Gas Hookup Moratorium Putting Chill on Housing, Real Estate
By Michael P. Norton
STATE HOUSE NEWS SERVICE
BOSTON -- The state’s twin natural gas crises are now taking a toll on housing and economic development in Massachusetts.
While impacts on devastated Merrimack Valley residents and locked-out union workers have been well documented, commercial real estate and home construction sector officials told the News Service Tuesday that moratoriums on non-emergency and non-compliance natural gas work in the National Grid and Columbia Gas territories have put a freeze on scores of residential, commercial and retail projects because developers are unable to connect properties to gas systems.
“Essentially developers are powerless and they have absolutely no idea when the moratorium will end,” Tamara Small, senior vice president at NAIOP Massachusetts - The Commercial Real Estate Development Association, told the News Service. “This has gone on for a long time and it’s having a huge impact. There are thousands of units of housing that are affected by this right now. People are calling every day.”
“It’s an increasingly difficult situation,” added Mark Leff, senior vice president and construction loan officer at Salem Five Bank and co-chairman of the Home Builders and Remodelers Association of Massachusetts (HBRAMA) Public Utility Subcommittee. “We have the onset of the winter. Builders can’t get heat in the homes, so there’s mutiple effects of that. Buyers are ready to move in, and trying to do so by the holidays. They may very well be unable to do so. This has really done some serious damage to the home building community.”
During the second week in October, the Department of Public Utilities (DPU) slapped work moratoriums on National Grid and Columbia Gas. The moratoriums were put in place after a National Grid gas scare in Woburn and following the release of a National Transportation Safety Board preliminary report on the Sept. 13 Columbia Gas overpressurization fires and explosions that left one man dead and damaged 131 structures across Lawrence, North Andover and Andover.
National Grid provides gas service to approximately 908,000 customers in 116 cities and towns in Massachusetts. Columbia Gas provides natural gas service to more than 313,000 customers in 65 cities and towns, including the cities of Springfield, Brockton and Lawrence.
The National Grid moratorium was issued “pending the results of DPU’s review of National Grid’s safety practices.” The Columbia Gas moratorium will stay in place until at least Dec. 1, according to state officials.
The combined National Grid and Columbia Gas territories account for about 50 percent of the state, said Small, who said the connection crisis is the biggest one to hit the industry during her 14 years with the real estate trade association.
Real estate industry officials began feeling effects of a lack of National Grid workers in August, Small said, and when the moratorium was put in place “we really started to hear it loud and clear.” She said, “There are countless units of housing affected and all of the jobs that go with it.”
According to the home builders association, “simple installations” required to bring homes online should be allowed.
“While respecting the DPU’s primary responsibility to ensure the safety of those customers of National Grid who utilize natural gas in their homes and businesses, it is the view of the HBRAMA that the type of simple installations that are needed to complete homes in process do not give rise to any meaningful safety concerns and should be, at a minimum, exempted from the moratorium,” said HBRAMA spokesman Ben Fierro.
Industry officials are also concerned with how the utilities plan to address the growing backlog of hookups once the moratorium is lifted. Tenants who have signed leases, companies looking to relocate, and new construction as well as redevelopment projects are affected by the moratoriums, Small said.
“We’ve been given no information about when this might end, which complicates everything,” said Leff, predicting consequences lasting well into 2019 unless exceptions are made to the moratorium. “There’s no certainty in this situation.”
In addition to noting that the DPU moratorium must end to do any new work, National Grid spokesperson Christine Milligan told the News Service that once that happens the company plans to “prioritize work based on need (whether it’s commercial or residential/whether they need gas for heat and hot water) and also readiness (not all projects in queue are actually ready for gas service right now.)” But Milligan also noted winter moratoriums in most cities and towns begin this week, which she said “means National Grid will not have an opportunity to connect new service for the majority of customers until spring.”
Fierro said the DPU moratorium orders are “causing serious harm to homebuilders and significant inconvenience to their customers,” citing single-family homes and townhouse condominiums that are completed or nearly completed and only need a gas connection. In some instances, he said, buyers are ready to close on home purchases and movers have been scheduled, but they cannot get an occupancy permit.
“Builders are in a bind trying to decide if they should switch to another source of heat for their homes,” Fierro added. “Many are considering the use of propane. Although that is not an easy solution for many reasons. Indeed, National Grid is telling builders to consider that option.”
A spokeswoman for the locked out National Grid workers said Tuesday the workers expect meetings later this week with the DPU, and with National Grid.
Gov. Charlie Baker and public officials have called for National Grid and union leaders to reach a compromise and end the lockout, which started June 25.
Asked about the economic and housing impacts of the moratorium, Housing and Economic Development Secretary Jay Ash, through a spokeswoman, declined comment and referred to the News Service to the Executive Office of Energy and Environmental Affairs (EEA). In a statement, EEA spokesperson Katie Gronendyke did not address the impacts and concerns cited by real estate industry officials.
“The Baker-Polito Administration is committed to ensuring the state’s natural gas distribution system is operated in a safe and reliable manner, and in the wake of the tragic explosions across the Merrimack Valley the Department of Public Utilities has imposed moratoriums for all work, except emergency and compliance, for National Grid and Columbia Gas until certain safety practices are reviewed by the department or for a set time period,” Gronendyke said.
During a governor’s race debate held shortly after the National Grid moratorium was announced, Baker said, “I think it’s really important that those guys and gals get back to work and I think one of the ways we get them back to work is by demonstrating to National Grid that they’re not going to be able to do anymore work outside their statutory obligations until they put them back to work.”
Greater Boston Real Estate Board President and CEO Greg Vasil said he’s heard about development delays and aggravation but said some people have also found ways around them. He said the energy access issue needs to be resolved quickly.
“We should be beyond that,” he said. “It’s really vital for us to make sure we have gas and energy that we can grow and develop with.”
While the real estate industry is dealing with a crisis, Small said she recognizes the importance of ensuring public safety in the natural gas system. “No one wants a repeat of what happened in the Merrimack Valley,” she said.