Fact Sheet on Chapter 40B The State’s Affordable Housing Zoning Law Prepared by Citizens’ Housing and Planning Association Updated January 2006 What is Chapter 40B? Chapter 40B is a state statute, which enables local Zoning Boards of Appeals (ZBAs) to approve affordable housing developments under flexible rules if at least 20-25% of the units have long-term affordability restrictions. Also known as the Comprehensive Permit Law, Chapter 40B was enacted in 1969 to help address the shortage of affordable housing statewide by reducing unnecessary barriers created by local approval processes, local zoning, and other restrictions. The goal of Chapter 40B is to encourage the production of affordable housing in all cities and towns throughout the Commonwealth. The standard is for communities to provide a minimum of 10% of their housing inventory as affordable. A total of 47 cities and towns have now met that standard. For those communities that still fall below that threshold, a 40B development can be proposed (communities above the 10% threshold can still accept 40B development proposals at their choice). Many communities have used Chapter 40B to successfully negotiate the approval of quality affordable housing developments. The program is controversial, however, because the developer (nonprofit organizations or limited-dividend companies) has a right of appeal if the local zoning board rejects the project or imposes conditions that are uneconomic. Since its inception, Chapter 40B has been responsible for the production of affordable housing developments that in most cases could not have been built under traditional zoning approaches. Developments built through Chapter 40B include church-sponsored housing for the elderly, single-family subdivisions that include affordable units for town residents, multifamily rental housing developments, and mixed-income condominium or townhouse developments. What has Chapter 40B Accomplished? Approximately 43,000 units in 736 developments have been created under 40B statewide since the early 1970s (an average size of less than 60 apartments or homes per development). This total includes approximately 23,000 affordable homes reserved for households below 80% of median income. Of the 43,000 units, approximately 31,000 are apartments and 12,000 are homeownership units. The level of production is higher than any other single housing program available in the Commonwealth. There has been significant progress at the local level in recent years: Over the past three years, approximately 30% of all housing production in Massachusetts was directly attributable to Chapter 40B. Over the past five years, 82% of all new production of affordable housing units was the direct result of 40B (excluding the cities over the 10% threshold). Currently, nearly 5,000 units in 61 developments have recently been approved under Chapter 40B and are under construction or nearing construction, providing homes to approximately 7,500 people in communities where jobs are located. Currently, 47 communities have exceeded the 10% threshold, up from 23 in 1997. Some towns that have recently exceeded the 10% threshold include: Andover, Braintree, Burlington, Canton, Framingham, Georgetown, Hadley, Holbrook, Hudson, Lexington, Marlborough, Peabody, Pembroke, Raynham, Revere, and Tyngsborough. Currently, 36 communities are at 8% or 9% and are likely to reach the 10% threshold in the near future, including: Bellingham, Danvers, Dedham, Franklin, Lincoln, Mansfield, Merrimac, Stoughton, and Wilmington. There are another 41 communities at 6% or 7%, up from 15 three years ago. At present, 82 communities only need to produce or preserve 100-200 units to reach the 10% threshold and 112 communities only need to produce or preserve less than 100 units to reach the 10% threshold. Chapter 40B has encouraged many cities and towns to form affordable housing committees to plan and implement a local strategy to build affordable housing in their community and has prompted nearly 60 communities to develop affordable housing plans under the 2003 "planned production" regulation. Who is Served by Chapter 40B Housing Developments? In most cases today, Chapter 40B developments are communities with market rate and affordable homes, apartments or condominiums. The market rate units often serve middle-income singles, seniors and families who make between 100% and 150% of the area median income. The affordable apartments/condominium and homes are reserved for seniors or families who make less than 80% of median household income for the area. Most of the residents in the affordable apartments and homes earn less than $50,000 per year. Below are the guidelines for the greater Boston area: Income Eligibility for Affordable Units in Boston Metropolitan Statistical Area 2005 Median Income for a Family of 4 - $80,800 Income Guidelines for the affordable units at 80% of median income: 1 PERSON: $46,300 2 PERSON: $52,950 3 PERSON: $59,550 4 PERSON: $66,150 How Does a Development Qualify Under Chapter 40B? To qualify for Chapter 40B, a development proposal must first be approved under a state or federal housing program, such as MassHousing, MassDevelopment, Massachusetts Housing Partnership, the Department of Housing and Community Development, or the U.S. Department of Housing and Urban Development. At least 25% of the units must be affordable to lower income households who earn no more than 80% of the area median income (Alternatively, for rental housing, the project can provide 20% of the units to households below 50% of median income.) Towns are allowed to establish a local preference for residents (currently, up to 70% of the units can be for local preference). Developers (whether for-profit or nonprofit) must also agree to restrict their profit to a maximum of 20% in for-sale developments and 10% per year for rental developments (unless indicated otherwise in the subsidy program or the comprehensive permit). After a project has been determined to be eligible, the developer can submit an application for a comprehensive permit to the local Zoning Board of Appeals (ZBA). The ZBA is empowered to grant all local approvals necessary for the project after consulting with other relevant boards, such as the Planning Board, and the Board of Health. This results in a more streamlined review process at the zoning board, although it typically involves a number of hearing sessions. State regulations, such as the Wetlands Protection Act, Title 5, and all building codes, remain fully in effect under the comprehensive permit. Therefore, the local Conservation Commission