40B Myths

[x] 40B has constructed 1,000 developments, using up precious Massachusetts land and forever changing our landscape. More than 50,000 units of housing have already been built or are currently being constructed using 40B. Sadly, the vast majority of this housing is sold at expensive market-prices. Barely 26,000 affordable units were created over four decades. Even worse, in 2010, the state reports that 26,000 units of affordable housing will be lost - meaning they will no longer be affordable as they become priced at full market cost. 40B developers are also preparing to take advantage of new 40B rules that allow them to build non-residential parts to these projects - including large commercial projects. This change leaves every neighborhood vulnerable to a 40B development that includes a Wal-mart and a liquor store.

• 40B has been used as a tactic to be able to force the construction of market-priced homes that would otherwise be illegal.
• The best producers of affordable housing have never used 40B – including Boston.
• By allowing developers to help craft and manage 40B and its regulations, the law had changed from a program that built projects that were 98% affordable in the early 1970’s to projects that are now falling below even the minimum mandated by 40B – 20%! Clearly, they are putting profits before people.

[x] Massachusetts is widely considered to be one of the most prohibitively expensive states in the nation. The National Low Income Housing Coalition has ranked it 49th in national housing affordability. Housing is expensive in Massachusetts for many reasons, including the fact that 40B produces too many expensive, market-priced homes and barely any affordable ones. As part of this practice, 40B developers have caused land prices to skyrocket – ensuring that non-profit housing organizations and communities have no viable way of purchasing land for affordable housing construction. 40B developers also add price premiums to their market-priced units of approximately 9%-13% - causing artificial home value increases that have helped to contribute to our housing finance collapse.

• Supply and demand is an argument used by developers constantly. There’s one big problem with it – Massachusetts is the ONLY state in the entire nation to have had a stable or declining population for five years in a row! Massachusetts' population declined 3.42% between 2000-2005 and during the same time, housing vacancy rates increased 67%
• We currently have a significant over-supply of homes on the market and forcing the construction of more, using 40B, will only exacerbate the current global housing collapse.
• The American Planning Association, a group for planning professionals, has called 40B “the most regressive planning legislation in the country.”
• During the time that 40B construction reached record-highs, Massachusetts experienced some of the biggest declines in affordability in our history. 9,000 more families fell below the poverty line, and the number of communities that are affordable to first time homebuyers plummeted 90%! (from 116 to only 6 out of 161 communities!)

[x] 40B severely limits eligibility restrictions – so much so that many 40B units remain empty and many housing lotteries have no participants because no residents meet the 40B standards. This is yet another criticism that the law is building the wrong kind of housing in the wrong places.

• In many communities, the range of income that would allow you to be eligible for a 40B unit is only $1,000. What does that mean? It means that you would have to earn between $57,000 - $58,000 just to qualify!
• Many 40B “affordable” apartments totally miss the point of helping people who need it. In many communities outside of Boston, a one bedroom “affordable” apartment goes for about $1,100/month and is only available to persons or families making less than $31,000/year. Talk about out of touch! Maybe if we all work together we can find a few people that make less than $31,000/year who can afford an apartment that costs $1,100/month and those people can fill the many empty 40B units that were forcefully constructed with no clear aims.
• 40B took four decades to construct 26,000 “affordable” units. By 2010, about the same number of affordable units will be lost and will become market-priced homes again because the state refuses to be pragmatic about funding and preserving affordable housing.
• A recent 40B project in Southeastern Massachusetts has affordable units that cost in excess of $650,000!

[x] Overwhelmingly, 40B developments – like all new developments – cost taxpayers huge sums of money. All objective research shows that each additional housing unit built costs the host community between $30,000 and $80,000 more than taxes and fees collected.  That generates a net loss to taxpayers and causes higher taxes and heavy burdens on services.

• 40B production costs taxpayers about $200 million per year
• The DHCD, the agency charged with managing 40B, costs approximately $600 million per year.
• The development industry and home-builders lobby has fought off the implementation of impact fees that most state us to help growth pay for growth
• Much of the management and oversight of 40B has been handed over to developers and their private banks to make decisions about size, location and profits. The entities put their profits before people and make decisions that have significant financial impacts. The costs to municipalities are significant and those costs trickle up to the state in the form of local aid requests, traffic & safety expenditures, school funding, environmental protection and mitigation just to name a few.
• The "develop-at-all-cost" strategy of 40B costs Massachusetts taxpayers approximately $1 billion per year. Maybe that wouldn't be so bad if we were actually getting some affordable housing out of it, but with affordability declining each year, it is time to support a different approach.

