This 102 page document is the most recently revised set of recommendations by the Town of Arlington’s Redevelopment Board. The report takes into consideration the comments and information provided over the last few months’ public hearing process. It also incorporates a citizen petition which strengthens the case for increasing permanent affordable housing with the passage of these zoning related Articles. Town Meeting convenes on April 22, 2019.
Related articles
by Andy Greenspon
Image credit: Henry Hudson Kitson, Public domain, via Wikimedia Commons
In 2023, Lexington was one of the first towns to comply with the State “MBTA Communities” law (MBTA-C) by adding 227 acres to several multifamily overlay zones. When discussing this proposal, it was estimated to possibly generate 400-800 units in 4-10 years. However, after receiving building permit applications for about 1,100 units in the first year (including 160 inclusionary affordable units), Lexington passed Article 2 at a Special Town Meeting recently, which decreased the amount of land in these zones to approximately 90 acres. What can Arlington learn from Lexington’s experience?
Overall, Lexington’s experience shows us that developers are willing and able to build multifamily housing on large lots that aren’t very built up, and that MBTA-C can be successful in adding new housing in some circumstances. However, Arlington has few if any large, sparsely-built parcels zoned to allow multifamily housing under MBTA-C. As such, Arlington is unlikely to add significant amounts of new housing or affordable housing as a result of the MBTA-C overlay passed at Town Meeting in fall of 2023.
Parcel Size and Existing Buildings
Many of the parcels in Lexington’s MBTA-C zone are multiple acres each, are underutilized, and contain older office space. In contrast, Arlington’s MBTA-C parcels are much smaller and mostly covered with existing buildings, typically residential.
The largest development approved under MBTA-C so far in Lexington is at 3-5 Militia Drive. This land is three very large parcels containing a couple older office buildings, a previous religious institution, and giant surface parking lots. Therefore, such a property was already primed for redevelopment and the large lots allowed for 292 units to be approved. These parcels are also within walking distance of Lexington Town Center and the Minuteman Bike path, so multi-family housing on this location is a great use.
In contrast, there are no similar parcels in Arlington in the MBTA-C zone with large surface parking lots and aged office space that could be redeveloped in such a manner. One of the few parcels in Arlington that is somewhat similar to the planned parcels for redevelopment in Lexington would be the Walgreens at 324 Massachusetts Ave, 1.5 acres with a surface parking lot. However, this parcel was specifically excluded from the MBTA-C overlay along with all other business parcels to avoid displacing any existing business space. And the parcel is unlikely to be redeveloped one way or another unless Walgreens chooses to close their business and sell the parcel to a developer.
In short, compared to Lexington, Arlington is “built out” insofar as almost every parcel is utilized in some manner with high lot coverage. The original Lexington MBTA-C zone contained many parcels with low lot coverage, large surface parking lots, and underutilized office space, all attributes that make such parcels more likely to be sold to a developer to construct housing if permitted by zoning.
Last, while 1,100 units have been permitted so far, this does not mean all these units will be constructed given current financial uncertainty in the economy and high interest rates. It will also take several years for these properties to be completed and prepared for occupancy. As such, the original estimate of 400-800 units in 4-10 years (an estimate that actually widely ranges from 40 units all the way to 200 units per year) may in fact not be that far off from the final numbers once buildings are completed. The parcels most primed for redevelopment were acquired and permitted first. Finally, it is not entirely clear how many more parcels would have been redeveloped in the next 5-10 years had the Lexington MBTA-C zoning not been reduced in size.
Development Potential in Arlington
Most privately owned lots in Arlington are less than ⅓ of an acre with many much smaller, significantly limiting the amount of new housing development on any single parcel. Almost all of these lots are covered by existing buildings, and some of those buildings are condominiums. Therefore, in order for a large new construction project to occur on such parcels in Arlington’s MBTA-C multifamily zone, all of the following would have to take place:
- a single owner would have to take control of multiple lots and/or condominiums, meaning that
- multiple existing property owners would have to want to sell at the same time, or else the new owner would have to take the time and risk to assemble the property slowly, and
- the new proposed development would have to be large and profitable enough to make up for the combined purchase prices of all the properties acquired.
Meanwhile, properties in Arlington generally turn over at a fairly slow and steady pace. This is in contrast to underused large commercial properties, whose owners are more eager to sell.
