What is Chapter 40B?
Development in Plymouth is controlled through the Planning Board and Zoning Board of Appeals. But Massachusetts does have some statutes relating to “affordable” housing which supersede these local controls. One of those statutes is General Laws Chapter 40B, which is referred to as the Regional Planning Law. One section of this law in particular, Section 21, has been used by developers to circumvent Town zoning requirements. In Plymouth, for any development to occur, the planned use for the property must be allowed by existing zoning, exempted by obtaining a special permit obtained through the Planning and Zoning Boards, or the property has to be re-zoned by Town Meeting. But if a proposed residential development meets the requirements of Chapter 40B, Section 21 (and the applicable State regulations), it can circumvent those procedures. In fact, it can be built regardless as to local zoning restrictions, and Town boards have practically no say in preventing it. That is because applications for those projects are submitted to a State board, which makes all decisions as to whether or not to approve it and under what conditions.
What type of projects can be built under Chapter 40B?
Chapter 40B relates only to housing projects (there are separate rules for mixed housing/commercial developments under Chapter 40R). But beyond that, there are multiple different forms of housing that can be built. It can be for sale or rental. It can be for families or age restricted. It can be independent living or assisted living/nursing care. The only common aspect is the requirement that a defined portion of the units be set aside for those meeting certain income/asset eligibility requirements.
Who can build Chapter 40B housing?
Chapter 40B housing can be constructed by a State agency, a non-profit entity, or an entity called a limited dividend organization. A limited dividend organization is an entity which agrees to limit the dividend it pays to a maximum amount which is allowed by the statutes or regulations governing the type of housing built. However, that does not limit the overall profit the entity can make. So on the sale or rental of non-income restricted units, a company can make as much money as the market will bear.
What makes a development Chapter 40B compliant?
To qualify under the statute, overall, 25% of the available units at the development have to be occupied by Income Eligible Households earning 80% or less than the area median income. Alternatively, if at least 20% of units are to be occupied by households earning 50% or less of area median income. To meet these requirements, there are regulations set forth regarding both rental and sale of ‘restricted’ units:
A. Restrictions on Rental
To be considered eligible to be a restricted unit, monthly rental costs (inclusive of utilities) cannot exceed 30% of monthly income for a household earning 80% of area median income (adjusted for household size). In Plymouth, we are considered part of the Boston area, meaning the current median area income is around $100,000. So in real terms, an apartment or house meets the affordability standard in Plymouth if it costs $2,000 per month or less in rent. If there is no city trash collection, a trash removal allowance is included, and if utilities are separately metered, they may be paid by the tenant and the maximum allowable rent will be reduced to reflect the tenants’ payment of utilities, based on the area’s utility allowance.
B. Restrictions on Sale
To be considered eligible to be a restricted unit, there are restrictions on both financing and homeowner costs:
1. The down payment must be at least 3% of the purchase price, at least half of which must come from the buyer’s funds (unless purchased under a program that permits a smaller down payment).
2. The mortgage loan must be a 30-year fully amortizing mortgage for not more than 97% of the purchase price with a fixed interest rate that is not more than 2 percentage points above the current MassHousing interest rate.
3. Monthly housing costs (inclusive of principal, interest, property taxes, hazard insurance, private mortgage insurance and condominium or homeowner association fees) shall not exceed 38% of monthly income for a household earning 80% of area median income (adjusted for household size). So again, in real terms, a house or condominium in Plymouth is affordable if mortgage, insurance, tax, and fees are $2,500 per month. This would not include upkeep or utilities.
It is important to note that if a development is Chapter 40B compliant, then all of the units in that development, not just the restricted units, count towards the Town’s affordable housing stock for State calculations.
Does the Town have any control over the developer of a Chapter 40B project?
Only by agreement.
There are two paths developers can pursue for their 40B development — friendly or unfriendly.
In a friendly 40B development, the developer works with Town boards and departments, which can then approve the development per Chapter 40B. This is done to avoid the complex State application process. In exchange, the developer may agree to minimize density, improve setbacks, or blend architectural aesthetics with the neighborhood.
However, if the Town and developer cannot work cooperatively, the developer can pursue an unfriendly application through the State, whihc would by-pass local zoning. These types of developments tend to be very dense, out of character, and do not preserve much in the way of open space.
Can the Town do anything to prevent Chapter 40B developments?
