Talking Heads: Sheila Dillon, Neighborhood Development, City of Boston

9 min read

Boston’s vibrant neighborhoods, cultural assets, productive workforce, innovative businesses and renowned hospitals and universities have spurred an era of rapid growth. When the city celebrates its 400th birthday in the year 2030, the projected population will exceed 700,000 residents, a number not seen since the late 1950s.

In 2014, newly-elected Mayor Marty Walsh released “Housing a Changing City: Boston 2030,” which proposed the construction of 53,000 new units of housing at various income levels across the city, including 44,000 units of workforce housing for low- and middle-income families.

Overseeing this audacious effort is Sheila Dillon, chief of Housing and director of Neighborhood Development, the agency which manages the city’s housing and neighborhood development programs. Dillon has served as the city’s chief housing official since August 2012, when she was appointed to the position by then-Mayor Thomas M. Menino.

Prior to her appointment as chief of Housing, Dillon served as the director of the Bureau of Rental Assistance at the Massachusetts Department of Housing and Community Development, where she oversaw the Section 8 program, the Massachusetts Rental Voucher program, and many of the state’s homeless programs. Before entering public service, Dillon was director of Real Estate at the Massachusetts Housing Partnership and the director of Development for the Dorchester Bay Economic Development Corporation.

Tax Credit Advisor sat down with Dillon to learn more about “Housing Boston 2030,” the opportunities that it creates for developers, and other initiatives that are helping expand access to affordable housing.

Tax Credit Advisor: What progress have you made implementing “Housing Boston 2030,” especially your workforce housing objectives?  

Sheila Dillon: To date, we have permitted approximately 25,000 new units of housing. About 40 percent of these units are affordable to low- and middle-income households. Mayor Walsh wants to do everything possible to maintain and increase the city’s workforce. We are fixated on making sure that more moderately priced housing is available. That 40 percent figure is a mix of what we call “naturally occurring affordable housing”—or housing that is market-created but is more affordable to low- and middle-income households—and it also includes income-restricted, or what we call ‘Capital A’ affordable housing.

TCA: What type of housing comprises the other 60 percent of units permitted?

Dillon: The balance is market-rate and higher-end housing located in the downtown areas. We are using the economic strength of these higher-end developments to extract funding for the creation of new lower-income housing. We also have a very robust, successful inclusionary development policy in Boston that provides more housing for the middle class.

TCA: What guidelines under “Housing Boston 2030” have been established to qualify individuals and families for these workforce housing units?

Dillon: There’s a range of incomes that we target our housing efforts. We have our inclusionary development program that creates affordable units for lower-middle class households with incomes ranging from 70 percent AMI (area median income) to 100 percent AMI. We have public housing that we are working hard to maintain and keep occupied. Then we have our more traditional tax credit housing that ranges from 30 percent AMI to 60 percent AMI. And then we have market-rate.

TCA: What challenges have you encountered implementing “Housing Boston 2030” and what steps have you taken to overcome them?

Dillon: The housing plan has been going very well. The city departments involved in this effort are well coordinated. As a system, we are working together much better compared to prior years. The main challenge is that Boston has seen a significant increase in population, but we are a small area geographically. Only 44 square miles. So one issue is the availability of land. There’s a lot of construction going on, not just with housing but also commercial and light industrial. It’s not cheap to build in Boston given the demand for general contractors, sub-contractors and materials. Like any city, we want new housing and jobs to be located next to mass transit, but that too can be challenging because we have a fairly old transit system.

TCA: Is “Housing Boston 2030” fully-funded or could proposed cuts to HUD programs impact your progress?

Dillon: We have a budget. Part of that equation is federal money, some of it controlled by the city and some by the state. Maintaining our funding levels will be key. But also, more importantly, we are getting a lot of our funding through the extraction of private development here in Boston. I mentioned our inclusionary development program earlier, which generates money from developers who build affordable housing. If you are a developer who constructs commercial buildings or institutional-type properties, such as hospitals or university buildings, we extract linkage money on a square foot basis. So the private market has also played a crucial role in our success.

TCA: What type of developer partners are you looking for?

