In his bid to tackle Boston’s housing crunch, Mayor Martin J. Walsh is looking for help from a new source: The business community.
Walsh has started pitching major companies and foundations in the city on the idea of pooling their money — perhaps as much as $100 million — to help finance affordable housing in Boston. Discussions are still in early stages, with another meeting scheduled this month. But if the idea comes to fruition, it could make Boston the first city on the East Coast to adopt a strategy that cities and companies are experimenting with out west, where tech firms are putting up millions of dollars to combat a housing crisis many critics say they helped create.
Walsh’s effort was born out of a speech he gave in October before the Greater Boston Chamber of Commerce in October. He urged business leaders to do more to encourage the construction of middle-class housing. The idea came into sharper focus Tuesday during his State of the City address, when the mayor pledged $500 million in new spending over the next five years on a variety of affordable housing programs.
One of those programs, aides said, would be seed money for a largely-private fund to help acquire and finance affordable housing.
“It’s not going to solve everything,” said Walsh’s housing chief Sheila Dillon. “But it could be a good resource.”
The concept is loosely modeled on similar efforts in expensive West Coast housing markets.
Early last year, a collection of big companies and foundations in the San Francisco Bay Area pledged $540 million to help lower that region’s crippling housing costs. They were later joined by tech giants Google and Facebook which each promised $1 billion in land and low-cost financing to help build housing. In Seattle, Microsoft promised $500 million toward affordable housing as well, and has leaned on some suburban municipalities to loosen zoning rules to enable more building.
Some have criticized those efforts as too little, too late, given how the exploding tech industry, in particular, has reshaped housing markets in those cities by attracting many thousands of employees, driving up rents and home prices as a result. Others have noted that most of the funds come in the form of loans and land sales — profitable for the companies themselves — not grants. Regardless, the funding programs are beginning to bear fruit.
In September, Microsoft put up $60 million to help a Seattle-area housing authority purchase several housing developments and keep rents low. A month later, ground was broken on an affordable housing project in Berkeley, Calif., that was financed by a corporate partnership.
Efforts here are nowhere near that stage.
Following Walsh’s Chamber speech last fall, he and Dillon talked with Chamber president Jim Rooney and several of the city’s larger employers about how best to approach housing. During those talks, the notion of a fund came up.
“The idea of a fund or housing trust was talked about,” Rooney said. “Beyond that, there’s been no decision to do anything specific.”
A more formal sit-down with some of the major companies to explore the idea — including which ones might contribute, what a fund might pay for, and how it would function — is scheduled later this month. Dillon said the Walsh administration would like to be able to seed the fund through some of its own resources, perhaps from a 2 percent tax on high-end real estate sales. The city recently sent such a proposal, known as a home rule petition, to Beacon Hill for legislative approval.
Dillon said the amount of seed money has not been determined, “but it needs to be sizable to signal to the business community that we’re serious.”
While many details remain to be worked out, Rooney said he expects businesses would be receptive to Walsh’s idea. For many companies, Greater Boston’s high housings costs are a growing worry, especially when it comes to hiring and retaining workers who may struggle to afford living here.
“Our competitive advantage as a region is our workforce and our talent,” Rooney said. “We need people who want to stay here, who want to come here, and who can afford to do so. Issues like cost and availability of housing are really key to that.”