There are 3 ways the Town can prevent approval of new Chapter 40B applications:
1. Meet the State’s affordable housing requirement. Because the intent of Chapter 40B is to encourage development of sufficient ‘affordable’ housing, the statute only applies to communities which don’t have a sufficient amount of such housing. The State defines the adequate amount of affordable housing to be 10% of the total number of housing units in the town. Based on the most recent census, Plymouth has over 28,000 housing units (a number which is still increasing rapidly), meaning we would need to have over 2,800 affordable units to be considered to have an adequate affordable housing stock (and continue to increase affordable housing equal to 10% of new housing each year). Right now, with current applications, Plymouth has under 7% affordable housing, meaning right now we are over 840 units short (before new housing construction). To show how difficult it has been to develop affordable housing in Plymouth, we created the Affordable Housing Trust in 2006. In the 12 years since its creation, it has developed a bit over 500 affordable housing units.
2. Create and implement a Housing Production Plan.
A Housing Production Plan (HPP) is a community's proactive strategy for planning and developing affordable housing by: creating a strategy to enable it to meet its affordable housing needs in a manner consistent with the Chapter 40B statute and regulation. The HPP is required to contain 5 year assessments for the town’s comprehensive housing needs, affordable housing goals, and implementation strategies. The HPP is first adopted by the Planning Board and then approved by the Select Board, after which it is submitted to the State Department of Housing and Community Development (DHCD) for its approval. The HPP is to be updated and renewed within five years of the date of its approval by the DHCD.
A town which has an approved HPP, can then submit a request to DHCD for a Certification of Compliance. This is a request for a finding that the town has shown that it is following its HPP and is making significant and consistent progress toward attaining its affordable housing goals (such as by implementing new regulations, creating new zoning districts, and making progress towards its numerical housing targets). If the DHCD issues such a certificate, then for a 2 year period, it will defer any new 40B applications to the town Zoning Board of Appeals (ZBA), and any decision by that ZBA relative to that application will be deemed "consistent with local needs" under Chapter 40B, meaning that it will be upheld by the Housing Appeals Committee.
Plymouth does have a HPP. It was approved by the DHCD in 2013, and its update was approved in 2019. You can view the plan by clicking here: https://www.plymouth-ma.gov/planning-board/files/2019-final-housing-production-plan. However, given that Plymouth is so far behind the 10% affordable housing target (again, under 7%), and that it has failed to keep pace with the HPP requirement to create some 250 new affordable housing units each year (or Chapter 40B developments with at least that many total units), it is not able to seek a certificate of compliance.
3. Seek a waiver based on creation of new affordable housing units.
In 2003, the Department of Housing and Community Development (“DHCD”) issued regulations that create certain “safe harbors” which allow municipalities to deny or place conditions on comprehensive permits (Chapter 40B applications) without the threat of appeal. In 2008, the DHCD further expanded these safe harbors. Specifically, under the new regulations, a municipality may qualify for a “planned production” safe harbor if there is an approved Housing Production Plan and the town then approves a new affordable housing project with a number of units equal to 0.5% of its existing housing stock. Once verified by the DHCD, a municipality is free to deny any Chapter 40B applications for the next 12 months.
At the time of the last Census, Plymouth had almost 28,500 dwelling units that count towards its housing stock. That means that in order to qualify for safe harbor, Plymouth now needs to approve qualifying housing projects of at least 150 units (and the number will continue to rise as more housing is built).
Plymouth has taken advantage of the safe harbor regulations twice in recent years. The first time was with the Oasis project, the construction proceeding behind Home Depot. Plymouth sought, and received, safe harbor status from the DHCD in 2019, when the original application was approved. However, that status was later withdrawn when the developers failed to obtain a building permit within the required time period. Then, after the building permit was obtained, the Town sought to reinstate the safe harbor status, but that request was denied by the DHCD.
The second safe harbor request was made in connection with the Walk, the senior housing project adjacent to Colony Place. Plymouth sought and received safe harbor status for that project, which took effect when the number of restricted units was achieved. That safe harbor protection will expire in February of 2023.
There are two main problems with the safe harbor provision. First, they only apply for one year; so a developer can wait until the restriction expires and then proceed with an application. Second, they don’t give extra credit for years with multiple developments. Again, to qualify for safe harbor, Plymouth needs to approve qualifying projects of at least 150 units. But if Plymouth approves double that amount, it still only gets 1 year safe harbor.
So what does Chapter 40B mean for Plymouth in the long term?
The crux of all of this is that unless Plymouth makes significant strides in developing ‘affordable’ housing, the State will continue to take away control of key aspects of our planning, and developers will continue to exploit these loopholes.
Plymouth needs a proactive approach to land use throughout the Town with respect to both development and open space protection. Because given State requirements, we can’t have one without the other.