From Good to Great: Recommendations for the Baker Polito Administration

FROM GOOD TO GREAT: Recommendations for the baker polito administration

JANUARY 2015

The Commercial Real Estate Development Association

A MESSAGE FROM DAVID BEGELFER CHIEF EXECUTIVE OFFICER

NAIOP Massachusetts, The Commercial Real Estate Development Association, represents the interests of companies involved with the development, ownership, management, and financing of office, multifamily, industrial, laboratory, institutional, mixed use, and retail space in the Commonwealth. Through advocacy at the regulatory, legislative and judicial levels, NAIOP works to encourage economic growth throughout Massachusetts.

It is with that goal in mind that NAIOP Massachusetts submits the following recommendations on policy priorities for the Baker Polito Administration. The recommendations are focused on three Cabinet Secretariats: the Executive Office of Housing & Economic Development; the Executive Office of Energy & Environmental Affairs; and MassDOT. The suggested strategies run from big, long-term concepts to smaller, easily implemented ideas.

We hope they will serve as a starting point for the new Administration as it looks to find new ways to encourage economic growth in Massachusetts.

For more information on these concepts, or any economic development issues of interest to the Baker Polito Administration, please contact me or Tamara Small, NAIOP’s Senior Vice President of Government Affairs, at small@naiopma.org.

NAIOP looks forward to serving as a resource to the Baker Polito Administration as it guides Massachusetts in “Getting to Great!”

- David Begelfer

MISSIONSTATEMENT NAIOP Massachusetts is the leading association representing the interests of the real estate industry, including developers, owners, and other professionals engaged in real estate development, investment and ownership in the Commonwealth.

Part of an international commercial real estate association, the Chapter provides its members with outstanding services that are effective, visionary and responsive to their professional needs. Core organizational values include:

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Providing visionary leadership Practicing and promoting absolute integrity and professionalism Promoting inclusivity and diversity Supporting career-long learning and networking opportunities Contributing to the economic well-being and sustainability of the Commonwealth

The Commercial Real Estate Development Association

Table of COntents Page 1 2 3 5 7 8 10 12 14 17

Topic EXECUTIVE OFFICE OF HOUSING & ECONOMIC DEVELOPMENT Establishing Economic Development Priorities and Initiatives Creating Workforce Housing Expanding and Implementing Statewide Regulatory Reform EXECUTIVE OFFICE OF ENERGY & ENVIRONMENTAL AFFAIRS Realigning Resources at Environmental Agencies Reforming Massachusetts Environmental Policy Act (MEPA) Developing a Public Private Partnership on Climate Change Resiliency Reducing Energy Burdens and Increasing Competitiveness Promoting Land Reclamation, Soil Reuse and Urban Development Encouraging the Redevelopment of Brownfields MASSDOT Creating a Long-term Vision for Transportation

FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

EXECUTIVE OFFICE OF

HOUSING & ECONOMIC DEVELOPMENT

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executive Office of Housing & Economic Development

The Commercial Real Estate Development Association

ESTABLISHING ECONOMIC DEVELOPMENT PRIORITIES & INITIATIVES The Secretary of Housing & Economic Development should be the empowered advocate for the business community, both within the Cabinet and externally. Nearly all policies and regulations have an impact on the business community – including the businesses that are already located in Massachusetts, as well as those relocating to the Commonwealth. NAIOP urges the Baker Polito Administration to make the Secretary of Housing & Economic Development the vocal advocate for business interests through the following initiatives: • Work closely with the leading business trade groups to ensure the state is providing the kind of incentives and programs needed to foster broad-based growth, not simply those favored by the Administration (i.e., don’t pick winners, make decisions based on need).

• Expand and strengthen the Regulatory Reform Initiative created in 2012, an Administration-wide regulatory reevaluation for all state agencies. Start by appointing a Regulatory Ombudsman and consider freezing any policies or regulations approved in the final 60 days of 2014.

• Simplify the administration of all of the state’s business incentives and consolidate economic development agencies. The Baker Polito Administration should examine the current list of economic development agencies and quasi-publics and determine if there should be some consolidation. In addition, incentives should be coordinated and streamlined – too many agencies are overseeing incentives right now, resulting in confusion and missed opportunities for businesses.

• Identify opportunities for privatization and public-private partnerships. There are numerous opportunities for privatization (e.g., transportation, water infrastructure, etc.) However, the “Pacheco” law makes it virtually impossible to actually do any of these. The Baker Polito Administration should consider a targeted “pilot” program to break through this problem, with EOHED taking a lead in advocating for such a concept.

• Create incentive packages for start-ups. Most of the net job growth in the country is attributable to companies in operation five years or less. Many states are aggressively looking to attract and nurture start-ups (e.g. New York’s startup.ny.gov). Massachusetts, led by EOHED and working with organizations like the Cambridge Innovation Center, should consider strategies that provide the necessary ecosystem for start-ups within Massachusetts to thrive and grow into profitable companies.

Concepts like “LabCentral,” a shared laboratory space designed as a launch-pad for high potential life sciences and biotech start-ups, could be expanded to most any of the industries in the state offering the space and resources start-ups need.

