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In an effort to brief members and communities on the benefits of
Massachusetts' new 40R housing measure, the Federal Home Loan Bank
of Boston (the Bank) recently sponsored the Chapter 40R Forum at
the Crowne Plaza Hotel in Natick.
The forum provided an overview of the new housing measure and encouraged
members to hold similar forumsin their communities to educate local
officials and the public on the benefits of 40R legislation.
Signed into law in June 2004 by Massachusetts Gov. Mitt Romney,
Chapter 40R grants municipalities financial incentives for adopting
special zoning districts for the construction of multifamily and
single-family housing on small lots.
To participate in the voluntary plan, municipalities agree to create
special "smart-growth" zoning districts close to transportation
nodes, town centers, or vacant retail and commercial sites where
housing can be built on less costly lots. To be eligible for the
financial benefits, municipalities must submit comprehensive plans
outlining the housing they plan to build in the districts. The law
requires that at least 20 percent of residential units in district
projects with more than 12 units be affordable, and provides mechanisms
to ensure that at least 20 percent of the total residential units
built in the districts are affordable.
Once a smart-growth district is approved by the state, a municipality
becomes eligible for incentive payments based on the housing it
plans to build there. These payments range from $10,000 for 20 units
or less to $600,000 for 501 or more units. If no construction begins
in the district within three years of receipt of the incentive payment,
the municipality must repay the state.
In addition to the incentive payments, communities with approved
smart-growth districts receive bonus payments of $3,000 for each
unit of new housing that receives a building permit, and they become
eligible for favorable treatment when state discretionary funding
is disbursed.
Unlike the 40B statute, which enables local zoning boards of appeal
to approve an affordable-housing development under more flexible
rules if at least 25 percent of its units are "affordable,"
the 40R measure allows developers to build in districts specifically
set aside for housing on smaller lots. Developers can pursue either
approach to build affordable housing in a community.
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the left, John Eller, Eleanor White, and Sarah Young at the
Chapter 40R Forum.
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Speakers at the January 40R forum included Eleanor White, cochair
of the Commonwealth Housing Task Force; Sarah Young, deputy director
of policy at the Massachusetts Department of Housing and Community
Development; Nancy Curry, vice president at member Banknorth Group;
and Andrew Santos, vice president at member Century Bank and Trust
Company.
"Chapter 40R is expected to generate an increasingly significant
volume of housing sites zoned as-of-right for multifamily and single-family
housing on small lots in smart-growth locations," said John
T. Eller, the Bank's senior vice president / housing and community
development. "Our job is to support our members in pursuing
these opportunities with the municipalities in their area and the
developers that borrow from them."
Mr. Eller noted that the Bank has provided members with $3 billion
in New England Fund (NEF) advance approvals to help finance the
state's Chapter 40B housing initiatives. In 1999, the Housing Appeals
Committee of the state Department of Housing and Community Development
added the Bank's NEF to the list of financing mechanisms that qualify
a development for consideration under Chapter 40B. The Bank's NEF
advances support moderate-income housing and community-development
initiatives, including 40B developments in which 25 percent of the
housing is for households earning at or below 80 percent of the
area median income.
Ms. Curry noted that 40B projects are the largest developments
currently under construction in her region and a valuable source
of business. "40B housing makes a huge impact on Cape Cod,"
she said, adding that developers are loyal to banks that stick with
them through the sometimes arduous 40B-development process. She
said there is now an experienced group of 40B developers working
successfully in her community.
Several speakers noted that the creation of a 40R overlay district
would not restrict the ability of developers and bankers to continue
to fund 40B initiatives. Developers who want to build anywhere in
a town could continue to work through 40B, said Ms. White, while
those that prefer the certainty of building in a district specifically
designed for denser housing would turn to 40R. In addition to offering
financial incentives, the 40R process would also present less resistance
from communities, she added.
Ms. Young said 40R offers an exceptional opportunity to change
land-use patterns across the state and gives communities more control
over where housing developments are built. The 40R overlay districts
allow communities to "achieve housing goals within parameters
they find acceptable," she said.
David Parish, member services representative at the Bank, said
40R initiatives provide new opportunities for the Bank's members.
"We think there is significant business potential for our members,"
he said. "The goal now is to build enough pressure in communities
to move this along quickly."
Mr. Eller asked members to schedule meetings to introduce 40R to
their communities, adding that the Bank would make its community
investment managers available to help them. "The first with
the knowledge is usually the first to do business," said Mr.
Eller.
Chapter 40R regulations are available on the state Department
of Housing and Community Development web site at www.mass.gov/dhcd.
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