Thursday, 4:30 PM
State to look at profits of builders of affordable housing
By Christine McConville, Globe Staff
WORCESTER -- The Patrick administration plans new steps to control lucrative profits pocketed by some developers of affordable housing projects, in response to growing outrage in Boston suburbs and criticism by the state inspector general.
"The new administration is very concerned," Mark Siegenthaler, policy director for the state Department of Housing and Community Development, told a group of town planners at an annual conference in Worcester on Thursday.
In his department's first public response to the controversy, Siegenthaler said the state will probably require developers to post a bond when they launch a project under Chapter 40B, the law designed to encourage affordable housing. The bond money would not be returned to the developer until the project is completely reviewed for excess profits.
Siegenthaler also said the state plans to take a stronger role in checking the costs of the projects and is considering training independent certified public accountants to review the developer’s profits.
Local planners told him Thursday that there is great confusion about who should be reviewing the profits, which are generally supposed to be limited to between 10 percent and 20 percent.
The issue of profits for 40B developers has been raging since February, when Sullivan reported that, with virtually no state oversight of the law’s profit cap, some developers have exaggerated their project costs and minimized project revenue as a way to reap excessive profits.