• Identify ways to build on the Commonwealth’s innovation economy to strengthen and improve government services, while better serving the business community. Massachusetts leads the way in innovation. The many start-ups and globally recognized institutions like MIT and Harvard are an untapped resource for state government. Possible opportunities may exist for apps or innovation companies to improve services for Massachusetts residents and businesses.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

CREATING WORKFORCE HOUSING The Commonwealth’s economy depends on its ability to attract and retain a talented workforce.

Massachusetts has one of the higest housing costs in the nation - a significant barrier for talent recruitment and retention. This is a supply problem due, in part, to a shortage of single family and multi-family housing. Lengthy and unpredictable local permitting, combined with high land and construction labor costs, put new housing out of reach of many of the state’s working families.

Massachusetts communities have some of the strictest zoning in the region, with large minimum lot sizes, restrictions limiting multi-family housing, and unworkable cluster zoning ordinances.

Communities have tightened permitting, making it harder to build and meet the demand for housing, in general, and moderately priced and affordable units, in particular. Zoning requirements have become more onerous with local rules and special by-laws, making the development process longer and more unpredictable. Currently, there is a serious lack of permits issued for housing for families.

Therefore, NAIOP suggests that the Baker Polito Administration and EOHED work to increase the production of a wide range of housing types through the implementation of a plan that allows for the construction of family-friendly apartment housing as well as smaller, denser, affordable, single family starter homes. The plan will eliminate barriers to housing production and provide new ways of meeting the existing need for workforce housing by addressing the following (among other things): • Expand Chapter 40S to Address School Budget Challenges: The most frequent argument used to oppose apartment construction is the burden it will put on local school budgets. That is not always the case. Although Chapter 40S has been adopted to help offset the cost of student education for projects developed under Chapter 40R, it should be expanded to incentivize and assist those communities that would substantially increase their school-age population through new housing development of any kind. An important place to start would be to include Ch. 40B projects under this school “reimbursement” program, removing one of the objections to affordable housing projects.

• Encourage Production of Starter Homes: There is a serious lack of moderately priced single family homes (starter homes) for many working households. A goal should be set to encourage cities and towns to establish zoning districts that permit the construction of a modest number of small, singlefamily homes that are affordable for middle-income families. “Starter Home” zoning districts could be established in the most appropriate locations for these new neighborhoods. Incentives could include qualifying for Chapter 40S funds, assistance grants, and an increase in local aid. To keep the land cost per unit down, density bonuses would be needed for this type of housing, with the requirement that the scale of the homes be smaller (e.g. 1,500 square feet.)

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executive Office of Housing & Economic Development

The Commercial Real Estate Development Association

expandING & implementING statewide regulatory reform In 2012, the Patrick Administration launched a top-to-bottom regulatory reevaluation for all state agencies. The initiative resulted in a review of 1,791 regulations for efficiency and effectiveness. In addition, 255 regulations were amended or eliminated. The goal was to determine which regulations should be rescinded, modified, or made more consistent with a national model or standard.

The Baker Polito Administration should expand upon and strengthen the Regulatory Reform Initiative through the following initiatives: • Appoint a proactive Regulatory Ombudsman with significant authority operating out of the Governor’s office. This person and a support team will be responsible for implementing the Regulatory Reform initiative by overseeing the following: o Seek out and motivate agencies to respond to feedback from the regulated community on

problematic policies or regulations. o Maintain and reinvigorate the Business Advisory Committee to help the Ombudsman and

team identify problematic regulations and alternative processes.

o Consider initially freezing and reviewing any policies or regulations approved in the final 60 days of 2014, until there is a thorough review by the agency and the Ombudsman.

o Ensure that any newly proposed regulation go through an extensive vetting process that begins first with identifying the need for the regulation and ensuring the benefits of the regulation outweigh the impacts and burdens on business and the public. Any agency proposing a new regulation must complete a “small business impact statement” documenting the potential financial and time costs. This impact statement must include feedback from the regulated community. The Ombudsman and team will be responsible for ensuring the small business impact statement meets certain established standards.

o Provide authorization on the public comment period for draft regulations.

o Ensure the implementation of the ongoing periodic review of existing regulations required under the economic development bill passed in 2012 to identify those that should be amended or repealed.

• When regulations are approved for public comment, draft regulations must be posted online and emailed to a list of affected stakeholders (via voluntary sign-up as now done with DEP, DOR, and a few other agencies).

• While guidance can be helpful, it should be clarified by the Baker Polito Administration that guidance is just that, guidance, and does not take the place of regulations in any way.

• The Baker Polito Administration should seriously consider amending or eliminating current state regulations that exceed federal standards or duplicate federal processes.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

EXECUTIVE OFFICE OF

ENERGY & ENVIRONMENTAL AFFAIRS

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

REALIGNING RESOURCES AT ENVIRONMENTAL AGENCIES When considering a long-term vision for the Commonwealth’s environmental agencies, NAIOP encourages EEA to start by realigning resources to ensure 1) environmental protection and 2) that resources are appropriately allocated to ensure timely and predictable permitting. In recent years, the regulated community has observed that a larger percentage of staff at the environmental agencies is focused on the development of new policies and regulations instead of the expedient implementation of existing regulations (i.e., permit approvals, compliance assistance, etc.). Prompt and predictable permitting is critical for economic development projects and ensures increased tax revenue for the Commonwealth. Compliance assistance programs provide a preventive and costeffective approach to ensuring environmental protection.

