RAPPAPORT POLICY BRIEFS InstituteRAPPAPORT for Greater Boston INSTITUTE Kennedy Schoolfor of Government, Greater Harvard University Boston November 2008 Reviewing Chapter 40B: What Gets Proposed, What Gets Approved, What Gets Appealed, and What Gets Built? By Lynn Fisher, Department of Urban Studies and Planning and Center for Real Estate, MIT For almost 40 years, Chapter 40B, Until now, it has been impossible to Rappaport Institute Policy Briefs are short a unique Massachusetts law, has answer such questions because no overviews of new scholarly research on allowed developers to circumvent one had collected comprehensive data important issues facing the region. This brief is based on “Chapter 40B Permitting local land-use regulations for housing on both built and unbuilt projects. and Litigation: A Report by the Housing Aff ordability Initiative,” a working paper projects that include subsidized units To fi ll this gap, in 2007 and 2008 published by MIT’s Center for Real Estate that in communities that lack such housing. we contacted offi cials in 144 cities is available online at http://www.mit.edu/ cre/research/hai/pdf/40B-report_fi sher_07- Given well-documented restrictions and towns surrounding the city of 0618.pdf. Funding for this research was that many communities impose on Boston to explore their community’s provided by a variety of sources, including the Rappaport Institute for Greater Boston. multifamily housing, Chapter 40B— experiences with the law between offi cially known as Massachusetts 1999 and 2005. We ultimately Lynn Fisher 1 Comprehensive Permit Law —has received responses from offi cials in Lynn Fisher is an Associate Professor of Real become the primary tool for building all but two of those communities and Estate in the Department of Urban Studies and Planning (DUSP) at MIT and at the MIT multi-family development projects information on 404 separate projects Center for Real Estate. in the state. This, in turn, has made in 115 cities and towns. The survey the law extremely controversial results showed that: Rappaport Institute for Greater Boston and led to repeated but thus far The Rappaport Institute for Greater Boston • While about 90 percent of the aims to improve the region’s governance unsuccessful attempts to either repeal by fostering better connections between or substantially modify it. proposed projects ultimately scholars, policy-makers, and civic leaders. The Rappaport Institute was founded and funded were approved, only 62 percent by the Jerome Lyle Rappaport Charitable Because Chapter 40B is so important had obtained building permits Foundation, which promotes emerging leaders in Greater Boston. for multi-family housing production by the second quarter of 2008. © 2008 by the President and Fellows of and because 40B projects often Harvard College. The contents refl ect the are controversial, it is critical to • More than 80 percent of projects views of the authors (who are responsible for the facts and accuracy of the research understand how the law actually were initially approved at herein) and do not represent the offi cial views or policies of the Rappaport Institute . works in practice. Which projects are the local level and, for over 80 percent of these approved Rappaport Institute for Greater Boston built with little controversy, which John F. Kennedy School of Government are substantially delayed, and which projects, developers did not 79 JFK Street, Cambridge, MA 02138 Telephone: (617) 495-5091 never get built? How much time does challenge the conditions of the Email: [email protected] the process take? How litigious is the approvals. As of September http://www.ksg.harvard.edu/rappaport process? What infl uence, if any, does 2008 developers had received the process have on the design and building permits for about 75 location of the projects that ultimately percent of these projects. get built? • Overall, developers appealed 28 percent of the local decisions on applications. As of the fall Reviewing Chapter 40B RAPPAPORT INTITUTE POLICY BRIEFS of 2008 developers had not started other development. It could also prompt construction on over 50 percent of unanticipated behavior, like local support of the projects that had secured modifi ed subsidized housing rehabilitation as a means approvals. of reaching the affordable housing goals established in Chapter 40B. • At least 12 percent of all applications were the subject of lawsuits challenging Background on Chapter 40B state or local approvals of those projects. Chapter 40B has two key components. • Rental projects built on the law’s First, it allows both for-profi t and non-profi t provisions were much larger, much developers (as well as public entities) to seek a denser, and more likely to be challenged single comprehensive permit from a locality’s than homeownership projects. Zoning Board of Appeals (ZBA) for projects in which 25 percent of the units are permanently • On average, it took local governments 