Unlike private for-profit developers proposing to build market-rate housing
in Massachusetts, "public
agencies, limited dividend and non-profit organizations" proposing
to build "low or moderate income housing"
are subject to "affordable zoning" under G.L. Chapter 40B.
G.L. c. 40B, sec. 21
Chapter 40B defines "low or moderate income housing" as housing "subsidized by
the federal or state government...."
G.L. c. 40B, sec 20 Examples of Massachusetts affordable housing
subsidy programs that qualify under Chapter 40B include the Housing Starts and Affordable Housing
Trust Fund programs provided by
MassHousing, the state's housing finance agency.
Other examples of such subsidy programs include the Housing Development
Support Program provided by
Massachusetts Department of Housing and Community Development,
the Permanent Rental Financing Program of
Massachusetts Housing Partnership Fund,
and the Homeownership Development Program provided by the
Cape Cod Commission,
as agent for the Barnstable County HOME Consortium. Each of these programs
contains detailed eligibility requirements, including limits on the developer's
profit margin and minimum levels of affordability for the project. For
example, the Housing Starts program limits developer profit on
homeownership projects to twenty percent (20%) of total development costs, and
requires that twenty-five percent (25%) of the homes be sold to homebuyers
earning no more than eighty percent (80%) of the area median income.
Under
Chapter 40B, a developer of affordable housing who has received a "site approval
letter" indicating that the project is eligible for such a subsidy program, may
submit a single application for a "comprehensive permit" to the Zoning Board of Appeals, “in lieu of separate
applications to the applicable local boards,” and the ZBA will have “the same
power to issue permits or approvals as any local board . . . who would otherwise
act with respect to such application,” including the power to make conditions
relating to “height, site plan, size or shape, or building materials.”
G.L. c. 40B, sec. 21
In addition, the ZBA will have the authority to “override local
requirements and regulations that are inconsistent with local needs.” Hanover
v. HAC, 363 Mass 339, 354 (1973). The statute defines “consistent with
local needs” as “reasonable in view of regional need for low and moderate income
housing” and “the need to protect the health or safety of the occupants or of
the residents of the city or town, to promote better site and building design in
relation to the surroundings, or to preserve open spaces….”
G.L. c. 40B, sec 20. According to the Court, this standard requires the ZBA
to “balance the regional need for low and moderate income housing against any
objection to the details of the proposed plan." Hanover v. HAC, 363
Mass. at 365. As to any conditions that might be imposed on the permit, the
Court also requires that the ZBA determine whether such conditions will make the
project “uneconomic.” The statute defines an “uneconomic” condition as, for
example, one that would make it impossible for a limited dividend organization
to make a “reasonable return.”
G.L. c. 40B, sec. 20.
Accordingly, a Chapter 40B application should not be denied (either explicitly or
effectively by imposing conditions that would make the project "uneconomic")
unless it is not "consistent with local needs."
Chapter 40B also provides
that a developer may appeal to the Housing Appeals Committee if the application
is denied or “granted with such conditions and requirements as to make the
building or operation of such housing uneconomic.”
G.L. c. 40B, sec. 22.
According to the Supreme Judicial Court, HAC is then charged with conducting a
de novo review of the evidence and making its own determination of how
the balancing test should be applied to the facts of the particular case.
Hanover v. HAC, 363 Mass. 369. The procedure before HAC is similar to a
civil trial, see
760 CMR 30.00 (HAC's
procedural regulations), and it is up to the ZBA to prove that there is a valid
health, safety, environmental or other local concern which supports the denial
of an application (or the imposition of “uneconomic” conditions) and such
concern outweighs the need for affordable housing.
760 CMR 31.06(7)
(One of HAC’s Criteria for Decisions). According to HAC’s regulations, the
weight of the local concern will be commensurate with the degree to which health
and safety is “imperiled,” the environment is “endangered,” or the design is
“seriously deficient” and the degree to which the local requirements bear a
“direct and substantial relationship” to the protection of the concern.
760 CMR 31.07(2) (Another
of HAC’s Criteria for Decisions). If HAC disagrees with the ZBA’s decision, HAC
is empowered to “vacate such decision” or “modify or remove” any “uneconomic”
condition, and direct the ZBA to issue the requested permit to the applicant.
G.L. c. 40B, sec. 23.