Therefore, NAIOP proposes the following recommendations: • Tie Permit Fees to Results. Permit streamlining was brought to MassDEP’s doorstep in the late 1980’s. Facing considerable time delays for the issuance of permits with no timetables, NAIOP was a founding member of the MassDEP Fees and Program Advisory Committee that established a fee program for all permits and a retained revenue account in return for the MassDEP’s agreement to set enforceable timetables for administrative review, technical review, and issuance of permits. General results were positive and fees have been adjusted gradually over the years to reflect cost of living increases. Permitting fees went into a dedicated revenue account, which was intended to supplement the MassDEP budget so that it could continue to provide its other non-permitting services. The original committee included NAIOP, AIM, Mass Municipal Association, MASSPIRG, Environmental League of Massachusetts, and other private and public sector representatives. The enacting statute establishing the agreement and authorizing MassDEP to establish the fee program is M.G.L., c. 21A, §18 and the regulations are at 310 CMR 4.00.

As the architects of the Program left state government and Massachusetts faced revenue shortfalls, the original agreement was sacrificed for revenues. Gradually the Legislature began to apply permit monies to the MassDEP operating budget. Rather than decreasing the time for permit issuance based upon the lesser number of permits due to a slow economy, the General Fund percentage decreased for the MassDEP budget. As recently as 2013, the Fees Committee wrote to the Governor and to the Ways and Means Committees requesting that the agreement be honored. Business was hesitant to support the Department’s request for additional funding based upon the legislative track record applying fees for operations. NAIOP urges the Baker Polito Administration to reinstate the original agreement and ensure permitting fees are directed to the dedicated revenue account to ensure adequate resources for permit issuance.

• Increase Use of General Permits. NAIOP encourages all environmental agencies to consider increasing the use of general permits. General permits are more cost effective and achieve the same goal as individualized permits, but do so faster and more cost-effectively and provide a higher level of certainty in outcome (including reducing the risk of permit appeals). In order for this to work, however, it is critical that agencies be committed to making these general permits effective and not so limited in scope or so overly burdened by contingent conditions that they are no longer useful.

EEA should conduct an internal review of all programs to identify those that could move, in whole or in part, from individualized permits to general permits.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

REALIGNING RESOURCES AT ENVIRONMENTAL AGENCIES (Continued) • Move to Permit-by-Rule (aka self-certification). Self certification needs limited staff resources to administer and oversee and uses enforceable third-party certifications to ensure that rules are met and standards are achieved. MassDEP is already using self-certification for some programs, but there are numerous opportunities for expanding the use of this cost-effective and proven regulatory approach.

• Increase Permitting Staffing for Waterways Program. Waterways is responsible for issuing Chapter 91 licenses for docks, piers, and other water-dependent structures as well as non-water dependent uses and structures on tidelands and filled tidelands. It is involved in almost every ma jor coastal project, including transportation, energy, infrastructure, commercial buildings and housing. Staff has recently been increased to five persons, still woefully inadequate to ensure timely processing of project permitting demands. The lack of staff is holding back the development of many ma jor public and private projects. Additional resources must be committed and dedicated to new employees that focus solely on Waterways permitting and not policy development.

• Continue Regulatory Reform Implementation. The Regulatory Reform initiative was originally motivated by a reduced budget affecting staff permitting and oversight, but the effort has also resulted in important regulatory and policy changes. Continually reviewing existing regulations to determine if they are needed or if changes are required, and closely examining the costs and benefits associated with new regulations before they are drafted, should be a top priority for the Baker Polito Administration (and is required under Chapter 238 of the Acts of 2012).

• Provide MassDEP with delegated authority over National Pollutant Discharge Elimination System (NPDES) programs and the funding needed to adequately administer the program. As of June 2013, 46 states had been authorized to administer the federal NPDES permit program. Massachusetts is just one of four states in the nation where the federal government is in charge of the permit issuance, compliance and enforcement for the 2,990 NPDES permit holders in Massachusetts.

MassDEP jointly issues NPDES permits with EPA. Having MassDEP as the sole permitting authority with EPA limited to an oversight role could result in a more efficient permitting process. In addition, as the NPDES program continues to evolve in response to increased concerns over issues like nutrient loading and stormwater impacts, MassDEP would have greater control over policy decisions.

However, appropriate resources would be needed (estimated at approximately $9.5 million per year) to ensure a carefully coordinated approach to watershed management.

• Concentrate on Implementing & Enforcing Existing Rules and Regulations. Agencies should concentrate on implementing and enforcing existing rules and regulations before expending resources on new program and policy development. This builds on the Regulatory Reform Initiative and is critical for the proper allocation of resources.