[x] Developers and state bureaucrats love to tell people that "local land use restrictions are too harsh and they prevent the construction of new affordable housing." The reality is that local land use restrictions include critical environmental protections. One acre zoning is implemented not as a snob-tactic, but rather as the minimum requirement for environmental standards relating to septic tanks.

• Despite claims that cities & towns do not produce affordable housing and that we need 40B to continue to threaten them into submission, the Massachusetts Municipal Association reports that communities produce approximately 2,000 units of affordable housing per year. That is more than 40B. Between 2000-2006, 40B produced an average of 1,667 "affordable" units. What's more, Boston and the nine other major cities of Massachusetts are the preeminent affordable housing leaders and they have never used 40B to produce their affordable housing gains.
• 40B is little more than a unfunded mandate for bedroom communities to grow in excess of 50% of their total size. Using the facade of "affordable housing," 40B effecitvely serves as a developer welfare program that decimates local communities while ensuring constant and arbitrary new construction.

[x]Originally, 40B was designed to help expedite the permitting of projects and in return for speeding up the process for developers, it placed legally binding profit restrictions on 40B projects to limit the return on investment on rental developments and limit profits in excess of costs for home ownership units. However, behind closed doors, the DHCD has worked with developer lobbyists and 40B builders to change the regulations. They have nearly eliminated all government oversight and much of the control of 40B financing and construction has been handed over to developers and their private bank backers. This has led to massive fraud and abuse and has contributed to the collapse of our housing market.

• 40B regulations encourage opaque financial reporting that is impossible to verify until the project is already built and builders have walked away with excess profits that are nearly impossible to recapture because of the developer's use of Limited Liability Corporations.
• The Inspector General of Massachusetts has testified that cities and towns are owed $100 million in excess 40B profits.
• When a discovery like the Inspector General's is made, the DHCD usually changes the regulations to allow the abuse to continue. One example is the building standard that was supposed to limit projects to a density of 8 units/acre. Builders regularly built in excess of this standard in order to yield profit windfalls. Instead of doing their jobs to enforce restrictions, the DHCD and MassHousing endorsed changing the density limit from 8 units to 44 units/acre!

[x] While 40B developments are subject to state and federal environmental rules, they override local standards. 40B regularly constructs high-density projects on marginal land that would otherwise be illegal if it weren't for 40B's zoning overrides.

• The American Planning Association calls 40B "the most regressive planning legislation in the nation."
• Because 40B forces urban density construction in rural communities who lack the infrastructure for such growth, the law has raised serious environmental concerns. Many 40B projects have been constructed in places that have no sewer capabilities or which are over sewer capacity. Abutting neighborhoods have been flooded with sewage, drinking water walls and aquifers have been disturbed and family farms have been ruined.
• Many communities have documented cases of 40B developers dumping fill into vernal pools and other projects that have so severely affected the watershed that neighbors homes have flooded.

[x] Each 40B project adds at least three market-priced units for every one affordable unit it builds. With normal growth, this makes it impossible to reach the "10% affordable" threshold using 40B alone. In fact, every town that has, has utilized 40B alternatives. However, once a community does hit "10%," developers can still build 40B projects. The DHCD even recently changed the 40B regulations to allow for builders to do new 40B construction arguing that there is a "regional need," despite the fact that the host community might be well over 10% affordable.

[x] Firstly, developers wouldn't be tripping over each other to build 40B projects if it wasn't profitable. Furthermore, the 40B developer lobbyist have spent millions of dollars in the last few years to maintain 40B - - the same law they claim loses them money. Call us crazy, but we've never met a group that invests tens of millions of dollars to lobby for a law that loses them money!

• Almost every other state requires builders to include affordable units in projects without the subsidies provided to 40B developments.
• In addition to not receiving tax credits, developers in most other states are required to pay "impact fees" - fees designed to help offset the significant costs of new construction.
• The average profit earned nationally on affordable housing projects is 10% according to the National Association of Homebuilders. In Massachusetts, 40B regulations are devised so that developers are given automatic returns of 20% profit.