Turning affordable housing into a profitable venture

Boston Business Journal – May 19, 2006

by Howard S. Goldman

Massachusetts has a chronic shortage of low- and moderate-income housing. In 1969, the Legislature sought to help remedy this housing shortage by enacting the Anti-Snob Zoning Act, often referred to as Chapter 40B.

Chapter 40B presents an opportunity for developers to prosper from residential development with a fair return on their investment. However, a developer’s chance of success — and profitability — can be greatly enhanced by taking steps that will streamline the local approval process and avoid lengthy legal battles.

In towns where existing affordable housing is less than 10 percent of the total housing units, Chapter 40B allows developers to construct housing projects that do not comply with local zoning and land-use controls. However, in return, developers must make 25 percent of the project’s units available at below market prices.

At the start of the Chapter 40B approval process, the developer must submit a comprehensive permit directly to the local zoning board of appeals that contains preliminary site-development plans, a report on existing site conditions, plan of proposed building types and size and a list of requested exceptions to local requirements and regulations. The developer must also demonstrate that the proposal is fundable by a state agency that will provide low- and moderate-income subsidies to qualifying purchasers or renter.

A public hearing is held for other local boards to give their recommendations. At this point, the affected neighborhood residents often strongly express their opposition to excessive density of units, environmental, and fire and safety matters.

Experienced zoning boards often seek compromises with the developer and the opposing neighbors by obtaining a reduction in size of the project with conditions acceptable to allay health, safety, and environmental concerns.

To streamline the Chapter 40B approval process, a developer should consider taking the following actions:

  • Prepare and present architectural style and development density plans consistent with the character of the existing neighborhood.
  • Refer to responsible local funding agencies on the types and density of developments that have been approved in similar communities to establish the reasonableness of the proposal and to refute local concerns for health and safety.
  • Be prepared to contribute to the costs to improve roadways and intersections in proportion to increased traffic flow projected to be created.
  • Be familiar with the local zoning board for special rules governing submission of the application to avoid procedural delays.
  • Submit a site approval letter indicating that the project is fundable by a subsidizing agency with the initial application to establish that the development is fundable under a low and moderate income housing funding subsidy program.

Successful Chapter 40B housing projects should necessarily deal appropriately with health, safety and environmental issues that appease local concerns but can still create greater numbers of units otherwise barred by local ordinances to produce profitable project returns.

This compromise should be made through sincere neighborhood outreach and responsiveness to important, legitimate environmental and fire safety concerns, such as reduction of paved surface areas, creation of play areas, retention of much of the existing natural vegetation, screening between properties through fencing and landscaping, and sufficient access for emergency vehicles.

Howard S. Goldman, a partner in the Needham law firm Goldman & Pease, advises clients in real estate and business transactions. He also is a member of the Needham Zoning Board of Appeals.