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

REFORMING MASSACHUSETTS ENVIRONMENTAL POLICY ACT (MEPA) MEPA needs to refocus on its regulatory jurisdiction. When passed, the MEPA statute established a unique approach of deep review, required mitigation, and jurisdictional limits. This combination led to general acceptance by the regulated community and has yielded remarkable results. In the last several years, for well-intentioned reasons, MEPA has moved away from this model to a model of policy development in areas for which there is no Commonwealth Permit and about which MEPA can do little more than remonstrate.

The most glaring example of this is the 2010 Revised Greenhouse Gas Emissions Policy and Protocol.

It applies to any new project subject to MEPA jurisdiction. Under this Policy, MEPA now routinely requires that applicants prepare elaborate and expensive Greenhouse Gas Analyses costing from $15,000 to more than $50,000 per project. The Policy requires the “baseline” condition in an applicant’s Greenhouse Gas analysis to be the “code compliant” condition. MEPA applicants are required to search for GHG mitigation measures beyond those already required by the applicable building code. With a strong energy code that is being updated frequently, this MEPA policy already has become unnecessary and soon will become infeasible, with developers expected to chase an ever-rising baseline. MEPA should return to its intended role as a clearing house for state agency actions, rather than attempting to serve as a state level building official. The building code now requires the same elements that the Policy was authored to foster, and therefore eliminates the need to regulate GHG from buildings under MEPA altogether.

Furthermore, the GHG Policy affects only a very small percentage of the new projects in the Commonwealth and has no effect on the dominant source of GHG emissions—existing buildings.

Thus, it diverts both private and public resources that could be better spent on improving the performance of those existing buildings. This might be accomplished by support for the new State Building Code, which has remarkable energy efficiency “baked in,” by extending this code to ma jor rehabilitation projects, and by developing grant, loan, or tax incentive programs to foster the voluntary upgrade of existing buildings. Such an effort could affect not only new projects, but the existing buildings that release the bulk of GHGs. And, it would level the playing field between those few projects that are subject to MEPA and the many that are not.

A similar disconnect is found in the recently-released Draft MEPA Climate Change Adaptation and Resiliency Policy. It, too, will require extensive and costly analyses of future scenarios, of the effect of projects on that future, and of that future on projects. This is without a clear jurisdictional basis.

While it is right spirited to foster such thinking, it should not be placed upon the shoulders of private proponents who have little control over or ability to predict this future. It is better to establish a credible, state-wide description of this future and require that proponents take account of it in preparing required analyses for MEPA. Therefore, NAIOP suggests that the Baker Administration: • Rescind the GHG Policy or restrict its application to parts of private projects for which there is actual MEPA jurisdiction.

• Revise the Draft Climate Change Policy to eliminate private-proponent modeling requirements.

• Refocus EEA’s efforts on implementation of the new (and future) building code requirements for energy efficiency, especially in supporting voluntary retrofit of existing buildings.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

DEVELOPING A PUBLIC PRIVATE PARTNERSHIP ON CLIMATE CHANGE RESILIENCY Climate change can have significant impacts affecting the overall economy; directly, by damaging structures, and indirectly, by compromising transportation systems, communications, and utilities. An increasing number of extreme weather events and future sea level rise may lead to more frequent and extensive flooding along the coast and inland waterways.

The varying interpretations and projected economic and environmental impacts from climate change and sea level rise demand that the private and public sectors coordinate their common objectives. Unfortunately, to date, there has been a serious lack of coordination or collaboration on this issue. Individual cities and towns are taking their own steps to regulate and respond to climate change and sea level rise. Within MassDEP alone, multiple climate change policies and regulations are being drafted using different climate change projections. All of these regulatory and policy initiatives are focusing on how private development projects should address this issue, and very few have addressed the public sector’s role. For example, capital expenditures will be necessary for equipping existing public infrastructure to meet storm surges. Clearly, having a “climate change proof” building in the middle of a flooded neighborhood, without power or adequate transportation, provides no real public or private benefit.

There is no question this issue will be a significant challenge for the Baker Polito Administration.

Addressing climate change and sea level rise requires coordination at the highest level of state government, and the participation of many state agencies. Therefore, NAIOP urges the Administration to consider the following steps to better coordinate how this issue is addressed in order to avoid the calamities that have been suffered by other coastal states: Create a high level point of contact (Climate Change Chief) for local, state, and federal agencies, as well as the private sector. This position should be located in the Governor’s office or within the Executive Office of Administration & Finance. Given the need for coordination across many facets of state government, and the impact of this issue on the state’s resources, it should not be located in EOEEA. Planning for responses to rising sea levels is an operational and infrastructure challenge, not an environmental policy issue. To ensure consistency across the Administration, the Climate Change Chief should have input on all policies or regulations dealing with climate change. All agency findings and regulations regarding the extent of sea level rise or climate change must not be cost prohibitive to the private sector and should include public funding and participation.

Working closely with the Governor’s office, the Climate Change Chief would pursue the following action items: • Establish a structure/partnership with academic and research institutions to identify, develop, test, and incorporate reliable climate change and sea level rise forecasts and climate change preparedness programs.

• Conduct an inventory of state agency regulations adopted or now under review/proposed dealing with how existing and new public and private development should respond to climate change and sea level rise.

