ELEANOR WHITE
Communities interested
When the state Legislature approved a measure this summer to provide financial incentives to Bay State communities that create special smart-growth zoning districts for housing to be built, it was hailed by some supporters as the most radical reform in housing policy in decades.
In the first few months after passage of the law, officials and advocates in some towns and cities in Massachusetts, including Watertown, Somerville and Woburn, have already expressed keen interest in learning more about the law and possibly implementing it in their own communities. But others are skeptical about how effective the law will be and fear that some parts of the legislation will deter cities and towns from implementing it.
About 20 communities have indicated some interest in the new legislation, according to Eleanor White, who co-authored a report for the Commonwealth Housing Task Force – a broad coalition of housing advocates, business leaders, environmentalists and developers – that served as a blueprint for the law, known as Chapter 40R.
White and the other authors of the task force report – including Barry Bluestone, director of Northeastern University’s Center for Urban and Regional Policy, and Edward Carman, president of Concord Square Development Co. – have traveled to interested communities to share information about Chapter 40R. The Romney administration, which is supportive of the law, has also been trying to educate communities about the measure, with the state Department of Housing and Community Development and the Office of Commonwealth Development hosting regional meetings focused on Chapter 40R in the last few months.
Under Chapter 40R, the state will provide cash payments to communities that establish smart-growth overlay districts where developers can build new housing close to town centers and public transportation, and in underutilized or abandoned properties. By some estimates, early 30,000 housing units are expected to be built under this legislation in the next decade.
Some communities that have expressed interest already have a project in mind that could fit with Chapter 40R, or have met with a developer who wants to construct a specific development and feel they could benefit under the law, according to White. Leaders in other communities simply feel that they have a housing crisis and are searching for ways to address it, she said.
A committee appointed by the Romney administration and DHCD is currently working on regulations related to Chapter 40R that should be ready this month.
“The program can’t be implemented without regulations,” said White. “We are eagerly awaiting the dissemination of the regulations so communities can begin to participate.”
Under the law, communities that adopt a smart-growth zoning district in an eligible location can qualify to receive a one-time zoning incentive payment. The new zoning must allow for a mix of housing to be developed and must allow for at least 20 units per acre of multifamily housing or eight units per acre of single-family housing. In addition, in projects with more than 12 units, at least 20 percent of the units must be affordable.
The district must be approved by DHCD. Once the district has been certified by the state, towns can receive a one-time zoning incentive payment that ranges from $10,000 for up to 20 units that are to be developed all the way to $600,000 for more than 500 units.
When a town begins issuing building permits, it can also receive a $3,000 density payment for each new or rehabilitated unit that’s created within the district. In addition, the town will receive priority consideration for state discretionary funding.
Supporters believe these payouts are very powerful incentives for communities to embrace housing.
“It’s a whole new approach to housing,” said Sen. Harriett Chandler, of Worcester, who is co-chairman of the Legislature’s Joint Committee on Housing and Urban Development.
Suburban Shrugs
But some aren’t so sure that state will be able to deliver.
Money for these incentives is supposed to come from the Smart Growth Trust Fund, which will be funded from the sale of surplus state property. However, the first $25 million coming from the sale of surplus state properties must go into the state’s general fund, with the next $25 million flowing into the trust fund. So far, the state has yet to reach the first $25 million threshold, so no money has been deposited into the trust fund. So far, $2 million has been set aside in the state’s Affordable Housing Trust Fund for Chapter 40R.
Expenditures from the Smart Growth Trust Fund will start after July 1, 2005. In an e-mail, White explained that if some communities implement Chapter 40R in the spring, and if the trust fund doesn’t have money to pay out zoning incentive payments, the Commonwealth Housing Task Force would work with state lawmakers during the budget process to assure that funds are available.
“We’re hearing some of the skepticism that you can always expect when a law is new,” said Marc Draisen, executive director of the Metropolitan Area Planning Council, which has briefed towns and cities on Chapter 40R at eight regional meetings. “We’ve gone through a few years during this budget downturn when municipal aid has been cut, and the cities and towns are a little skeptical when they hear that the state is going to provide the various bonus payments.”
School Dropout
MAPC, a proponent of Chapter 40R, has heard from both communities that have an interest in taking advantage of the law and others that are uncertain about its effectiveness. Among suburban communities, interest in the legislation has not been great, according to Draisen.
However, Draisen said a larger number of urban communities than he anticipated seem to be interested in Chapter 40R. Cities that are most interested are ones where a fair amount of affordable housing development has already taken place and are searching for ways to attract more developers to build housing for lower-income households.
One sticking point that continually pops up, according to Draisen and other observers, is the elimination of a “hold harmless” clause that was part of the original legislation. The provision, which was cut during budget discussions, called for the state to provide additional assistance to communities to pay for the educational costs of children who live in the new housing that’s created under Chapter 40R.