will review the project regarding compliance with the state's Wetlands Protection Act. In addition to the streamlined process, the Zoning Board of Appeals is authorized to apply more flexible standards than the strict local zoning by-law requirements. For example, a local zoning code may require two acres of land for each house or prohibit multifamily housing entirely. Under Chapter 40B, the Zoning Board of Appeals can approve a project with greater density, thereby making it financially feasible to develop affordable housing. ZBAs can also require projects to have a greater number of affordable units. How Does the Local Review Process Work? A developer acting under Chapter 40B submits a single application to the Zoning Board of Appeals. The zoning board notifies the applicable local boards and requests their recommendations. Within thirty days of the receipt of the application, the zoning board begins a public hearing, which typically continues for several months while concerns are explored and addressed. The zoning board must issue a decision within forty days after ending the public hearing. The zoning board may approve the application as submitted, it can approve the project with conditions or changes, or it can deny the application altogether. If the board denies the application or imposes "uneconomic" conditions, the developer may appeal the decision to the Housing Appeals Committee. The developer must still obtain various permits required by state statutes, such as wetlands protection, state highway access permits, and a local building permit. Do Communities Have Control Over the Proposed Development? Zoning boards and other town officials often work with developers to modify the project. Furthermore, the zoning board may include conditions and requirements on any aspect of the project such as height, density, site plan, utility improvements, or long-term affordability--provided these conditions do not make the development economically unfeasible. Over the past several years, the Massachusetts Housing Partnership has provided extensive technical assistance and support to more than 100 local ZBAs to help them with project review and negotiations with developers. How Does the Appeals Process Work? If the ZBA rejects the affordable housing development, the developer may be able to appeal the decision to the State Housing Appeals Committee (HAC), which can overrule the local decision unless the proposed development presents serious health or safety concerns that cannot be mitigated. This right of appeal is only available in communities where less than 10% of the year-round housing meets the statute's definition of low and moderate income housing or where low and moderate income housing exists on sites comprising less than 1.5% of the municipality's total land area zoned for residential, commercial, or industrial use. The combination of flexible rules and a right of appeal has meant that the vast majority of Chapter 40B proposals are negotiated at the local level and approved by the local board of appeals. Issues such as density, buffer zones, conservation areas, and infrastructure improvements are typical items for negotiation. For those proposals that go to the State Housing Appeals Committee, the record has generally been in favor of allowing reasonable projects to move forward. From 1970-2002, 415 cases have been appealed to the State Housing Appeals Committee. Below is breakdown of the disposition of these cases: 45% of the cases were withdrawn, dismissed, or settled 24% of the cases were negotiated between the town and the developer 31% of the cases were decided by the HAC. Of these, 84% ruled in favor the developer and 16% ruled in favor of the town. How Do Units Count Toward the State’s 10% Affordable Housing Goal? 1) They must be part of a "subsidized" development built or operated by a public agency, non-profit, or limited dividend organization; 2) At least 25% of the units in the development must be income restricted to families with incomes of less than 80% of median and have rents or sale prices restricted to affordable levels. These restrictions must run at least 30 years for new construction; 3) The development must be subject to a regulatory agreement and monitored by a public agency or non-profit organization; and 4) Owners must meet affirmative marketing requirements. What Regulatory Changes Have Been Made? In September 2005, DHCD issued new smart growth guidelines for 40B developments that took effect on January 1, 2006. In November 2005, Massachusetts Housing Partnership issued "Local 40B Review and Decision Guidelines" which are being used by all four state housing agencies involved with 40B. From 2001-2003, DHCD made 16 regulatory changes to Chapter 40B, including: • Imposing a project size limit of 150-300 units, depending on the size of the community. • Enabling a municipality to reject a 40B application if a developer submitted an application for the same site for a non-40B development within the previous 12 months. • Allowing group homes, accessory apartments, locally assisted units, and units funded under the Community Preservation Act to count toward a community's 10% goal. • Enabling a community to deny a comprehensive permit if that community has made recent progress on affordable housing. This is defined as either: a 2% increase in affordable housing over the previous 12 months or .75% increase plus an approved housing plan over the previous 12 months. • Allowing units to count on the subsidized inventory as soon as a comprehensive permit is issued rather than having to wait until a building or occupancy permit is issued. • Requiring DHCD and the local chief elected official to be notified when a developer applies to the ZBA. • Requiring a 30-day comment period for communities from the time a 40B application is filed. The subsidizing agency must consider the community's comments when issuing a site letter. • Mandating that site approval letters contain more extensive, standardized information. • Requiring developers who want to access financing from the New England Fund to obtain a site approval letter from a state agency. The state agency will then monitor and oversee the project. • Updating of the subsidized housing inventory every two years (communities can submit changes to DHCD at anytime). For additional information contact: Citizens'Housing and Planning Association (617) 742-0820. MassHousing, 617-854-1000, www.masshousing.com MA Department of Housing and Community Development, 617-573-1300, www.mass.gov/dhcd/ Click here to download this fact sheet in a PDF file.