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

DEVELOPING A PUBLIC PRIVATE PARTNERSHIP ON CLIMATE CHANGE RESILIENCY (CONTINUED) • Undertake an inventory of state and regional authorities, their threatened assets, and their infrastructure preparedness needs, and identify state monies committed to study climate change and sea level rise. Identify capital funds that should be dedicated to infrastructure upgrades for vital state and regional properties, with a priority toward vulnerable infrastructure.

• Coordinate the agenda of the state agencies responsible for establishing a target range for sea level rise, determining its effect upon existing infrastructure and future development and developing guidelines for climate preparedness and mitigation planning and review (e.g., MEPA, MassDOT, MBTA, BBRS, MWRA, MassDEP, DPU, Mass Housing, MEMA and CZM).

• Identify state agency personnel responsible for the review of policies, procedures, and regulations regarding climate change and sea level rise.

• Ensure that cost-benefit analysis guides policy making. Policymakers should look at programs in terms of maximizing preparedness and resiliency benefits while minimizing burdens on fiscal and other resources.

• Encourage consistent local efforts to address climate change preparedness including identifying susceptible infrastructure (e.g., mass transit, highways, stormwater systems, energy, fuel, communications, etc.), adopting reliable climate change projections, and establishing guidelines and regulations to incorporate climate change into future planning decisions and outreach programs.

We urge the Governor to coordinate this critical effort to assure focus and consistency on this economic development issue.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

REDUCING ENERGY BURDENS & INCREASING COMPETITIVENESS The Stretch Energy Code was adopted in May 2009 in spite of strong opposition from the business community. Since then, it has caused enormous confusion among building inspectors and developers. The Stretch Energy Code undermines the uniformity of the State Building Code through the creation of a patchwork of local option building codes. The statewide building code was created in 1975 to avoid such a patchwork.

Maintaining a Stretch Energy Code will both hinder economic development and create a financial barrier to home ownership for many Massachusetts families. NAIOP urges the Baker Polito Administration to eliminate the Stretch Code and acknowledge the latest version of the International Energy Conservation Code (IECC) as the only energy code in Massachusetts for the following reasons: • Massachusetts Is Already the Most Energy Efficient State in the Nation For four years, Massachusetts has been named by the American Council for an Energy-Efficient Economy (ACEEE) as the most energy efficient state in the nation. ACEEE has stated that Massachusetts had the most aggressive energy efficiency targets in the nation, citing the Green Communities Act as central to the Commonwealth’s “success.” Massachusetts was one of the first states in the nation to adopt the IECC 2012 statewide. Since the Green Communities Act does not reference the creation of a Stretch Energy Code, but it does require the adoption of the latest IECC, the Commonwealth’s position as a national leader in energy efficiency will be ensured even without a Stretch Code. More importantly, while receiving this recognition is always nice, bragging rights do not justify the substantial costs and negative economic impact that will result from continually changing the code and setting costly or unattainable goals.

• Too Many Code Changes, Too Quickly A real issue for builders, contractors, engineers, architects, and local building officials is the frequency of changes to the code, what many in the industry are calling “code exhaustion.” A new statewide energy code took effect in July 2014 (IECC 2012) and necessitated a learning curve for these professionals. Currently, the state is drafting the next energy code (IECC 2015), which is expected to take effect next year. A further change to the Stretch Code (either its elimination or a new version of the stretch code that goes beyond the aggressive energy efficiency requirements in IECC 2015) will be required to ensure that the stretch code is not less efficient than the statewide code. There is a serious question as to whether local building officials, especially those in communities that have adopted the Stretch Code, can keep up with all of these changes and will be able to properly interpret and enforce them. The requirement under the Green Communities Act that the Commonwealth must adopt the latest version of the IECC puts Massachusetts among the most energy efficient states in the nation. Anything beyond that is overly burdensome and creates a significant competitive disadvantage for Massachusetts.

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

REDUCING ENERGY BURDENS & INCREASING COMPETITIVENESS (CONtinued) • Cost of Stretch Code Must be Considered According to Chapter 143, §95 of the Massachusetts General Laws, the Board of Building Regulations and Standards was created to develop: o Uniform standards and requirements for construction and construction materials,

compatible with accepted standards of engineering and fire prevention practices, energy

conservation and public safety and to eliminate the use of restrictive, obsolete, conflicting and

unnecessary building regulations and requirements which may increase the cost of construction and maintenance.

During the past year, DOER representatives have stated that the agency was considering a new Stretch Code that would be 15% more energy efficient than the IECC 2012. There is absolutely no question such a change would increase the cost of the construction and maintenance of residential and commercial buildings. Given the requirements listed above, such a proposal would seem to be in direct conflict with the statute.

Furthermore, in most projects throughout Massachusetts, rents would not cover the increased costs associated with such a significant jump in energy efficiency requirements. This will be particularly harmful to the development of low and moderate-income multi-family housing. Energy efficiency should not take priority over jobs, economic development and affordable housing production.

