Promised state funds not coming
Account that rewards smart growth runs dry
For North Reading, the rewards the state promised for allowing a large residential development at the closed state J.T. Berry Rehabilitation Center were enticing. Under Chapter 40R, the state's 2004 smart growth-affordable housing law, the town would get $600,000 for approving the project's zoning, then more than $1 million when building permits were issued.
The town got its initial payment last year, and officials made plans to spend the second installment on new roofs for town buildings, police cruisers, computer upgrades, and other capital projects. But as work started this spring on the 434-unit housing development, state officials informed the town that the second round of money would not be forthcoming.
The reason: The account is empty.
"We are greatly disappointed that this is the position the Commonwealth has taken," said North Reading Town Administrator Greg Balukonis, who added that capital projects will be on hold at least until next year. "You don't spend what you don't have."
Uncertain funding for the state's primary smart growth-affordable housing law has sparked concern in cities and towns hoping to cash in on the growth.
"There's a lot of apprehensive people out there," said Robert J. Halpin, president of the Merrimack Valley Economic Development Council. About a half-dozen communities in the area served by the council have either adopted 40R districts or are considering them.
Massachusetts General Law Chapter 40R was designed as a kinder, gentler alternative to Chapter 40B, the so-called antisnob zoning law that forces cities and towns where less than 10 percent of the housing stock is deemed affordable to ac cept affordable housing by overriding local zoning.
Chapter 40R is a voluntary program, which rewards municipalities that create zoning districts that encourage affordable housing near public transportation, existing city and town centers, and other desirable areas. Cities and towns can qualify for $600,000 just for adopting a district, then $3,000 for each building permit issued.
But three years after the Legislature passed the measure and Governor Mitt Romney signed it into law, a permanent funding source has not been identified.
A fund set up under the Romney administration from the sale of state properties is exhausted. Governor Deval Patrick, who has voiced support for Chapter 40R, recently asked the Legislature for $15 million for the law. The money would come from state accounts supported with revolving housing loans.
That funding request is pending before the House Ways and Means Committee. Jim Eisenberg, a spokesman for the committee, said the issue is being studied.
Backers of Chapter 40R say the state must resolve the funding question soon or communities will abandon the program.
"I think it's a very dangerous message to send if you offer a financial incentive to cities and towns and then don't follow through," said state Representative Bradley Jones, a North Reading Republican who has 40R projects pending in his district in Lynnfield and North Reading.
Ted Carman, a Boston consultant who advises cities and towns on 40R, said, "It has been our assumption that the state would make good on its obligations. If they don't, all of this will stop."
The uncertainty surrounding funding for Chapter 40R comes at a time when more and more communities are setting up the special districts or considering doing so.
Chapter 40R districts have been adopted in 15 cities and towns and are being considered in about a dozen others. Nearly 5,000 units of housing could be built in zones already approved.
Northwest of Boston, locally approved districts are in North Reading and North Andover, while districts are being considered in Lawrence, Billerica, and Belmont.
Haverhill has one of the state's first 40R zones, which is in a former mill area downtown. The city last year received $600,000 from the state when the zone was established.
"One of the reasons we rushed it through was that we knew there were limits on the money," said Haverhill Mayor James J. Fiorentini. "We wanted to make sure that we got it."
In June, North Andover Town Meeting approved a Chapter 40R zone for the former
Lawrence is considering seeking a 40R district for the area around the Malden Mills complex in the northwest corner of the city near the Methuen line.
Also, Lawrence is looking to get credit for a zoning district the city adopted in 2003, before Chapter 40R became law. The 2003 district encourages housing in the downtown mill area, and city leaders are hoping to gain 40R designation and financial rewards.
"The intent of 40R obviously was not to punish a community like Lawrence, which was ahead of the curve," said Andre Leroux, director of planning for Lawrence CommunityWorks, a nonprofit development agency working with city government on zoning issues.
Belmont is considering a 40R district for the Our Lady of Mercy church property, closed by the Archdiocese of Boston three years ago and now for sale. The town would get a small financial reward under Chapter 40R for redevelopment of the 1 1/2-acre site with 12 to 16 housing units.
Neighborhood activists proposed the 40R designation for the Our Lady of Mercy property. "The neighborhood would like something built there that they would have some control over," said Jay Szklut, Belmont's planning and economic development manager.
Robert Preer can be reached at preer@globe.com. 