With simulation modeling performed on potential rate of redevelopment, the Arlington Redevelopment Board’s 2023 Report to Town Meeting on the MBTA-C proposal projected that 15–45 parcels could be redeveloped over the next ten years, for a net increase of 50–200 new units or 5–20 per year, far fewer than even the initial Lexington housing unit construction estimates at the time of passage of their initial MBTA-C zoning.
In fact, Arlington has seen even less than the low end estimate of 5 units per year so far since our MBTA-C zoning became effective. Only a single project has been permitted so far, which would turn an existing 2-unit building into 4 units, a potential net gain of 2 housing units.
Lessons
- There is strong regional demand for housing including for multifamily units.
- Developers are currently willing and able to build when lots are available, are zoned multifamily, and aren’t already full of other buildings.
- Arlington can’t expect anywhere near as many new units with our current zoning as Lexington saw, because our MBTA-C multifamily zones are almost exclusively made up of smaller and built-up lots.
- As a result, Arlington’s current zoning won’t add much housing or affordable housing to our community, and won’t noticeably increase our tax base either.
Dave Weinstock, an Arlington resident interested in affordable housing wondered about the concept of “developer math”. The math involved in planning an affordable housing projects is a problem that needs to get solved in order to have anything built here in Arlington, or anywhere. This topic comes up frequently in community discussions about the need for more housing.
Questions are raised around:
- 1- Why build so many units vs. smaller buildings
- 2- Why parking is costly and inefficient use of land
- 3- Why can’t more affordable or all affordable units be built?
- 4- The cost of subsidizing affordable units and how that may translate to higher rental rates/costs, etc.
Dave found a great Architecture and Development firm in Atlanta (Kronberg Urbanists + Architects, based in Atlanta GA) that lays out a nice presentation, includes sample proformas, and real life scenarios that may help us understand this piece of the puzzle better when evaluating any project and how developers may be incented to build certain types of projects or do certain types of work.
Here is a link, reformatted to be within this website, to the presentation, showing the varieties of choices, costs, formulas and outcomes developers consider before deciding if the project can be built: https://equitable-arlington.org/developer-math_kua_071420/
Much of our hope for more affordable housing depends on the market forces of capitalism and the willingness of developers to build for good, not just for profit. But the developers must be able to cover their costs. Many communities are highly skeptical of developers, assuming the community will get tricked, the developer will get greedy and the promised housing will be a disappointment. Trust is needed. But so is verification. We all need to learn the developer math.
What are the math factors that a developer considers before deciding to build affordable housing?
Here is a link to the original presentation. https://www.kronbergua.com/post/mr-mu-let-s-talk-about-math
This is the second in a series of “Arlington 2020” articles. The first article looked at the number of one-, two-, and three-family homes and condominiums in Arlington, and how that housing stock has changed over time. This article will examine changes in the value of those properties. We’re going to look at “value” through the lens of property assessments, so we should start with an explanation of what property assessments are and how they’re used.
A property assessment is simply the Town Assessor’s best estimate of what a property is worth, based on market values. The assessor’s office inspects properties every ten years; during intervening years, assessments are adjusted based on sale prices of similar homes in a given tax neighborhood. For all practical purposes, assessed values tend to trail market values by two years. In my neighborhood, property assessments are spot on — my house was assessed at $501,000 in 2020; during 2018, sales of similar homes in the neighborhood ranged from $495,000 to $520,000.
Condominiums have a single assessed value, which includes land and buildings. Otherwise, assessed values are broken down into land value, building value, and yard items (e.g., a garage or a shed).
Assessed values are used to determine the tax rate. The assessors page on the town website has calculations in worksheet form, but for all practical purposes, it’s just a division problem. One takes the total tax levy and divides by the sum of all property assessments (in thousands of dollars), and that’s the tax rate. An individual’s taxes are the assessed value of their property (in thousands of dollars) multiplied by the tax rate. If an individual owns (say) 1% of the assessed value in town, that individual will pay 1% of the property tax levy.
The main point is that assessed values are based on market values, but with a two-year lag. Consequently, we can use them as a way to see how home prices have changed over time.