• No Statutory Requirement for a Stretch Code While G.L. c. 143, § 94 (o) requires the energy provisions of the State Building Code to be updated within one year of any revision to the International Energy Conservation Code, there is nothing in the Green Communities Act that requires an updating of the Stretch Energy Code. In fact, there is no mention of the Stretch Code in the statute. The Green Communities Act does require Green Communities to minimize the life cycle costs of buildings by utilizing “energy efficiency, water conservation and other renewable or alternative energy technologies” (G.L. c. 25a, § 10 (c)), but this can be achieved by adopting the latest version of the IECC instead of a Stretch Code. It is only DOER’s policy, not the statute which suggests the use of a Stretch Code to meet such a requirement.

Therefore, as stated above, NAIOP urges the Baker Polito Administration to repeal the Stretch Energy Code and acknowledge that the Green Communities requirement is achieved through one uniform, energy efficient code reflecting the current IECC.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

PROMOTING LAND RECLAMATION, SOIL REUSE & URBAN DEVELOPMENT Most large development projects in Massachusetts require excavation of large quantities of soil.

The lack of available facilities to re-use, recycle or dispose of the soils results in significantly higher development costs, unpredictability and delay. The urban development boom has played a ma jor role in the economic recovery of the Commonwealth; but the viability of this continued growth is at risk unless solutions to this soil management crisis are allowed to proceed unencumbered by overregulation.

The management of soils in the Commonwealth is already heavily regulated by the Massachusetts Department of Environmental Protection (MassDEP) based upon sound science and public policy. An extensive and comprehensive regulatory scheme exists for the identification, classification, tracking and recycling or disposal of soils. That regulatory scheme is based upon risk to human health, welfare and the environment. Pursuant to this statutory and regulatory scheme, soils with levels of oil or hazardous materials deemed to be potentially harmful to the public or the environment have for years been reused or disposed of at permitted lined and unlined landfills, in-state or out-of-state asphalt-recycling facilities, and out-of-state landfills. Because of a lack of clear options to recycle or reuse soils that have only low levels of oil or hazardous materials at concentrations deemed by DEP to not pose a risk to the public or the environment, those soils have often been over-managed and recycled or disposed of at facilities intended and designed to handle soils containing higher levels of oil or hazardous material. Consequently, there is a critical lack of capacity to reuse, recycle or dispose of both soils containing higher levels of oil or hazardous material and cleaner soils.

One sensible option for such cleaner soils is to reuse them as part of the reclamation of quarries and gravel pits, that is, the filling of quarries. NAIOP believes that an important misunderstanding about the nature of the risk, or lack of risk, these soils pose is causing unnecessary concern on the part of the public; so much so, that some ill-considered regulations or bylaws are being pursued in numerous towns that are not in the best interest of anyone and may be unconstitutional and unenforceable.

This past summer, in the waning days of the legislative session, the appropriations bill was amended to require MassDEP to “establish regulations, guidelines, standards or procedures for determining the suitability of soil as fill material for the reclamation of quarries, sand pits and gravel pits.� The Governor vetoed the quarry reclamation amendment, referred to as Section 277, but that veto was overridden with almost all of the other year-end vetoes of amendments to the appropriations bill.

MassDEP has begun the process of satisfying the requirements of Section 277 by publicly meeting with stakeholders over the past several months to obtain their input. MassDEP is working to develop a program that requires a level of permitting, design and monitoring commensurate with the risk posed by these soils. It cannot be overstated that the soils being proposed to be managed under this program are soils that contain concentrations of oil or hazardous materials, in some cases naturally occurring, that are below, and in many cases well below, risk levels established by DEP and that do not pose a risk to the health of the public or the environment. Clearly, a significant education program for the public as to the real risk, or lack of risk, posed by these soils needs to be an important part of any program going forward.

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

PROMOTING LAND RECLAMATION, SOIL REUSE & URBAN DEVELOPMENT (Continued) As part of any potential guidance or regulations, MassDEP is now considering what level of municipal involvement is appropriate in the permitting process given the low level of risk posed by the reclamation soils. In many instances, the soils pose no significant risk to the public health, welfare, and the environment. While NAIOP is supportive of some level of notification to the municipalities regarding the reclamation projects, we oppose any guidance or regulation that provide the municipality with the ability to prohibit such projects that otherwise satisfy local regulatory requirements. Because of the highly scientific nature of the issues, we believe it is prudent to defer to MassDEP’s expertise to determine the appropriate level of design, permitting and monitoring for these facilities.

Furthermore, if these soils do not pose a risk to the public or the environment, why do we need any regulations or guidance at all? MassDEP believes that it is important that these soils be adequately characterized at the point of origin so that the nature of these soils is appropriately understood before they are brought to another location. There is a concern within the agency that the transported soils may not have concentrations similar to those that are at the receiving facility.

Also, MassDEP wants to be able to track where these soils have been reused. Most importantly, MassDEP wants to make sure the locations where these soils are reused are adequately designed, permitted (if appropriate) and monitored to receive these soils as part of a reclamation plan. An important consideration in the process will be determining the level of design, permitting and monitoring that will be necessary and appropriate for different facilities. For example, if a facility is intended to receive only soils that are well below the risk standards established by MassDEP, then the level of design, permitting and monitoring may be significantly less than a facility that may be receiving soils that are closer to the DEP risk levels. This will be a very important consideration in the development of this reclamation soil program.

