As a resident of Massachusetts, the “The Public Waterfront Act” gives you the legal right to access and use waterfront areas called Tidelands along the coast and certain waterways. These tidelands are held in public trust by the State's Department of Environmental Protection.
However, non-water-dependent real estate development on these tidelands can create considerable economic value for property owners and communities, especially in dense urban and suburban areas.
To balance public waterfront access and non-water-dependent real estate uses on tidelands, the Public Waterfront Act specifies requirements for tideland real estate. These include rules on building placement and building dimensions, the quantity of open space onsite, and the distribution of uses onsite.
To fine-tune this balance, municipalities can craft Municipal Harbor Plans (MHPs) that alter specific Act requirements for a site. Ideally, MHPs still preserve a high standard of public access by retaining the minimum required amounts of open space, indoor public space, waterfront visibility, and other forms of access.
However, if it is impossible to preserve a minimum level of public access onsite, then the project must pay to offset the reduction in public access. This payment is known as a mitigation payment.
Unfortunately, there is no consistent, agreed upon way to calculate an appropriate amount of financial compensation in this situation. To help fill in this gap, this calculator evaluates the additional land value unlocked by a project that reduces public access to tidelands. It suggests that this “land value premium”—if it exists—could be a source of financial compensation back to the public.
The calculator uses the concept of residual land valuation, which is a theoretical method for calculating the value of developable land based on the projected market value of a development project. (When the tool uses the word “value,” it is referring to residual land value.)
Given up-to-date regional market assumptions, the calculator estimates the value of a proposed project. This project could be an actual proposed project, or project made up by the user.
The calculator compares the value of the proposed project to the value of a comparison project. The comparison project represents a legally achievable value given Public Waterfront Act requirements. Both projects always share the same proportional mix of real estate uses (e.g. 50% rental housing and 50% condominium housing).
When the proposed project is larger and more valuable than the comparison project, the proposal is probably exceeding Public Waterfront Act rules and achieving greater scale and real estate value. The incremental value is the “value premium”: the total extra value generated by reducing public waterfront access. And this premium could be a source of compensation back to the public if a project cannot satisfy public access requirements in other ways onsite.
When the proposed project is smaller and less valuable than the comparison project, the proposal is probably fitting within the maximum scale and positioning permitted by Public Waterfront Act rules. Thus the “value premium” shows up as negative. Situations like these arise if the local market context cannot support enough development to fill up the allowable buildable area on a waterfront parcel of land, or if the waterfront parcel in question is exceptionally large in scale.
It is important to remember that there are other ways of understanding the value at stake in Massachusetts’s waterfront areas. One could attempt to estimate the value of the public access for users, by asking many different people to assign financial value to their ability to access a particular stretch of waterfront under consideration. On one hand, this method is useful because it directly measures the potential loss in public benefit. On the other hand, this method would require surveying a representative sample of residents for every piece of land in question. Demonstrating the economic value of the land is a more straightforward and replicable path for guiding negotiations in these situations, with the understanding that such negotiations should still consider public commentary and input—even if it is harder to quantify.