Dillon: We work with very talented nonprofits and for-profits. We have a good working relationship with developers. We understand each other. We have been putting out a lot of city-owned land, smaller parcels, for the creation of single and two-family homes and some townhomes. So we are starting to cultivate and work with smaller, more locally-based contractors and recruiting and growing a network of small, neighborhood developers.

TCA: The costs of construction have been rising steadily, while federal and state subsidies have been shrinking. What incentives, financial or otherwise, are you providing to developers to help build your workforce housing?

Dillon: The city funds projects. We don’t expect developers to come in and be able to build with the high cost of land and construction and then turn around and sell or rent to low- and middle-income households. So we do subsidize projects that are coming into us. We offer funding through the city and the state, which helps with feasibility. We also provide tax relief through our 121(a) vehicle and allow for more density where appropriate, which helps bring down costs. We are flexible on parking ratios and unit sizes that support compact living arrangements, which also helps offset costs. So we are working with developers in a lot of positive ways to look at their cost realities and help them design feasibility.

TCA: Sixty percent of the housing units that are being constructed under the mayor’s plan are located outside the downtown area in suburban neighborhoods. What led to that decision? Have you run into any neighborhood opposition?

Dillon: We have seen a shift in recent years of less downtown, high-rise construction and more housing permits in outlying neighborhoods. We are fine with that. We have wonderful neighborhoods in Boston, so we like to see good, quality housing take advantage of those neighborhoods. As importantly, the rents and sales prices of those properties are more affordable compared to downtown, high-rise construction.

TCA: Please describe the process that you use to fill these new housing units. Is it lottery-based?

Dillon: All of the income-restricted affordable and middle-income units are put through a lottery that is administered by our Fair Housing Department. There is a preference for Boston residents. And there are set-asides for homeless people and for households with disabled members in all of our funded projects. Depending on the development, there may be set-asides or preferences given but generally it is through a lottery. What we have done during the last year or two, we have one place, called our Metro List, where we advertise all new housing opportunities. People know where to go, they are notified by email, and it’s a much easier application process than in years past. There is a pre-application that they can do online. A lot of people are working multiple jobs, so we try to make it easy for people to apply.

TCA: Do you believe the Trump administration’s new Opportunity Zones initiative could help lead to more development of workforce housing? Is that something your team is looking at?

Dillon: We submitted to the state 15 census tracks that we believe work well as Opportunity Zones. However, there are no regulations yet. One of our concerns with Opportunity Zones is that we don’t promote investments that might fuel gentrification, which is something we’re working hard to prevent in the city.

TCA: While “Housing Boston 2030” can do a lot of good, you can’t help everyone. Are there other longer-term initiatives that the Walsh administration is contemplating to help families that are struggling to pay for housing?

Dillon: While we are trying to build more affordable housing, there are still families who struggle with rents. We opened an Office of Housing Stability just about a year-and-a-half ago and employ six full-time case managers who field calls from families who are in a housing crisis. They may be getting evicted. They might have fallen behind on their rent. Or they want to know where to find affordable housing opportunities. Our case managers answer over 100 calls a week. That was a really good idea by Mayor Walsh to make sure families get the support they need. I agree that Boston can’t do it alone and help everyone. That’s why Mayor Walsh and the Mayor of Somerville, MA, Joseph Curtatone, have assembled a group of regional mayors and are working with our Metropolitan Planning Council and the state’s planning agency to develop a regional housing plan that will be announced in the next six months that further proposes housing goals and strategies. It will look at how we grow housing more regionally, not just in Boston, because the city can’t meet all of the needs.

TCA: As other cities struggle to provide affordable housing to middle- and low-income families, what aspects of “Housing Boston 2030” would you recommend to housing officials in other parts of the country that they consider replicating in their own areas?

Dillon: It comes down to a handful of things. You have to make land available. You need to make financial resources available to write down sales costs or rents. We have numerical goals, which is really important so that every city department remains focused. And you have to have a good working relationship with financial institutions and partners to make sure that whatever investment your city is making that you’re leveraging two-, three-, four-fold.

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Darryl Hicks is vice president, communications for the National Reverse Mortgage Lenders Association and a 24-year veteran of associations managed by Dworbell, Inc., the management company of NH&RA.