MONEY TALKS: NEW LAW OFFERS CASH TO SPUR HOUSING, BUT WILL IT WORK?

By Jason Feifer
STATE HOUSE NEWS SERVICE

STATE HOUSE, BOSTON, JULY 15, 2004……A new law that gives financial rewards to communities that host certain kinds of affordable housing has been steeped with praise from those connected to it, but the success of its actual application is still unknown.

The law, known as Chapter 40R, is aimed at making affordable housing, a shrinking commodity in an era of soaring residential property values, a more palatable option to communities. It encourages community leaders to plan high-density housing using pre-existing infrastructure, and financially rewards cities and towns for every unit built. The law was included in the budget that was approved by Gov. Mitt Romney on June 25, and goes into effect in July 2005.

Communities can designate an area as a "smart growth zoning district," which must meet certain criteria and be approved by the Department of Housing and Community Development. Once accepted, the state would pay the community a flat reward, which varies by the number of potential units in the district, and then will pay an additional $3,000 for every new unit of housing included in a building permit.

"This budget includes the most far reaching and innovative housing steps that Massachusetts has seen in decades," Romney said when he signed the budget, adding that it was "too bad" that such a major policy proposal was buried in the budget. By offering cash incentives for communities to establish overlay zones for multi-family housing, the state will play a greater role in reshaping the design of communities.

The smart growth districts are considered an attractive route for communities who may be fighting efforts by developers to build unpopular affordable housing projects, according to the law's proponents.

Under the state's Chapter 40B law, developers can advance projects that exceed local zoning requirements in communities in which less than 10 percent of the housing meets the state's definition of affordable. But according to state Rep. Kevin Honan (D-Boston), co-chairman of the Legislature's Housing and Urban Development Committee, the 40B law is not producing enough affordable housing in part because many communities find the law unworkable.

With 40R, he said, they'll now have a new tool to make their way towards that 10 percent benchmark.

"This is a way that will help those municipalities that are having trouble" reaching 10 percent, he said. "It encourages smart growth. It encourages the municipalities to take control of their own destiny."

That's a sentiment echoed by Boston Foundation President Paul Grogan. He said it's crucial for the state to have more affordable housing, but that cities and towns need to be given a good reason to build more.

"This is a route to making clear progress on the 10 percent," he said. "I would hope there would be cities and town leaders that would say, 'Hey, they're going to pay us to do what we want to do, instead of doing what someone else wants to do.' "

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MONEY TALKS: NEW LAW OFFERS CASH TO SPUR HOUSING, BUT WILL IT WORK?

When a so-called 40B project is proposed, local residents and officials often express concern that the influx of new people will put a strain on local resources and on school funding. Grogan said the money offered through 40R will help offset that, but he hopes it goes one step further - to actually making the state pay the per-pupil expenditure for any new student who moves into a smart growth zoning district.

A similar initiative was included in an earlier version of the bill, but was not there by the time it was passed. Grogan said there will be studies conducted on the feasibility of adding school funding to the mix, and that he hopes the law will be revised in the future.

Since the law doesn't take effect for about a year, all the talk about the law's impact is still hypothetical. Proponents admit that, until municipalities actually have a chance to use it, nobody will know if 40R will be met with cheers or total indifference.

"What they've tried to do is create a process with incentives, carrots, instead of the stick of 40B," said Ben Fierro, a spokesman for the Home Builders Association of Massachusetts. "Will these incentives be sufficient to attract the communities, and will the densities be attractive enough to attract the developers? That we will have to wait and see."

Fierro said he has high hopes for the new law - and even envisions communities initiating 40R projects themselves, instead of waiting for a developer to come in and propose something else.

But not all city and town planners see it that way.

Maryann McCall-Taylor, the assistant director of planning in Lexington, said the financial enticements in 40R aren't enough to make the town actually initiate development.

That's not to say it's worthless, though. The town is currently looking to see if it can apply the law to a project that's already happening - a 387-unit apartment complex that a developer plans to build on Lexington's portion of the Metropolitan State Hospital site, which closed in 1991. Twenty-five percent of the units built will be affordable, McCall-Taylor said.

The law wasn't the inspiration for the project, but she said the town would be glad to reap the financial rewards for it. However, it's unclear if the project will apply since it will have started before the 40R law goes into effect.

She also said she was disappointed the school funding portion of the law didn't pass, because it was "probably the most attractive part."

For some other planners, the law has not grabbed any notable attention. Planning officials in Braintree and Dover said yesterday that they knew nothing about the law, and Eamon McGilligan, executive director of planning in Somerville, said he's only read an article about it.

While the law gives communities an incentive to plan high-density projects, it does not give developers any incentive to build them. However, according to Fierro, that doesn't mean developers won't appreciate the law.
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MONEY TALKS: NEW LAW OFFERS CASH TO SPUR HOUSING, BUT WILL IT WORK?

He said the law may give communities and developers a common ground, which is something they sometimes lack - particularly when a developer's project is filed under Chapter 40B. He said communities may counter a developer's 40B plan by offering a smart growth zoning district plan, and that the developer might agree to it because it would be less of a struggle.

"Time is money. They'd rather do a project that is less confrontational and less contentious," he said. "A builder wants to build. They don't want to be tied up in a protracted battle."

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