Landmark Study Explores 40B & Litigation
MIT Research Answers Many Questions, Raises More
For Immediate Release — June 18, 2007
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BOSTON — Even though a majority of Chapter 40B zoning override cases in the Boston area are approved by town zoning boards in a manner acceptable to developers, many projects are not being built — this is one of many surprising findings released today in a new study by the Housing Affordability Initiative at the MIT Center for Real Estate. In the wake of recent press on work by the Inspector General, as well as complaints from both towns and developers, this study casts new light on how the process of permitting mixed-income housing actually works. Read full report.
Key findings from this major undertaking stem from an exhaustive effort to follow requests for 40B overrides — comprehensive permit applications — in the Boston area from birth to final outcome. Chapter 40B is the Massachusetts law that allows developers to override local zoning if they agree to sell or rent 25% of a project's housing units at prices that are affordable to moderate income households. It is a process that can produce multi-family housing in a strong housing market (such as that in 2000-2005) because market rate dwellings effectively subsidize modest income dwellings.
According to MIT lead author Professor Lynn Fisher, "In an atmosphere in which developers are often seen as making unreasonable demands, and towns are often seen as resisting any multi-family development, this year-long effort answers key questions, and raises even more."
Although towns and developers often find a way to settle on a permit, only 55% of the projects get built. According to Fisher, "Setting aside the most recent permits, which simply haven't had enough time to get to construction, the puzzle still remains. The towns and developers have done their jobs, but why aren’t the projects being built? The stories we have been documenting vary. Additional litigation can occur between towns and developers, and abutters may file suits against the projects. Some projects are permitted and then sold, which entails a time delay. And the market has changed such that some parties may be waiting awhile."
Future research will focus on explaining the rate of construction, and especially on additional forms of litigation facing 40B projects. Preliminary evidence suggests that litigation in other courts besides the HAC occurs in about 13% of the applications, which may help explain some of the delays in bringing these projects under construction.
While a majority of permit applications are approved, a quarter of them result in an appeal to the Housing Appeals Committee (HAC), the administrative court established by 40B legislation to hear developer's appeals of ZBA decisions. Of the total cases brought to the HAC, nearly 75% result in a modification of the ZBA's original decision. It takes a lot of money on both sides to litigate a claim. This new study finds that "it takes on average 17 months from the time of the ZBA decision until the appeal is settled, and further issues such as abutters' claims often arise even after the settlement." And this follows an average of 8 months of consideration by the ZBA.
The MIT study also finds that of the cases that are approved (with conditions) by the ZBA and then appealed, less than 20% actually result in a decision by the HAC. While a few cases are dismissed (upholding the ZBA's decision), most result in settlements between the town and the developers. "The fact that there are so few decisions is consistent with other studies of litigation which find that most law suits settle 'on the courthouse steps' and never reach trial," says Fisher.
On the other hand, developers appeal 90% of all ZBA denials, and the towns only issue an outright denial about 12% of the time. Of those denied, about 40% reach a HAC decision. Overall, about one-third of the applications denied by ZBAs and then appealed result in a final rejection of the developer's application.
The study also focuses on differences among projects. Rental projects, which have two and a half times as many housing units as a typical condo project, are twice as likely to be denied by ZBAs. Thus rental projects account for 45% of appeals. While rental projects are larger than condo projects, the total number of units represented by rental projects is similar since many more condo projects are proposed.
Contact Information
Lynn Fisher (lead author)
Assistant Professor, MIT Center for Real Estate
(617) 252-1685
lfisher@mit.edu
Henry Pollakowski
Director of the MIT Housing Affordability Initiative, MIT Center for Real Estate
(617) 253-3703
pollak@mit.edu
Patti Richards
MIT Press Office
(617) 253-8923
prichards@mit.edu
