Critics of the state’s controversial affordable housing law often warn that it has let loose a flood of projects that threaten the cherished character of our towns. However, the actual numbers show that the state has seen only a trickle of Chapter 40B projects in the past few years, not a flood.
Critics of the state’s controversial affordable housing law often warn that it has let loose a flood of projects that threaten the cherished character of our towns.
However, the actual numbers show that the state has seen only a trickle of Chapter 40B projects in the past few years, not a flood.
In fact, the number of projects proposed under the 1969 law reached a plateau back in 2003 and 2004 and has been declining ever since.
The law’s impact provides a constant source for a debate, one that will heat up this year as opponents campaign for a ballot question that could wipe it off the books entirely. But one thing is clear: That impact on local communities has been shrinking in recent years as fewer developers enter the Chapter 40B game.
The law allows developers to sidestep local zoning limits if they agree to set aside a portion of their projects, usually 25 percent of the units, for moderate-income residents. Cities and towns can rebuke unwanted projects if at least 10 percent of their townwide housing stock is considered affordable – or they make considerable progress toward that goal.
Supporters say the law is one of the few tools developers have to build affordable homes in the high-cost Boston metro area, while critics say the law allows builders to run roughshod over local communities’ interests.
Either way, the law’s impact has been waning for some time, according to figures provided by Citizens’ Housing and Planning Association.
The Boston-based group, one of the law’s biggest defenders, crunched state data for the past nine years on the number of Chapter 40B site letters that have been issued. These letters are considered the first step in the permitting process and are a good barometer for how frequently builders rely on the housing law.
The numbers peaked in 2003 and 2004 when 129 and 134 letters were filed, respectively – and have been headed downhill ever since. By 2006, after the state’s housing market had started to sour, 91 letters were filed. Only 28 were filed last year, and only two have been filed so far in 2010.
Of course, the real estate downturn and the subsequent crash in the economy were most likely the main reasons. Home sales started to slow down at the end of 2005, while the recession began to take hold here two years later.
But economic reasons may not be the only factors at work. The number of new 40B projects began dropping well before the housing market started to collapse.
A decade ago, it seemed like nearly every suburban legislator within 60 miles of Boston was pushing a bill on Beacon Hill to rein in Chapter 40B. None of those bills became law at the time. But the state’s housing regulators, primarily under acting governor Jane Swift, crafted a series of rules aimed at addressing many of the widespread concerns.
Size limits were imposed to prevent new mega-projects. Towns were given a way to shield themselves against proposals as long as they achieved a certain level of progress toward the 10 percent goal. And, starting in early 2003, private banks were no longer allowed to issue Chapter 40B site letters, leaving the role solely to public and quasi-public agencies.
The furor about the law began to subside, although there were still plenty of hard-fought battles in certain communities.
Concerns were raised, however, about whether developers were finding ways to get around the 20 percent cap on profits for Chapter 40B projects.
So another set of regulations was put in place about two years ago to help ensure that developers weren’t fudging the construction costs they reported.
Judy Jenkins, president of the Home Builders Association of Massachusetts, downplayed the effects that all these rules had on the use of Chapter 40B. Jenkins, a home developer in Canton, says builders accepted these changes – even if they didn’t embrace them. Besides, she says, many developers are happy if they can reap a 20 percent profit margin on their projects.
Instead, Jenkins attributes the downturn in 40B projects to broader economic reasons. Developers didn’t want to build big projects just to have homes go unsold for months and apartments sit vacant awaiting renters. Meanwhile, landing loans for projects of any significant size became next to impossible in the credit crunch of the past two years.
Another factor in the 40B slowdown: More towns have cleared the 10 percent hurdle, giving them the power to reject these projects. About 50 cities and towns are above that threshold now, a number that has essentially doubled since 1997. Another 40 communities are above 8 percent, and many of them have won moratoriums because of the progress they’ve made.
Opponent Craig Chemaly, director of the Chelmsford-based Slow Growth Initiative, sees the weak housing market as the main culprit. He figures that once the economy is booming again, developers will return to Chapter 40B to help get their projects approved. And even if the numbers remain low, Chemaly says that’s no reason to protect what he considers to be a bad law.
In the short-term, developers may be wary about filing for new projects in the face of the ballot question that Chemaly’s group is pursuing. While it’s not a done deal, the initiative will likely be put before voters in November. Still, there are thousands of proposed Chapter 40B units in the state that have been sidelined by the recession. The ballot question’s threat will likely spur developers who already have 40B site letters in their hands to secure building permits before the spigot can be turned off.
The long-term outlook, however, is not quite so clear. Both sides of this issue say they believe that the use of Chapter 40B will pick up again as the housing market recovers. A decade’s worth of regulations will likely keep that growth in check – or at least prevent some of the abuses and egregiously out-of-place projects we’ve seen in the past.
But economic trends and state regulations probably won’t be the biggest factors in Chapter 40B’s future. The fate of the state’s affordable housing law will most likely be determined by the voters this time around.
Jon Chesto is the business editor of The Patriot Ledger. He may be reached at email@example.com or at www.massmarketblog.com.