diff --git a/config/dev-server-config.json b/config/dev-server-config.json
index e753459a0..96638b512 100644
--- a/config/dev-server-config.json
+++ b/config/dev-server-config.json
@@ -136,7 +136,7 @@
 		"/bs-loose/": {
 			"handler": "storage-filesystem",
 			"handlerArgs": {
-				"path": ["_env", "${CAMLI_ROOT}/loose"]
+				"path": ["_env", "${CAMLI_ROOT}"]
 			}
 		},
 
diff --git a/dev/devcam/server.go b/dev/devcam/server.go
index eb56229e8..5277df774 100644
--- a/dev/devcam/server.go
+++ b/dev/devcam/server.go
@@ -292,7 +292,6 @@ func (c *serverCmd) setEnvVars() error {
 		setenv(k, v)
 	}
 	c.makeSuffixdir(filepath.Join(fullSuffix("bs"), "packed"))
-	c.makeSuffixdir(filepath.Join(fullSuffix("bs"), "loose"))
 	setenv("CAMLI_PORT", c.port)
 	if c.flickrAPIKey != "" {
 		setenv("CAMLI_FLICKR_ENABLED", "true")
diff --git a/pkg/serverinit/genconfig.go b/pkg/serverinit/genconfig.go
index 960519998..db2a1cfb3 100644
--- a/pkg/serverinit/genconfig.go
+++ b/pkg/serverinit/genconfig.go
@@ -867,6 +867,7 @@ func WriteDefaultConfigFile(filePath string, useSQLite bool) error {
 		return fmt.Errorf("Could not create default blobs directory: %v", err)
 	}
 	conf.BlobPath = blobDir
+	conf.PackRelated = true
 	if useSQLite {
 		conf.SQLite = filepath.Join(osutil.CamliVarDir(), "camli-index.db")
 	} else {