Robert M. Ruzzo
The dog days of August mark the 53rd birthday of M.G. L.c. 40B §§ 20-23 (“Chapter 40B,” the “Comprehensive Permit Law,” or the “Affordable Housing Law”). Even today, Chapter 40B continues to
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For a
Commonwealth full of intelligent people, we in Massachusetts sure have a tough
time counting. At least when it comes to counting affordable units on the
state’s Subsidized Housing Inventory (“SHI”). The SHI is maintained by the
Department of Housing and Community Development (“DHCD”) and is used to determine
whether a municipality has met the most important of the three “statutory
minima” under the Affordable Housing Law. Chapter 40B fans and foes alike know
that 100 rental units built under a Comprehensive Permit (requiring 25 percent affordability)
count as 100 units on the SHI, but an identical 100-unit condominium
development built in the same fashion adds only 25 units to the SHI.
The lore
behind this approach is that long ago in a commonwealth not far away, DHCD concluded
that municipalities needed an incentive to accept rental housing developments. Actually,
that’s not quite how things were at the very beginning. It was not until a 1981
Housing Appeals Committee (“HAC”) case, Cedar Street Associates v. Zoning
Board of Appeals of the Town of Wellesley, that the HAC rejected, as
“too zealous,” an existing regulation providing that “only those units …
that are provided at below market rental or cost shall be counted…” for the
purposes of the SHI (see footnote 17).
With the
median house price for Greater Boston recently scraping the $900,000 mark, DHCD
needs to re-examine this approach to counting. The Housing
Watch does not advocate this change out of any animus against
municipalities. To the contrary, if DHCD drives this shift, there is a
reasonable possibility for an acceptable transition to “Chapter 40B version 3.0.”
On the other hand, if litigation drives this change, expect the sort of chaos
and confusion that followed the HAC’s decision in 1999 to recognize the New
England Fund (“NEF”) of the Federal Home Loan Bank Board as a “subsidy
program.” That decision sparked a Comprehensive Permit revolution and gave
birth to what the Housing Watch calls “Chapter 40B 2.0.” All it took was
more than a decade, a temporary shut-down of the program, the intervention of
MassHousing, and the defeat of a referendum question to restore some sense of
equilibrium to the Chapter 40B equation. No one needs a repeat of that.
And it does
not take a genius to realize that litigation is coming. As fans of the Housing
Watch (thanks to both of you, btw) know, the SJC considers the issue an
open one, stating in Sunderland vs. Sugarbush Meadow (2013)
(n.12), that “[w]e need not address whether the inclusion of non-subsidized
housing units in the SHI is permissible under [Chapter 40B].” When the
inevitable litigation comes, the language of the Comprehensive Permit Law won’t
help a municipality’s case much. Section 20 of Chapter 40B provides that local
requirements are “Consistent with local needs” if “low or moderate income
housing exists which is in excess of ten percent of the housing units” in
that municipality. That same section defines “Low- or moderate-income housing”
as “any housing subsidized by the federal or state government.” It’s
tough to argue that a $4,000/month rental unit in an NEF development is being subsidized
by the government, but a $600,000 condominium unit in an NEF development is
not, particularly when NEF funds are commonly not the cheapest source of
financing, and developers have over the years consistently sought to drive down
the percent of NEF funds required in their development financing plans.
As recent SJC
cases involving Chapter 91—the Moot decision in 2010 and the Armstrong
decision in July—demonstrate, even an agency with “a wide range of discretion
in establishing the parameters of its authority” is subject to judicial
oversight. DHCD’s current approach is entitled to deference to be sure, but the
standard is “one of discretion, not abdication.” Counting the present way is
the type of “arbitrary or unreasonable” interpretation that invites judicial
intervention.
Make no
mistake, municipalities will howl that DHCD would be “moving the goalposts;” point
taken, but DHCD would only be moving the goalposts back to where they were
originally, and even the hidebound NFL has done that. More to the point, kindly
take a look around and please tell the Housing Watch if you honestly
believe that the housing affordability goalposts haven't already moved in the
years since the Cedar Street ruling. To ease the pain of transition,
DHCD could phase the new counting rules in over a number of years. DHCD already
has numerous regulatory mechanisms (Housing Production Plans, “Safe Harbor”
Rules, etc.), that serve a similar function. Second, if DHCD still wants to
promote rental housing, it could programmatically provide that affordability
restrictions for ownership units “burn off” after a number of years, opening up
real opportunity for individuals from underrepresented communities to enjoy the
full benefits of homeownership. To promote adoption of “as of right”
multifamily zoning districts in MBTA communities, DHCD could provide more favorable treatment to
municipalities adopting such changes, or to those that do more than the bare
minimum required by the new law.
If all of us
are in this together, then there should also be a willingness to incorporate
legitimate municipal grievances into any new DHCD approach, and to distinguish
between good municipal actors and others. A municipality that plans for
housing, closes a Chapter 40B hearing in an expedited fashion, and does not appeal
if a developer successfully challenges an uneconomic condition at the HAC, can
and should be treated differently from a municipality that takes a
diametrically opposite approach. Greater discretion should also be exercised by
the subsidizing agencies in denying project eligibility letters, since not every
housing proposal in every community merits a project eligibility letter, an
attitude that seems to have been lost in translation somewhere along the path from
Chapter 40B 1.0 to Chapter 40B 2.0.
Changing DHCD’s approach
to counting represents a momentous challenge for our incoming governor, even
though it does not require any legislation. But litigation is almost certainly
the alternative. And then everybody loses.
Co-chair of the REBA
affordable housing section, Bob Ruzzo is a former Massachusetts Deputy
Secretary of Transportation. He also served as the Deputy Director/Chief
Operating Officer at both MassHousing and MassDevelopment. His column, “The Housing Watch…” will be a
regular feature in REBA News and on the REBA Blog He can be reached at bob@bobruzzo.com. The views
expressed are solely those of the author.
