A state Senate committee has recommended changes in the Bay State Chapter 40B affordable housing program, provisions of which have long perplexed local officials.
The Chapter 40B housing law enables developers to ride roughshod over local zoning provisions and a community's master growth plans. The law provides for a greater concentration of population in less space than some host communities find comfortable or desirable. As such, it has proven a substantial irritant in numerous communities.
Under the present law, developers (supported by the state's Department of Housing and Community Development) can bypass zoning restrictions and local opposition so long as a community lacks 10 percent affordable housing. The developer agrees to build 25 percent of his proposed units as affordable housing and limit his overall profit to 20 percent.
In 2006, the state's Inspector General Greg Sullivan reviewed 10 randomly selected 40B projects in the state, since expanded to two-thirds of all 40B projects. Sullivan concluded in his now two-year study that "Chapter 40B represents one of the biggest financial scandals in state history" (North Adams Transcript, June 2). His findings prompted the state Senate's own investigation.
Both Sullivan and the state senators found some developers scamming the system by inflating costs and underreporting profits without proper oversight at the expense of local communities.
In some cases, property was obtained at low cost but in the developer's application reported at an inflated figure - enabling seemingly higher development costs for the project. The bloated costs narrowed the profit its developer reported. Other projects simply understated their profits. In either case, excess profits (those over the 20 percent limit) were supposed to be turned over to the projects' host communities.
Sullivan's 2006 review had found that developers "routinely and substantially understated" actual returns on their investments. The state Senate's Committee on Post Audit and Oversight reported the various abuses cost cities and towns more than $100 million. Among those developers underreporting profits and cited by Sullivan were Salisbury Hill Estates in Billerica ($3 million) and Crossroads in Acton ($763,000).
Senator Marc Pacheco, D-Taunton who chairs the Post Audit and Oversight Committee, found in its investigation only $17,000 excess profit had ever been returned by a developer to a community. "It is clear that...the 40B program has gone unregulated far too long," Pacheco said.
Reforms the Senate committee recommends are lowering the profit margin allowed developments; a reduction in the DMCD density guidelines (limits on housing units per acre); and greater regulatory oversight on projects.
One fierce critic of 40B, Rep. Bill Greene, D-Billerica, favors scrapping the law entirely and writing a new law relating to affordable housing. He questions the wisdom of allowing the DHCD to formulate any more regulations. He has lost all faith in the department, as have many others.
It will be interesting to see how our local legislators approach 40B reforms. Probably developers and other special interests will vigorously resist changes in current provisions and regulations. "Smart growth" advocates and low-income home seekers are likely to be among the opponents. Chapter 40B projects are touted as a way of reducing municipal infrastructure costs and preserving space. Given short shrift are future blight concerns stemming from a project's poor construction and aging, needs for more social services, public safety issues, imposition of additional recreational and education requirements.
Meanwhile, two studies challenge the prevailing view that traditional housing subdivisions impose a financial drain on a community. Retired Stow assessor Bob Billups conducted a study in his suburban town that tax revenue derived from each new home in his town more than covered the municipal expense associated with its arrival. A more expansive study by the University of Massachusetts Donahue Institute had similar findings, concluding housing units essentially covered their costs in many instances. So much then for the adverse affects (net fiscal drain) new housing has on municipal finances.
John P. Lambert lives in Marlborough.
