the land.
- EMHAT invests the loans into infrastructure improvements, especially public transit, that further increase the value of the land and improve commutes.
- EMHAT further improves commutes through congestion pricing on highways and arteries. Charging drivers during peak hours reduces traffic and generates revenue for transit improvements.
- EMHAT facilitates commercial and residential development by leasing the land to the private sector.
- Revenue from leasing is used to service debt on the long-term loans.
- Taxes from new development are apportioned to the local government(s) of the site.
- Increasing the supply of housing near improved transit reduces the Housing Affordability Index. EMHAT may also directly subsidize housing, in lieu of inclusionary zoning requirements, for low-income residents.
- Reducing traffic on the Mass. Pike and other arteries and improving transit reduces the average round-trip commute time.
* Potential bonus: Cities and towns can borrow against their shares in EMHAT in order to fund their burgeoning pension and health-care obligations
A cycle of housing and transit improvement
These steps are not a formula; they will need to be adapted. But the core economics are not complicated: Government creates value by zoning for more compact, mixed-use development and improving mobility options; the private sector builds housing to capture that value, some of which it retains in profit and some of it which it transfers back to government in lease payments. The government re-invests its share back into improved mobility options, creating more value. The cycle continues, and the citizens benefit.Every day, our citizens are pioneering the fields of health care, robotics, cybersecurity, marine biology, and dozens more. They are edging aside “It’s always been done this way” thinking – and they are succeeding. State and local government should be galvanized by the example of our own citizens to move beyond our long-standing aversion to regional planning. We should be as bold and creative as they are.
Jake Auchincloss is an at-large Newton city councilor.