Because the developer has the right to have the ZBA's decision reviewed
de novo by HAC if the application is denied, it is important for
the ZBA to be able to demonstrate to HAC that any conditions it has imposed are
"bona fide," Cooperative Alliance of Massachusetts v. Taunton Zoning Board of
Appeals, No. 90-05, slip op. at 8, n. 12 (Mass. Housing Appeals Committee
April 2, 1992); that the Board has acted "fairly and reasonably," MacGibbon
v. Board of Appeals of Duxbury, 356 Mass. 635, 638 (1970); and that there is
a "reasonable factual and legal justification" for each condition, Peppercorn
Village Realty Trust v. Hopkigton Board of Appeals, No. 02-02 (Mass. Housing
Appeals Committee January 26, 2004). "Conditions unrelated to the concerns
cognizable under c. 40B, unreasonably or arbitrarily imposed, or based on
legally untenable grounds should not be allowed to stand,"
Archstone Communities Trust v. Woburn Board of Appeals, No. 01-07, p. 20-21
(Mass. Housing Appeals Committee June 11, 2003); and conditions that are
“founded [only] on broad considerations of the general public welfare” are also
beyond the authority of the ZBA. Middlesex & Boston St. Railway Co. v.
Board of Aldermen of
Newton,
371 Mass. 849, 857-858 (1977). However, bona fide conditions that have
sufficient evidentiary support and are properly crafted to address specific
local concerns, should be upheld unless the developer can show that the
conditions render the project "uneconomic."
Because HAC is also empowered to decide whether any conditions imposed by the
ZBA make it "uneconomic" for the developer to move forward, it is also incumbent
upon the ZBA to be able to rebut any claim that the developer cannot satisfy the
conditions and still make a "reasonable return." In the recent case of
Rising Tide Development, LLC v. Lexington Board of Appeals, No. 03-05 (Mass
Housing Appeals Committee June 14, 2005), HAC explained that the proper
procedure for homeownership housing is to conduct "an analysis of the Return on
Total Costs (ROTC)...." However, it also conceded that "not only is the
ultimate projection of total profit merely an estimate, but in addition, nearly
all of the factors on which the calculations based are themselves estimates."
In addition, "different experts approach the nuances of profit analysis in
slightly different ways." As a result, the process of determining whether
conditions make a project "uneconomic" is far from an exact science. What
is most important is the credibility of the expert witnesses who testify on behalf
of the parties and the soundness of the pro forma financial statements the
parties introduce into evidence at trial.
If the developer can persuade HAC that
the ZBA has affectively denied the application by imposing
conditions that make it "uneconomic" to move forward, HAC will modify or remove
the conditions unless they address
a local concern that is serious enough to outweigh
the regional need for low and moderate income housing.
An example of
the relatively rare circumstances where the denial of a comprehensive permit was upheld because the local concern involved outweighed the need for
affordable housing can be found in the case of Lexington Woods, LLC
v. Waltham Board of Appeals, No 02-36 (Mass Housing Appeals Committee
February 1, 2005). The developer in Lexington Woods sought a
comprehensive permit to build a 36 unit condominium development on 6.6 acres of
land in Waltham, Massachusetts. Access to the site was to be provided
solely by a long, narrow roadway that wound upward from the main road
increasing in grade to 10% as it approached the top of the hill where the site
was located (there would be no secondary access road). At the trial, the ZBA introduced evidence
that the design of the roadway, and the lack of any secondary access road,
raised serious health and safety concerns. Among other things, the presence of "reverse curves,"
which could cause a motorist to lose control of his vehicle, and the lack of any
"tangent" or straight area between the curves, where a motorist could attempt to
recover control, could make the road unsafe for motorists. Also, the
roadway could become blocked, preventing emergency vehicles from gaining access
to the property. After reviewing the evidence, HAC agreed that these
health and safety concerns outweighed the regional need for affordable
housing, and affirmed the Board's denial of the comprehensive
permit.
Because the ZBA's authority under Chapter 40B is so limited, it is incumbent upon
the ZBA work with the affordable housing developer to
create conditions that address local concerns but do not render the project
"uneconomic." In a sense, the conditions function as custom tailored
zoning requirements that are applicable only to the project involved in the
application. "Affordable zoning" under Chapter
40B is flexible zoning that addresses local needs in a cost-effective manner. The statute requires that the housing be affordable
and, in a way, it requires that the zoning be affordable too.