As stated earlier, the lack of available facilities to re-use, recycle or dispose of the soils has reached a crisis. Overregulating the reuse of reclamation soils will only hinder the redevelopment of soil reclamation sites and will stifle the rebound of the urban real estate market. We urge the Baker Polito Administration to strike a keen balance between the necessity for additional regulations and economic growth by directing MassDEP to allow for simple use of these soils in quarry reclamation.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

ENCOURAGING THE REDEVELOPMENT OF BROWNFIELDS Throughout the Commonwealth, thousands of blighted, contaminated properties in urban, suburban, and rural communities have been cleaned up and transformed into safe, economically sound and tax paying properties. The cleanup of Brownfields sites addresses many important goals, including affordable housing and workplace development, cleanup of environmental hazards, re-use of existing and underutilized infrastructure, support for public transportation, and an overall improvement in the quality of life in communities throughout Massachusetts.

Massachusetts became a national leader in the movement to reclaim contaminated properties with the passage of its “privatized” cleanup law over 20 years ago and the Brownfields Act that followed, providing state funding for site assessments, tax credits and financial support for remediation, while ensuring compliance with environmental standards. Recent amendments to the MCP regulations (the regulations that govern the clean-up of contaminated sites) streamline certain requirements and reflect a heightened concern about potential vapor intrusion sites.

However, more can be done to encourage and facilitate the reuse of contaminated sites. Both real and perceived barriers to urban development remain, and a public and private sector strategy aimed at overcoming significant obstacles to allow for investment is required. While regulations are necessary to protect public and environmental health, it is important to ensure that these regulations do not lead to unpredictability, delay, or lack of finality. Certainty regarding requirements, liability and “end points” are almost always more vital to development projects than any financial incentives that can be offered by government.

NAIOP suggests that the Baker Administration focus on the following three key aspects of the existing Brownfields program to allow for the continued development of contaminated properties in the Commonwealth: • Brownfield Tax Credits - There is little dispute the Brownfield Tax Credit program (BTC) has been a success. The BTC has leveraged private investment to clean up and develop contaminated properties that otherwise would have been passed over. As noted in an October 2012 report, entitled Analysis of the Economic, Fiscal, and Environmental Impacts of the Massachusetts Brownfield Tax Credit Program by Redevelopment Economics, the BTC program has protected public health through the cleanup of contaminated sites, created jobs, generated new sources of local revenue from previously unproductive properties, and provided smart growth benefits. The BTC is critical to the future success of the brownfields redevelopment program, and NAIOP encourages continued support for it, and, to the extent practicable, expansion of the BTC program.

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executive Office of Energy & Environmental Affairs

The Commercial Real Estate Development Association

ENCOURAGING THE REDEVELOPMENT OF BROWNFIELDS (continued) NAIOP also urges an increase in the credit for sites requiring an Activity and Use Limitation (AUL) to 50%, as is now the case for properties achieving closure without an AUL. (The amount of the credit is now only 25% if an AUL is imposed. AULs place deed restrictions on the use of the property indefinitely.) The BTC distinction between those properties with AULs and those without may have made sense 20 years ago, but no longer does. As the private sector has become more comfortable developing brownfield sites, they have been willing to take on more complex sites. Recent regulatory changes now allow these complex sites to come to closure, but may require an AUL. Therefore, it is inappropriate, indeed counter-productive, to reduce the BTC available to cover the extra costs when AULs are required. Better outcomes, with more process, notice, and protection of the public should be encouraged, not artificially and arbitrarily punished. A 50% credit - with or without an AUL - would be an appropriate adjustment of the BTC program in light of the substantially increasing requirements to use AULs by MassDEP. • Brownfields Redevelopment Fund - The Brownfields Redevelopment Fund, administered by MassDevelopment, provides grants and loans for assessment and remediation costs and has played a significant role in the redevelopment of Brownfield sites over the past 15 years. According to MassDevelopment, as of the close of FY 2012, the Fund has made 566 individual awards totaling over $65 million, creating thousands of temporary construction and jobs, and housing units. The Fund was initially capitalized with $30 million in 1998 and received another $30 million in 2006. The fund was fully depleted in June, 2013. Through the economic development bill and a supplemental budget passed in 2014, the Legislature added $25 million to recapitalize the Fund. Unfortunately, given the extensive backlog of projects, that money is likely to be spent within the year. Additional funding is needed to ensure the continued cleanup of brownfield sites in the Commonwealth.

• Permanent Solutions - A permanent solution is the “end point” to clean up activities, and under the Brownfields Act, establishes liability protections for future owners. As a result, achieving and maintaining a permanent solution is important. MassDEP is charged with auditing response actions, including permanent solution statements, normally within 2-year or at most 5-year windows. In recent years, however, as MassDEP has tightened standards, it has also gone back and invalidated Permanent Solutions, in some cases 15 and even 20 years later, upsetting long-standing investmentbacked expectations. Where MassDEP might reopen or “invalidate” a Permanent Solution because of changed standards, the resulting uncertainty to the market is significant and counterproductive.