10 subsidized at levels that make them affordable months to make a decision on proposed for households that make less than 80 percent projects and, for built projects, on of the median household income for the area average it took about an additional year (or, in the case of rental projects, where 20 before developers received a building percent of the units are permanently affordable permit that allowed them to start work for households with incomes that are no more on an approved project. than half the area’s median household income). • Projects that received comprehensive Second, in communities where less than 10 permits after 2004 were less likely to percent of the housing units are in projects have been built. Anecdotal evidence with permanently subsidized units, developers suggests this may due to both the may appeal the local ZBA’s decision on their downturn in the housing market and the comprehensive permit applications to the fact that some of those projects are still Housing Appeals Committee (HAC), a state- being challenged in court by abutters level administrative court.2 In reviewing the and other opponents. appeals, the HAC does not have to allow unlimited density or discretion in project Building on these initial fi ndings, research is now underway to explore the quality of More than 80 percent of projects location afforded by Chapter 40B housing, and to describe who lives in these housing units. were initially approved at the Future work is also needed to investigate the local level and, for over 80 potential for indirect impacts of Chapter 40B percent of these approved on other residential outcomes. For example, projects, developers did not because we expect developers, local offi cials, challenge the conditions of and others affected by new development to the approvals. behave strategically, the prospect of 40B projects could encourage more permissive design. However, it must allow developers to local rules (or their enforcement) with build at densities and with designs suffi cient respect to non-40B housing development, to ensure that the proposed project is or it could produce retrenchment against “economically viable.” 2 Reviewing Chapter 40B RAPPAPORT INTITUTE POLICY BRIEFS Over time, the law has become the major over the threshold before 1999, 12 more passed source of new, permanently subsidized housing it by 2005, and 16 more had exceeded it by in greater Boston. The 2006 “Greater Boston 2008.6 Housing Report Card,” for example, estimated that between 2002 and 2005, over half of new The initial survey yielded data on 369 projects subsidized units in greater Boston – and more in 95 cities and towns. Follow-up work done in than 70 percent of the subsidized units built 2008, yielded information on 35 more projects outside of the city of Boston proper – were in 20 communities. Combined, the two efforts produced via the 40B process.3 Consequently, have produced data on 404 proposals in 115 the law has become increasingly controversial, communities (as well as confi rmation that particularly in communities where it has been during the study period, no 40B projects were 7 used to build substantial amounts of new, proposed in another 27 communities). relatively dense, multi-family housing.4 The surveys asked for information in the three As a result of such construction, the number main areas: and type of communities that exceed the 10 • The timing of Chapter 40B percent threshold has grown and changed. comprehensive permit applications; In 1997, 328 of the state’s 351 cities and towns did not meet the 10 percent threshold • The nature of projects proposed and that would exempt them from HAC review. granted in comprehensive permits; Moreover, most of the 23 communities that exceeded the 10 percent threshold were • Whether projects were appealed to the older cities that were home to the state’s HAC or involved in other litigation, and poorest residents, such as Boston, Chelsea, the outcomes of HAC appeals. Brockton, Lawrence, and Lowell. By 2005, 39 communities exceeded the 10 percent In addition, we collected data on the nature threshold, a fi gure that increased to 55 and relative success of applications for projects communities by September 2008. Many (but with owner-occupied units and those with rental not all) the newer additions to the list were units, the location of proposed projects, and the in the fast-growing areas near the region’s actual number of affordable units generated via two ring highways (I-95/128 and I-495), the 40B permitting process. such as Andover, Canton, Framingham, and Marlborough.5 For-profi t developers Research Design organized as limited dividend companies in order to engage Despite 40-B’s growing importance, there in the 40B process submitted has been little systematic research on how the 338 of the 369 comprehensive law works in practice. To fi ll that gap, in 2007 permits identifi ed in our we contacted offi cials in 144 cities and towns original survey.