By Benjamin Fierro III
Although Massachusetts has seen an increase in housing production in the past several years, most of that increase has consisted of multi-family housing. Single-family housing starts continue to lag far behind what is needed to meet demand, especially for more modestly priced new homes. In an effort to encourage the production of affordable single-family homes, the state is launching a new program that specifically promotes “starter homes.”
|Benjamin Fierro III|
The Starter Home Program was included in Governor Baker’s omnibus economic development bill that was enacted last summer. Sections 37 through 54 of Chapter 219 of the Acts of 2016 amend G.L. c. 40R (the Smart Growth Zoning and Housing Production Act) to encourage municipalities to adopt local zoning ordinances and bylaws that permit the construction of smaller single-family homes (not exceeding 1,850 square feet of heated living area) on smaller lots (not exceeding ¼ acre).
Chapter 40R and purpose of the Starter Home Program
The Legislature enacted Chapter 40R in 2004 to provide financial incentives for cities and towns to create "smart growth zoning districts" for development of mixed-use and higher density housing as a matter of right. While the law has had some success, it has failed to spur single-family housing production.
The amendments to Chapter 40R allow communities to take advantage of the law’s financial incentives to facilitate the production of starter homes. It is targeted at suburban and rural communities with large lot zoning that makes it uneconomic to produce affordable single-family homes for young families.
State approval and local zoning adoption
Before adopting a Starter Home Zoning District, communities must apply to the Department of Housing and Community Development (DHCD) for approval of the location of the proposed district, the proposed zoning regulations and any design standards.
Like all zoning, Starter Home Zoning Districts are adopted either through Town Meeting or City Council approval. The ordinance or bylaw must include provisions to allow starter homes to be developed either as-of-right or through a limited plan review process akin to site plan review.
Upon DHCD review and local adoption of a Starter Home Zoning District, communities become eligible for payments from the Smart Growth Housing Trust Fund, as well as other financial incentives. Three types of incentives are offered.
1. Production bonus payments: After DHCD approves the district, the municipality receives a production bonus payment based on the potential number of new housing units (the maximum number of units possible under the 40R overlay zone minus the total number of units permissible under the previous zoning) that can be constructed in the district. Payments range from $10,000 for up to 20 units to as much as $600,000 for 501 or more units.
2. Bonus Payments: The community will also receive a bonus payment of $3,000 for each new housing unit constructed in the district once a building permit has been issued.
3. Funding Preference: DHCD, as well as the Executive Office of Energy and Environmental Affairs, the Executive Office of Transportation and the Executive Office of Administration and Finance, must give preference to municipalities with an approved Starter Home Zoning District when awarding discretionary grants.
A Starter Home Zoning District must meet the following minimum requirements:
1. It must be located in an eligible location, i.e., an area with the infrastructure, transportation access, existing underutilized facilities, smart growth characteristics, and/or location that make it highly suitable for a Smart Growth Zoning District or Starter Home Zoning District. A “highly suitable location” may include without limitation areas near public transit stations; areas of concentrated development, including town and city centers, other existing commercial or rural village districts; or other areas considered “highly suitable” for starter homes to be further defined in DHCD’s amended regulations.
2. Housing density shall satisfy the following criteria:
(a) at least 4 units per acre of developable land area;
(b) smart growth principles of development must be emphasized, such as cluster development and other forms that provide for common open space usable for recreational activities, and/or the use of low-impact development techniques; and
(c) at least 50% of the starter homes, excluding accessory dwelling units, must contain 3 or more bedrooms.
3. At least 20% of the starter homes shall be affordable to and occupied by individuals and families whose annual income is less than 100% of the area median income, and shall be deed restricted for at least 30 years.
4. It shall be exempt from any moratorium or limitation on the issuance of building permits for residential uses.
5. It shall be exempt from any municipal environmental or health ordinances, bylaws or regulations that exceed applicable state requirements, unless MassDEP has determined that specific local conditions warrant imposition of more restrictive local standards, or the imposition of such standards would not render infeasible the development contemplated under the comprehensive housing plan, housing production plan or housing production summary submitted as part of the application for such district.
6. It must comply with federal, state and local fair housing laws.
7. A single district may not exceed 15% of the total land area in the city or town. Upon request, DHCD may approve a larger land area if such approval serves the goals and objectives of the law.
8. The combined land area of all approved districts may not exceed 25% of the total land area in the city or town. DHCD may approve a larger combined land area if such approval serves the goals and objectives of the law.
A Starter Home Zoning District ordinance or bylaw may include provisions to modify or eliminate the dimensional standards contained in the underlying zoning in order to support desired densities, mix of uses and physical character. Modified requirements may be applied as of right throughout all or a portion of the district, or on a project specific basis through the plan review process as provided in the ordinance or bylaw.
A Starter Home Zoning District ordinance or bylaw may also designate certain areas as dedicated perpetual open space through the use of a conservation restriction, and the amount of such open space will not be included as developable land within such district. For developable land of under 50 acres, up to 10% may be designated as open space; up to 20% is permitted for larger tracts of developable land.
The Starter Home Program provisions of Chapter 40R became effective January 1, 2017, but will not be implemented until DHCD promulgates amendments to the current 40R regulations. See 760 CMR 59.00. Those draft regulations are anticipated to be released in the early spring for public comment.
Ben Fierro is a partner in the Boston law firm of Lynch & Fierro LLP and served on the Department of Housing and Community Development’s Starter Home Advisory Committee. He can be contacted by email at email@example.com.