Group takes new tack on housing

Saying that the state's affordable housing law is broken and cannot be fixed, a group of suburban officials has created an organization designed to develop new ways to produce low-cost housing.

Members of the new Municipal Coalition for Affordable Housing say individual communities should be responsible for producing such housing.

"We need to put the communities back in control," said Duxbury Selectman Jon D. Witten. "When it comes to affordable housing, communities have no voice in the process."

The state's affordable housing law allows developers to bypass local zoning, as long as at least 20 percent of the housing units in a project are made affordable to people with low and moderate incomes.

In most 40B developments, 75 percent of the housing units are sold for whatever price the market demands, while the other 25 percent must be priced at an amount that is affordable to people who make 80 percent of the area's typical salary. The income levels are set by the federal government, and vary from one metropolitan area to another. To qualify for an affordable unit in most Boston-area 40Bs, a single person must earn less than $46,300 a year, and a couple must earn less than $52,950 a year.

Local officials and residents often say that law leaves them powerless to halt projects or negotiate concessions from developers of affordable housing in their communities, while housing advocates and development interests on Beacon Hill defend the law, saying it generates much needed low-cost housing.

"To date, 40B is credited with the creation of approximately 45,000 homes that serve moderate and middle-class working families as well as low-income households all across the state," said Phil Hailer, spokesman for the state Department of Housing and Community Development.

"If we are to retain our population, retain jobs, and keep Massachusetts economically competitive, we need to build more homes that are affordable for working-class families," he said in an e-mail.

The new group includes elected and appointed officials from Duxbury and Plymouth. They plan to recommend that communities create their own lower-cost housing by gaining local approval of the state's Community Preservation Act, which permits a property-tax surcharge that can be used for affordable housing. The group also wants communities to adopt inclusionary zoning, which would require all residential developers to set aside some units as affordable, and to make town-owned land available for housing.

Together those two approaches, they say, would produce as much affordable housing as the Chapter 40B law does -- but in a way that does not cut local officials out of the process.

When the state Legislature approved the Chapter 40B affordable housing law nearly 40 years ago, it was primarily a tool used by nonprofit developers to build apartments for the elderly. The law required that the developers obtain a subsidy for the project from a handful of heavily regulated funding sources. In most cases, the subsidy agent is responsible for granting preliminary approval of the project and then ensuring that the developers stayed within the profit caps.

But in 1999, the Housing Appeals Committee ruled that developers could obtain their subsidy through the Federal Home Loan Bank of Boston's New England Fund, a consortium of about 400 local banks. But there was very little oversight of this fund, and communities complained that local banks granted preliminary approval for the developments with virtually no scrutiny of the projects.

In 2003, the state put in place new guidelines to create a more thorough preliminary review of the projects.

In recent years, the law has attracted huge interest from developers. According to a Globe review, since 2000 there have been more than 400 projects built under the law in the state, and 450 more projects are pending.

According to the new coalition, 40Bs have resulted in an average of 1,162 low-cost housing units a year, a small number when compared to total new home development, because in most 40B developments, for every one affordable unit, three are market-rate units.

"There are many, many other states that provide far more affordable housing than Massachusetts ever will, and do so with progressive techniques that put the burden on land developers, not cities and towns," said Witten, a land-use lawyer who has represented dozens of communities and resident groups in fights against proposed 40B developments.

"It is not surprising that the Massachusetts real estate and development community has resisted these techniques, where they have a free ticket under Chapter 40B," he added in an e-mail.

The Chapter 40B process has also been called into question by Massachusetts Inspector General Gregory W. Sullivan, who has accused some 40B developers of neglecting to abide by the law's profit cap. The law generally requires that developers limit profits to no more than 20 percent, and that excess profit be handed back to the community.

Sullivan said some developers made more money by inflating their project costs and deflating project expenses. He has also criticized the state for not providing proper oversight of the program; hundreds of 40B developments still have not been checked for excess profit.

Some communities have successfully battled 40B developers on excess profits. Boxborough, for example, sued two developers, accusing them of exaggerating their project costs and charging them with fraud. Several months later, the developers paid the town $1.2 million but admitted no guilt.

Hailer said that the state agency "continues to explore ways to improve 40B on every level and make it more efficient, equitable, and user-friendly."

Coalition member Bruce Arons, a former Plymouth selectman who now runs that town's Office of Community Development, said it is time for a change: "40B doesn't work, and this group is really trying to come up with something better," he said.

The coalition plans to hold an organizational event in a few months.

Christine McConville can be reached at cmcconville@globe.com.