June 14, 2022
With 47 miles of coastline subject to punishing inundation, Boston is considering a range of innovative techniques to build resilience against the inevitable impacts of climate change. But one of the most groundbreaking features of this effort may well be the mechanism used to pay for it.
City officials last year established a Climate Resiliency Fund to help finance the berms, seawalls, and natural systems that will help protect real estate in the vulnerable Seaport district and other potential flooding hotspots. Private developers will make contributions to augment local, state, and federal funding.
This mechanism will be applied to the estimated $124 million cost of protecting a city-run, 191-acre coastal industrial park. It's also poised to become a template for resilience-building in many other vulnerable areas. While chipping in to help build defenses seems like an obvious thing to do, the resiliency fund reflects an important recognition: Public investments in critical infrastructure benefit the private sector by boosting property values — and in the case of rising seas, keep land usable.
According to Brian Golden, who retired in April 2022 after eight years as director of the Boston Planning and Development Agency, "there's been a cultural shift." With such a huge task — preparing for 40 inches of sea level rise by 2070 across hundreds of acres of squishy landfill dating back to colonial times — developers understand they have to pitch in, he said at an April 2022, two-day workshop for climate journalists held at the Lincoln Institute of Land Policy, a Cambridge, Massachusetts-based think tank.
"We don't get a lot of people balking at any of this," he added, suggesting that developers have come to understand exactions and charges for climate infrastructure as a basic reality of the times — and appreciate the policy's consistency and predictability. "If you're doing business with us ... you're going to be paying to build some resiliency measures."
Leaving money on the table
What's happening in Boston reflects a growing consensus around the world, rooted in the concept of land value capture: the retrieval of increased land and property values specifically associated with government action and public investment. Just as a new transit line may increase values for the properties along it, resilience infrastructure can do the same. That increase in value is identified as the land value increment.
Allowing the private sector to enjoy those benefits without contributing to the infrastructure is increasingly recognized as the equivalent of "leaving money on the table," noted Enrique Silva, director of international initiatives at the Lincoln Institute of Land Policy.
Allowing the private sector to enjoy those benefits without contributing to the infrastructure is increasingly recognized as the equivalent of "leaving money on the table."
— Enrique Silva, director of international initiatives at the Lincoln Institute of Land Policy
Value capture won't fully finance climate adaptation efforts, but it can become part of a "stack" of public finance arrangements that jurisdictions can leverage together, said Lourdes Germán, executive director of The Public Finance Initiative, at the Journalists Forum. Drawing contributions from developers and landowners can help fill critical gaps that often remain at the local level after national and state funding is allocated.
Sharing the costs
The search for the necessary revenue to fight the battle against climate change, estimated by the UN to be some $90 trillion worldwide through 2030, is certain to intensify. Already governments have been using versions of value capture in Brazil, Colombia, Ecuador, the United Kingdom, and throughout Asia for many years. Officials in Miami are studying similar mechanisms to help pay for resilience infrastructure in that flood-prone city.
The argument for developer contributions is bolstered by the quality of the climate action efforts, which build confidence that real estate assets on urban land will indeed be protected.
This move is the latest in a decades-long series of planning efforts to address climate change in Boston. It is backed up by changes to zoning regulations and the broad application of Article 80, which gives the city discretion to approve projects with certain strings attached. The city has received accolades for this work, including a 2019 APA award for The Climate Ready Boston plan and Singapore's Lee Kuan Yew World City Prize, which bestowed special recognition for Boston's efforts to address climate change in an older coastal city.
Golden noted that it may have taken the climate crisis for landowners and developers to accept the obvious benefits of such government-funded interventions. In the past, public investments that enhanced land and property values may have been regarded largely as a gift to the private sector, or a form of stimulus for economic activity. Now the enormity of the task — fending off the water in some places, letting it be absorbed in others — is clear to all the stakeholders, who are more willing to be part of such a daunting, but necessary, effort.
"It's an old city, our building stock is fundamentally 19th century and early 20th century, and none of this was considered," said Golden, referring to climate impacts and flooding. "And it's not just about the benefit to metropolitan Boston. We are, after all, the economic engine of all the New England states. So people are, in 2022, signing up for this. They get it."