EDWIN J. SHANAHAN
40B applicability improved
A provision in the housing bill passed last week that limited what communities can do to prevent rent increases at so-called expiring use properties is being viewed as a victory by rent control opponents.
The housing bill, along with a $508 million housing bond bill that will provide money for the renovation, creation and preservation of affordable housing units, were negotiated through the first half of last week.
The bill included a compromise on changes to Chapter 40B, the state’s controversial anti-snob zoning law. It also featured other provisions, including one regarding expiring-use properties – federally financed affordable housing units that under contractual agreements are eligible to be converted to market-rate rentals once the property owners pay the mortgages off.
At least four cities had filed home-rule petitions to preserve affordable units at expiring use properties. Boston, Salem, Lowell and Quincy wanted to be able to cap rents at such properties. The Massachusetts Alliance of HUD Tenants supported the petitions, arguing that thousands of affordable housing units are in danger of being converted to market-rate units, leaving current residents with few or no housing alternatives in this pricey real estate market. Nonetheless, lawmakers rejected the petitions encouraging opponents who thought that the measure was nothing short of rent control.
“If there was an appetite to authorize a return to the punitive rent control situation … this would have been a vehicle by which it would have been accomplished,” said Edwin J. Shanahan, chief executive officer of the Greater Boston Real Estate Board. “Since it didn’t [pass], it is a clear indication that there is not an appetite to return to the punitive rent control schemes of the past.”
Boston housing activists have been trying to revive rent control and have even gotten some support from city leaders like Mayor Thomas M. Menino.
“The concept of rent control, whether it be in expiring use properties or other multifamily residential properties, is a concept we cannot and don’t support,” said Steve Ryan, general counsel for the Massachusetts Association of Realtors. “We are grateful that the final version [of the bill] does not include rent control as a proposed solution to a very serious and complicated problem.”
Legislators agreed on a measure that would require owners of expiring-use properties to notify local housing authorities once the units are up for conversion, giving the authorities the opportunity to purchase and preserve the affordable units. Housing authorities would be able to use $35 million in state money to purchase the properties. In addition, lawmakers are requiring that tenants living in such properties receive prior and specific notification about the possibility of a market-rate conversion.
Leaders of both GBREB and MAR were disappointed that another measure, which would require tenants to continue to pay rent into an escrow account during disputes with landlords over health code violations, failed. However, Shanahan said he was encouraged that lawmakers acknowledged, through prior proposed bills, that something needed to be done to stop tenants who were abusing the law and living rent-free.
‘A Good Thing’
The overall outcome of the housing bill was closely followed by Realtors and affordable housing advocates and local leaders who were anxious to find out what kind of changes would be made to Chapter 40B. Community leaders had pushed for changes to the law, saying that developers were misusing the law to build housing developments that overburdened local services. The law allows developers to bypass local zoning when proposing projects with affordable units in communities where less than 10 percent of the housing is affordable.
Lawmakers agreed to a compromise that would allow communities to reject housing developments proposed under Chapter 40B if the towns file a plan with the state to increase affordable housing stock by at least a half-percent each year. Also, a community could deny a permit for a housing project if it has increased its low- and moderate-income housing by at least 2 percent in the prior year.
What is considered affordable housing under the law was also broadened. Now, newly created accessory apartment units and special units that house people with mental disabilities and illness can be counted as affordable.
Realtor groups and housing advocates hailed the compromise, even though some suburban leaders complained that the changes weren’t enough to protect communities from unscrupulous developers, and homebuilders felt that the changes would harm housing production efforts.
“The changes that were made in the bill improve the applicability and the wisdom of 40B,” said Shanahan.
Shanahan praised lawmakers for expanding what can be counted as affordable but limiting it to newly created units. At one point, lawmakers had argued for mobile homes and units occupied by Section 8 voucher holders to be counted as affordable. Those were not included in the bill as affordable.
MAR President David S. Drinkwater was also pleased with how Chapter 40B issues were resolved.
“All in all, it’s a good thing,” Drinkwater said of the bill. “Chapter 40 is a very important piece of our future here in Massachusetts to ensure that we have affordable housing.”
But the Home Builders Association of Massachusetts expressed some reservations about the Chapter 40B modifications, particularly about allowing communities to reject housing development proposals if they show that they are increasing housing stock by a half-percent.
“We’re also pleased that the worst of the deforms of 40B – that is, counting mobile homes, Section 8 vouchers and so on – were also not included in the final bill,” said Benjamin Fierro III, the general counsel for HBAM. “However, the fact of the matter is, this bill downshifts affordable housing production in Massachusetts into first gear, and it does so by virtue of this provision regarding community planning – the one half of one percent.”
The homebuilders group, however, was pleased that lawmakers threw out a mandatory inclusionary zoning provision, a measure that would have allowed communities to pass laws requiring developers building 10 houses or more to set aside 10 percent for low- to moderate-income households.
Critics of inclusionary zoning believed the measure would have created an unfair financial burden on developers, forcing them to hike the prices of the market-rate homes in order to pay for the “affordable” homes within a development.
Also included in the bill was the repeal of a law that requires home sellers to disclose whether urea formaldehyde foam insulation was ever used in their home. MAR leaders had unsuccessfully pushed for the repeal of the UFFI disclosure law, enacted in 1986, in prior years.
The formaldehyde found in this type of insulation has been found to emit harmful vapors. But the sale of UFFI was banned in 1980, and public health officials have reported that the harmful effects of any installed insulation would have dissipated years ago.
The housing bill also provided incentives aimed at stimulating housing production that were supported by GBREB, MAR and the Home Builders Association of Massachusetts. For example, it expanded the use of tax-increment financing, which provides an incentive to developers to focus on building in urban areas.