MassDEP’s auditing function must align with the real risks presented at sites at which changed standards may apply and, to the fullest extent possible, preserve the Permanent Solution on which buyers, seller, lenders and local tax authorities have relied.

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FROM GOOD TO GREAT:

Recommendations for the Baker Polito Administration

MASSDOT

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MassDOT

The Commercial Real Estate Development Association

CREATING A LONG-TERM VISION FOR THE COMMONWEALTH’S TRANSPORTATION NEEDS The Commonwealth’s transportation infrastructure is critical to our state’s economy, quality of life and industrial competitiveness. However, many of its elements have already exceeded capacity constraints with increasing delays on congested highways and transit systems. At the same time, demand has increased and is predicted to continue over the coming years with no ma jor increases in capacity coming soon. Without a serious long-term plan, further declining services, increased travel times, and a degraded environment will be the future of the Massachusetts transportation system.

In 1970, Governor Frank Sargent created the Boston Transportation Planning Review that analyzed and redesigned the entire area-wide transit and highway system. It provided a blueprint for transportation policy and investment that we have been effectively following for the last 40 years.

Massachusetts needs a similar long-range visionary thinking that will result in a comprehensive transportation plan for 2040.

A Vision 2040 Transportation plan, endorsed by the Baker Administration, should address tomorrow’s opportunities, focusing on the issues which may arise over the next 25 years, including long term demographic, economic, environmental, technological, cultural and governmental transformations, the potential effects of global climate change on infrastructure, and the development of new modal choices.

To successfully implement such an initiative, NAIOP supports the following guidelines: • Connectivity is key: Creating a seamless, reliable connection between air and rail, bus and subway, and the network of roads and transit is necessary for improving the flow of ideas and people.

• Out-of-the-box thinking is vital: New and “disruptive” technologies are already impacting other parts of society and should be considered, making enhanced transportation information sharing through technology an integral part of the Commonwealth’s hand-held knowledge system.

• Public Private Partnerships needed: Innovative public private partnerships can leverage the limited state resources to increase capacity to actualize a long-term plan that can be implemented over the next decades.

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NAIOP Massachusetts 2015 2015 Board Board of of Directors Directors Sarah Abrams Iron Mountain

David Greaney Synergy Investments

Peter Merrigan Taurus Investment Holdings

Susan Allen The Drew Company

Marci Loeber Griffith Properties LLC

Maura Moffatt Synergy Investments

Thomas Alperin National Development

Michael Grill Fairlane Properties

Stephen Murphy Campanelli

Luis Alvarado Cushman & Wakefield

Pamela Herbst AEW Capital Management, L.P.

Thomas Andrews Alexandria Real Estate Equities, Inc.

Andrew Hoar CBRE/New England

Paul Nasser Intercontinental Real Estate Corporation

Donald Briggs Federal Realty Investment Trust James Carlin Crosspoint Associates, Inc. Dennis Clarke Cummings Properties, LLC Lawrence Curtis WinnDevelopment Cappy Daume The Davis Companies Jonathan Davis The Davis Companies Daniel DeMarco Campanelli Thomas DeSimone WS Development

Mark DiNapoli Suffolk Construction Company, Inc.

Jay Doherty Cabot Cabot & Forbes of New England, Inc. Douglas Fainelli The Gutierrez Company Steven Fessler SDF Properties LLC Sam Flood TIAA-CREF William Gause Leggat McCall Properties

Michael Hogan A.D. Makepeace Company Ogden Hunnewell Nordblom Company Shawn Hurley Skanska USA Commercial Development Douglass Karp New England Development Brian Kavoogian Charles River Realty Investors Jonathan Kay JBK Ventures LLC Bryan Koop Boston Properties, Inc. Mary Lentz McCall & Almy, Inc. Christopher Maietta Combined Properties, Inc. Paul Marcus Marcus Partners, Inc. Steven Marsh MIT Investment Management Company

Thomas O’Brien The HYM Investment Group Young Park Berkeley Investments, Inc. Tim Pattison Partners HealthCare System, Inc. Frank Petz JLL Dana Rowan The Exeter Companies Kimberly Sherman Stamler Related Beal Eric Schlager The Bulfinch Companies, Inc. Sara Shank Beacon Capital Partners LLC Joel Sklar Samuels & Associates Mark Smith Equity Office Properties Kirk Sykes Urban Strategy America Fund Marilyn Swartz-Lloyd MASCO

Edward L. Marsteiner, II National Development

Ted Tye National Development

Kevin McCall Paradigm Properties, LLC

Mark Weld Clarion Partners

William McLaughlin AvalonBay Communities, Inc.

Frank Wuest Forest City | Boston Joseph Zink Atlantic Management Corp.

NAIOP Massachusetts represents the interests of companies involved with the development, ownership, management and financing of commercial, multifamily, industrial, retail, institutional, and mixed-use properties. For more information on any of NAIOP’s Government Affairs efforts, please contact Tamara Small, Senior Vice President of Government Affairs, at (781) 453-6900 x5 or small@naiopma.org

The Commercial Real Estate Development Association

144 Gould Street, Needham, MA 02494 w w w.naiopma.org 781.453.6900