Instead of including the school funding, the state will conduct an impact study looking at how specially created smart-growth districts affect educational systems. The study must be completed by July 1, 2006.
Some argue that the additional school funding was a critical incentive for communities and without it towns and cities will be less willing to implement Chapter 40R.
Chandler said the cost of educating children was one of the main issues that she repeatedly heard from town officials when she visited communities earlier this year to discuss Chapter 40B, the state’s controversial anti-snob zoning law. Many communities feel their schools and municipal budgets are overburdened when a large amount of housing development occurs.
Sen. Chandler said she and other supporters will push to have the extra school funding added during budget discussions. “We hope that can be rethought this year Â… because it is very important to communities,” she said.
MAPC’s Draisen said communities definitely want to see a more clear commitment for education funding. “We do think this issue of school funding needs to be revisited, and the state needs to make some determination about what its level of commitment is going to be,” said Draisen.
Educational costs aren’t the only reservations that communities have over Chapter 40R. According to Draisen, cities and towns are also concerned about a section of Chapter 40R that requires communities to return incentive payments if housing units aren’t built within three years.
While communities can control zoning, they have little control over when and whether housing is built, said Draisen. “It’s a little hard to penalize the community if the developer doesn’t show up,” he said.
And under Chapter 40R, once communities adopt a smart-growth zoning district, they have to get state approval if they want to change the zoning of that district.
“A lot of cities and towns are wary to give a state office permanent control over a zoning designation,” said Draisen
That seems to be a primary concern that Greg Watson, Watertown’s director of community development, has heard during regular legislative meetings of Boston-area planners.
“By essentially establishing one of those districts you give away a lot of the local control,” said Watson. “If that [issue] can be dealt with and addressed I think you’ll see a lot more communities expressing interest in Chapter 40R,” he said.
Watertown, which will be analyzing its zoning in coming months, is seriously considering implementing Chapter 40R. According to Watson, a 375-unit apartment complex for Pleasant Street that has been approved by the town but currently is tied up in litigation, would be one project that could fit Chapter 40R.
In fact, a stretch of Pleasant Street, which Watson says is ripe for development and has bus stops along it, may be an area that could be rezoned under Chapter 40R.
In Somerville, officials are eyeing several former industrial sites near public transit that could be converted into mixed-use development under Chapter 40R.
“We in Somerville are very interested in exploring Chapter 40R,” said James Kostaras, the city’s director of strategic planning and community development.
“We think it potentially is a great tool for us to take advantage of given the fact that we’re pushing to get the [MBTA] Green Line extended through Somerville. And there’s a number of former industrial sites along the Green Line corridor that offer some transit-oriented development opportunities using 40R as a possible mechanism to make that happen,” he said.
One site that the city is considering, known as the Max Pak site, currently includes several parcels – one of which houses the city’s Department of Public Works facility. The site is located right on the commuter rail line, on alignment with the proposed Green Line extension.
The city also has talked about using Chapter 40R at Assembly Square, where a 4 million square-foot mixed-use development to be built over 10 to 15 years is planned. As part of that project, the city is hoping to build a new station for the MBTA’s Orange Line.
“[Chapter 40R] is one of many funding mechanisms that we’re looking at” for that development, Kostaras said.
Kostaras is confident that developers will be eager to come to Somerville. “The Somerville market is very strong,” Kostaras said. “We don’t have doubts of getting development to happen.”
Sources interviewed by Banker & Tradesman said it was too early to tell exactly how many communities would actually participate in the new program.
“I think it’s going to take some time before it [Chapter 40R] really takes hold. It might be several years before we see any significant production of new housing units,” said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association.
Gornstein said he anticipates that much of the housing produced under Chapter 40R in the short term will stem from projects already in the works – in other words, from developers who have particular plans and sites in mind and approach a community seeking a rezoning.
He emphasized that Chapter 40R – which has been described as the financial “carrot” to accompany Chapter 40B’s “stick” – is in no way intended to replace the anti-snob zoning law, which has come under attack from many municipal and legislative officials in recent years.
“We do not view this as a replacement to Chapter 40B,” he said. “It’s [Chapter 40B] led to the production of more housing than any other initiative, and it continues to be a critical tool for the development of mixed-income housing.”
MAPC’s Draisen said, like every new initiative or program, Chapter 40R has its issues, but once it has been tested by some cities and towns and there is evidence that it works, communities will be more likely to implement it.
“We have to be prepared for those growing pains with this program,” he said.
In the meantime, MAPC will be working with state lawmakers and the Romney administration to make changes to the law to make it more desirable for communities to participate.
“There are enough people interested that in two or three years down the road we will have examples of real success and hopefully improved the statutes so that more communities will become interested,” Draisen said.
Aglaia Pikounis can be reached at apikounis@thewarrengroup.com.
