On July 10, 2023, Mayor Wu and the BPDA announced the launch of a Downtown Residential Conversion Incentive PILOT Program for downtown office buildings, and the application went live in October. The goal of this program is to support owners and developers of older commercial office building space in converting to residential units. (Jump to program details below)

Why Incentivize Conversions of Office to Housing?

Conversion of downtown offices is an important response to post-pandemic economic and workforce shifts that appear to be long-lasting. These challenges exist beyond Boston and are receiving broader attention at the national and state levels with other major cities including Chicago and Pittsburgh, which have also launched similar programs in response. The City’s program is designed to help increase economic activity in Downtown Boston by increasing the amount of people living downtown, while helping stabilize the office market.

The release of the Downtown Revitalization Report in October of 2022 as part of PLAN: Downtown showed that downtown office space vacancy rates were at approximately 20 percent at that time - they are now around 28%. In response, Staff spoke to developers over the next 12 months to gather information on their interest in residential conversions, and possible pathways to achieve more housing Downtown. The BPDA also contracted HR&A Advisors Inc. to produce a report on the feasibility of office conversions in Downtown Boston and the Financial District. This research suggested that partnership with the City was the most financially feasible path forward for private developers to be able to complete residential conversions due to the high cost of, and especially in this moment of high interest rates.

Goals of Conversions

  • Build much-needed housing, including affordable rental
  • Respond to post-pandemic lasting economic shifts
  • Activate properties currently facing high office vacancies
  • Create an active Downtown beyond work hours

The decision to convert an office building to another use is highly dependent on four key inputs.

  • Market conditions
    • Current and projected performance of both the office markets
    • Alternative uses (e.g. lab, hotel etc.)
  • Physical attributes and location
    • Floor-plate size
    • Elevators and stairs
    • Operable windows
    • ADA compliance
    • FIre systems
    • HVAC and utilities
  • Construction cost to convert the building
    • Hard and soft costs
    • Existing leases
    • Construction and lease-up period
    • Interest rates
    • Loan availability
  • Building performance and characteristics
    • Vacancy rates
    • Rent levels
    • Efficiency factor

Learn about the Program

An application for the program is now available for qualifying property owners. To qualify a property owner must either own the property you wish to convert, or have a signed agreement with the existing owner granting exclusive site control. After you have downloaded and reviewed the PDF application, please reach out to John Weil to discuss details of your project. Once that initial meeting has taken place, you should then complete and submit the application. If you have a signed LOI showing exclusivity over the property, you should submit that with your application.

Sign up for updates to the program below.

Key Elements

  • Selected developers will enter into a payment in lieu of taxes, or “PILOT” agreement with the City of Boston and the BPDA, which will provide for an average abatement of up to 75% of fair market assessed residential value for a length of up to 29 years, with terms to be negotiated with the Assessor. The PILOT agreement will require conversion of use from commercial to residential soon after the signing of a PILOT agreement.
  • Fast tracked processes for both Article 80 and permitting.
  • Zoning for conversion to residential where applicable per PLAN: Downtown.

Requirements

  • Must complete application by June 2024 and start construction (i.e., have a full building permit) by October 2025.
  • Target area is in the 121B Demonstration Project Area, however projects will be considered on a case-by-case basis anywhere in the City.
  • Affordable Housing Requirement: Per newly-approved Inclusionary Zoning Standards: 17% of all newly created units must be deed restricted affordable for households making up to 60% of the Area Median Income, and another 3% of units must be available at Fair Market Rent and reserved for voucher holders.
  • Compliant with the Stretch Energy Code, where applicable and not in conflict with other regulations.
  • Not designed for a complete demo and new ground-up construction.
  • This program is not intended for micro-units.
  • After permit has been pulled, the PILOT agreement will give the City and the BPDA the right to cancel the abatement and clawback any forgone tax revenues if there is evidence that the developer is not diligently pursuing the completion of construction for an incentivized project.
  • Transaction Charge of 2% of gross sale proceeds for future sales for a to-be-determined length of time. This charge will be waived upon passage of the Transfer Fee Home Rule Petition, or its equivalent.
  • If you have a project that you would like to convert that does not meet the requirements and qualifications listed above, the BPDA will consider all applications for their eligibility in meeting the City’s goals in this program.

Additional Resources

For more information on the program, please contact John Weil, Senior Program Manager for Downtown Conversions.


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