Research Conference Evaluates Chapter 40B
FOR IMMEDIATE RELEASE
May 22, 2007
(Cambridge MA) The MIT Center for Real Estate (MIT/CRE) revealed its latest findings on housing affordability at the Center's 3rd Annual Housing Affordability Conference on Tuesday, May 22, 2007. Attended by 120 real estate developers, town representatives, lenders, and others, the conference at MIT presented groundbreaking research on the Massachusetts Chapter 40B comprehensive permitting process. The study is the first and most conclusive to show that Chapter 40 is generally working, albeit with inefficiencies.
The 40B permitting process became Massachusetts law in 1969. It lets real estate developers bypass various local zoning restrictions when they build a percentage of affordable housing units. MIT/CRE's Dr. Lynn Fisher, Assistant Professor of Real Estate in MIT's Department of Urban Studies & Planning, conducted a study to determine how well Chapter 40B has been working, and to provide useful data for future policy initiatives.
Fisher's research group surveyed the "life histories" of all 40B permit applications from 1999 to 2005 in the Boston metro area, and compiled data on 95 towns. Of 369 applications considered, nearly 78% were approved by the local Zoning Board of Appeals (ZBAs). Of the remaining, 6% are currently pending, 4% have been withdrawn, and only 12% were denied outright. Of those denied, 65% had permits issued on appeal to the Housing Appeals Committee (HAC).
Results generally show that the 40B process is working, and works in favor of the developer; most 40B applications are approved (though often with modifications attached). However, 40B has significant inefficiencies. For example, while on average the total time to permit approval is about 2 years, the total time for owner-occupied projects denied and then appealed to HAC is 4 years.
Other statistics of note include:
- 25% of all projects were proposed on sites within 1500 feet of a town line.
- 72% of all projects were proposed on sites with residential zoning.
- Rental projects were on average three times the size of owner-occupied projects.
- Rental projects were twice as likely to be denied as owner-occupied projects.
Response to Research
Dr. Fisher's presentation was followed by a distinguished panel that considered her findings. Moderated by Tina Brooks, Undersecretary of the Massachusetts Department of Housing and Community Development (DHCD), the panel included Howard Cohen, a principal partner in Beacon Communities; the Honorable Werner Lohe, Chairman of the Housing Appeals Committee (HAC); Joseph Peznola of the Hudson ZBA and Hancock Associates; Jay Talerman is an attorney with the law firm Blatman, Bobrowski & Mead, LLC; and Clark Ziegler, Executive Director of the Massachusetts Housing Partnership (MHP).
Panelists generally agreed with the research that 40B was productive – an important factor in delivering affordable housing to Massachusetts residents. Werner said that as HAC Chairman, he sees generally the most controversial appeals, and given the relatively small sample set that he contends with, he was surprised by the large number of approved permits.
But panelists raised numerous concerns about efficiency. Talerman pointed out that 40% of housing starts came from 40B — too easily a "cash cow" for developers. Ziegler agreed that developers were overly dependent on 40B, but suggested that time spent improving 40B could be better spent rezoning land. Cohen pointed out that towns can rezone to increase efficiency, and stressed the importance of "the right mix between rental and ownership." Peznola felt that site selection was key to permitting since towns ultimately seek simply the "right project on the right site."
In conclusion, Dr. Fisher said that her researchers have only begun to explore the data painstakingly gathered over the last year. Further analysis should reveal important new findings that can help policy makers with new initiatives, and also help developers and ZBAs more efficiently implement Chapter 40B for mutual benefit.
For more information, contact Lynn Fisher, Assistant Professor of Real Estate at MIT.