With that background information out of the way, we can look at some numbers. Here’s a graph of the median assessed values for condominiums, one-family, two-family, and three-family homes from 2013 through 2020. (the “median” is a value such that half of the assessments are above, and half are below).
| year | Condominium | Single Family | Two-family | Three-family |
| 2013 | $297,800 | $472,850 | $532,650 | $581,600 |
| 2014 | $300,150 | $484,400 | $530,000 | $574,800 |
| 2015 | $318,200 | $507,900 | $572,000 | $616,300 |
| 2016 | $351,050 | $546,300 | $623,150 | $673,550 |
| 2017 | $357,750 | $581,200 | $663,900 | $714,800 |
| 2018 | $395,400 | $618,800 | $732,100 | $787,600 |
| 2019 | $463,250 | $701,550 | $851,200 | $897,500 |
| 2020 | $473,100 | $771,900 | $944,000 | $1,010,850 |
| %change | 58.87% | 63.24% | 77.23% | 73.81% |
As one would expect, two-family homes are worth more than single-family, and three-family are worth more than two. Condominiums have a lot of variety; they could be half of a duplex, or a single unit in an apartment building. But a general upward trend is clearly evident.
These values are straight out of the assessor’s database, and not adjusted for inflation. The Bureau of Labor Statistic’s inflation calculator shows 12% inflation between 2013 and 2020; the %change is pretty considerable, even if one deducts 12% for inflation.
Next, I’d like to dig further into the 1–3 family assessments, by breaking them down into the value of land vs the value of buildings, and showing how that’s changed over time.
Single-family homes:
| year | Land value | Building value | Total assessed value |
| 2013 | $243,700 | $226,300 | $472,850 |
| 2014 | $253,750 | $227,050 | $484,450 |
| 2015 | $272,700 | $229,900 | $507,900 |
| 2016 | $296,400 | $243,950 | $546,400 |
| 2017 | $326,400 | $246,400 | $581,250 |
| 2018 | $360,900 | $248,100 | $618,800 |
| 2019 | $440,400 | $250,400 | $701,600 |
| 2020 | $448,600 | $316,300 | $771,900 |
| %change | 84.08% | 39.77% | 63.24% |
Two-family homes:
| year | Land value | Building value | Total assessed value |
| 2013 | $202,500 | $320,550 | $532,650 |
| 2014 | $212,250 | $307,800 | $530,000 |
| 2015 | $256,400 | $309,800 | $572,000 |
| 2016 | $262,500 | $349,400 | $623,150 |
| 2017 | $307,000 | $350,700 | $663,900 |
| 2018 | $352,500 | $373,900 | $732,100 |
| 2019 | $478,300 | $374,850 | $851,700 |
| 2020 | $454,500 | $486,100 | $944,000 |
| %change | 124.44% | 51.65% | 77.23% |
Three-family homes:
| year | Land value | Building value | Total assessed value |
| 2013 | $200,100 | $377,900 | $581,600 |
| 2014 | $209,100 | $364,100 | $574,800 |
| 2015 | $249,800 | $366,550 | $616,300 |
| 2016 | $259,950 | $412,350 | $673,550 |
| 2017 | $298,100 | $412,500 | $714,800 |
| 2018 | $343,050 | $438,800 | $787,600 |
| 2019 | $459,000 | $440,100 | $897,500 |
| 2020 | $440,100 | $578,450 | $1,010,850 |
| %change | 119.94% | 53.07% | 73.81% |
There are several things worth pointing out in these breakdowns.
First, note that the land and building values “jump” a bit between 2019–2020. 2020 was one of our full reassessment years, so I’m willing to attribute this to a periodic course correction. The total increase is generally linear, but the land/building composition has changed.
Second, the median land value for single-family homes is higher than the median building value, for all years between 2013–2020.
Third, most of the increases come from changes in land value. I believe this comes down to location, location, and location. Arlington has a well-respected public school system, and it’s close to universities and tech centers is Cambridge and Boston, and office parks in Lexington, Waltham, and Burlington. City amenities are close at hand.
So what does one do about our rising home prices, and in particular, the rising value of land? The first (and perhaps default) answer is to do nothing. Rising property values are a boon to homeowners who purchased a capital asset (i.e., a house) in the past, and have seen its value appreciate over time. The downside of doing nothing is that each year, increasing housing prices create an ever-increasing income threshold for new residents.
An alternative approach would be to allow more (and smaller) units to be built on each lot. This requires reconstruction or redevelopment, but it allows the cost of land to be amortized among several households. More units/lot means more people and more density, but it reduces the income threshold for buying in to Arlington. (Note that the per-unit cost for three-family homes is lower than the per-unit cost for two-family homes. Similarly, the per-unit cost for two-family homes is lower than the cost of a single-family home).
A third article will look at the distribution of housing prices in Arlington, and how the distribution varies by housing type.
Here is a spreadsheet of data shown in this post.