As mixed-income subsidized housing developments reach towns further from Boston, they are encountering a new form of resistance from municipal officials: an argument that the town has satisfied its obligation to provide affordable housing by the mere existence of market-rate housing priced comparably to the subsidized housing developer's affordable units. This argument has yet to carry the day before the Housing Appeals Committee (HAC) or the Superior Court. But the Supreme Judicial Court has just accepted two cases that raise this issue, one in the rental context and one concerning a home-ownership development.
The home-ownership case, in which the developer is represented by Paul Wilson and Jonathan Cosco of Mintz Levin, spawned the first HAC decision on this new municipal argument. In that case, the Lunenburg Zoning Board argued that cheap market-rate homes in Lunenburg already meet what Chapter 40B calls the "regional need for low and moderate income housing," and therefore the developer could not invoke Chapter 40B even though only 1.9% of Lunenburg's housing stock was recognized by the state as subsidized housing, a far cry from the 10% level required by Chapter 40B. The HAC ruled the legislature defined "low and moderate income housing" as housing subsidized through a government program, and for good reason: inexpensive market-rate housing lacks many of the relevant characteristics of the affordable units in a subsidized condominium development. In particular, the HAC noted, without the safeguards provided by a deed rider restricting its future price, market-rate housing that is "affordable" today might not be affordable tomorrow, as housing prices climb out of their current trough. The HAC also noted that the condition of Lunenburg's least-expensive homes did not always provide the decent and safe affordable housing that Chapter 40B aims to provide. Moreover, the HAC said, allowing a town to count market-rate housing towards its 10% statutory goal would discourage a developer from using Chapter 40B if he could not tell, before he undertook a project, whether the town might deny his application because, in its view, market-rate housing made Chapter 40B inapplicable in that particular town.
On appeal, Mintz Levin and the Attorney General's office convinced the Worcester Superior Court to affirm the 45-page opinion of the HAC in a one-word decision. The Zoning Board filed a further appeal, which was fully briefed and awaiting argument in the Appeals Court when the Supreme Judicial Court took the case from the Appeals Court last week.
The Supreme Judicial Court probably took that action because, just days before, the Court had granted the Sunderland Zoning Board's request that it directly review a different case raising the same argument in the rental context. The Sunderland Zoning Board argued before the HAC that, as a result of its proximity to the University of Massachusetts at Amherst, Sunderland has a plethora of inexpensive apartments that satisfy the statutory "need for low and moderate income housing." The HAC again rejected this argument, citing its earlier decision in the Lunenburg case, and the Superior Court recently affirmed that HAC decision, too.
If the Supreme Judicial Court rules that cheap market-rate housing can satisfy a municipality's obligation to provide affordable housing equal to 10% of its housing stock, the Lunenburg Zoning Board will likely still be out of luck, because Mintz Levin's cross-examination of Lunenburg's "expert" convinced the HAC to rule that the Lunenburg Zoning Board had failed to present credible evidence of a sufficient number of affordable market-rate units in that town, and the Supreme Judicial Court rarely overturns such factual findings. But, elsewhere, such a ruling would make the application of Chapter 40B a function of geography; the law would always apply in expensive Boston suburbs, but not in counties where housing prices are lower. And application of Chapter 40B would also become a function of market timing; the law would apply during today's depressed real estate market in far fewer towns than it covered a few years ago, when market-rate housing prices were higher. The betting here is that the Supreme Judicial Court will affirm the HAC's decisions that the legislature did not intend to allow a lowest common denominator approach to providing housing to persons of low or moderate income, and therefore a town cannot rely on its cheapest and least habitable market-rate student apartments and decrepit houses to meet the statutorily-recognized housing need.
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