2013 Housing Score: Builders 2, Towns 0

     The stars continue to align for builders in 2013. As if low interest rates, pent-up demand, and the Governor's plan for 10,000 new housing units per year were not enough of a tailwind, along comes the Supreme Judicial Court and issues not one but two decisions approving affordable housing developments. 

     The recent SJC decisions continue to recognize the importance of constructing affordable housing (rental or ownership) under the "comprehensive permit" law, Chapter 40B. The decisions also remind local boards to not deny a project based on unreasonable concerns, because improper reasons will be overturned.

      1.  On January 8, the SJC ruled that the Town of Lunenburg had improperly denied a 146-unit condominium project. The SJC rejected the Town's argument that the project would be inconsistent with the Town's master plan, because the Town had not actually created any affordable units under that plan.

     The SJC also held that the Town's affordable housing stock for purposes of Chapter 40B consists of subsidized units with long-term affordability ensured by a deed restriction. Thus, low-cost market rate housing does not qualify as "affordable housing" under Chapter 40B.

      2.  On January 14, the SJC held that the Town of Sunderland had improperly denied a 150-unit rental project. It was wrong for the Town to deny the project on the basis that the fire chief had alleged fire safety concerns (i.e., the Town did not have a ladder truck or a garage to store it in). The SJC determined that those concerns were not valid where the 3-story buildings would have an extensive, state-of-the-art sprinkler system, the Town had mutual aid from a neighboring town that owned a ladder truck, and the Town's zoning bylaw allowed taller buildings than those proposed by the applicant.

     Importantly, the SJC also ruled that the alleged "fiscal impact" of the project was not a lawful basis for denial. The Town had argued that the project would increase the school age population and necessitate an increase in the school budget; require hiring additional police officers and firefighters; and, create additional maintenance expenses for roads, sidewalks and drainage, all in excess of the tax revenue generated by the project.

     The SJC rejected the Town's argument, holding that a fiscal impact analysis is not permitted under Chapter 40B. The one limited exception is if the alleged inadequate municipal services were due solely to unusual topographical, environmental or other physical circumstances of the project, which did not exist in this case.

     As a final exclamation point, the SJC ruled that the Town had improperly charged the applicant a $10,000 "filing fee", ostensibly to pay for the Town's attorney for general legal representation. Such burdensome "application fees" were prohibited under the affordable housing regulations.

 

    3.  The affordable housing regulations of the Department of Housing and Community Development (DHCD) and the Housing Appeals Committee (HAC) support proactive municipal efforts to create housing (e.g., adoption of "smart growth" zoning overlay districts to create new housing "by right" under Chapter 40R, commitment of Community Preservation Act (CPA) funds to construct affordable housing, etc.). However, as the SJC recently indicated, the local efforts and plans will not be credited if they do not result in actual construction of affordable units.

     In December 2012, I circulated a memo on the Governor's housing plan and "5 Tips for Real Estate Development". Please contact me if you would like a copy.

     Please contact me if you or a colleague has any questions regarding comprehensive permits, Chapter 40B, real estate development, or construction issues.

Why is it so difficult to rebuild a home?

Property owners are often struck by how difficult it is to build or rebuild a home in Massachusetts, especially if the lot or building is “nonconforming” (e.g., the lot is too small or does not have enough frontage, the house is too close to the property line, there is too much lot coverage, etc.). Even if a home has existed for decades without any “problems”, it can be very difficult (and expensive) to obtain approvals for additions or rebuilding to create present day amenities like energy efficiency, larger space and improved views.


If a city or town has tightened its zoning code over the years, the home falls into the category of “preexisting nonconforming structure” with challenging permit requirements regulating alterations. All of a sudden, a “team” of professionals may be needed to help obtain the necessary approvals. (However, to paraphrase Seinfeld, not that hiring professionals is a bad thing!) Although “mansionization” grabs the media attention, even modest reconstructions can face this challenge.

The Legal Standards

The challenge originates primarily in the State Zoning Act, General Laws Chapter 40A, Section 6, which provides that a preexisting nonconforming single family structure may be altered or reconstructed provided that it “does not increase the nonconforming nature” of the structure. To determine if a home’s nonconforming nature would be increased, one needs to identify the existing nonconformity (e.g., area, setback, frontage, coverage, etc.) and then determine if the new home would intensify the nonconformity or create new ones.

If the municipality determines that the home’s nonconforming nature would be increased, the rebuilding is allowed only if it is not “substantially more detrimental” than the existing home to the neighborhood. This is often called the “Section 6 Finding”, after its location in Section 6 of the Zoning Act.

As you likely sense, these are vague, subjective standards. Ultimately, the determination is typically made by the volunteer members of the local zoning board of appeals, who are often subject (and receptive) to neighbors’ claims that they are “aggrieved” by the proposal. (One maxim applies here: very few neighbors like change.)

Adding to this challenge is the authority granted to each municipality to adopt its own local zoning code to customize provisions of the Zoning Act. For instance, each municipality is allowed to implement different procedures, standards, prohibitions, and voting requirements for the Section 6 Finding and determining whether an alteration is substantially more detrimental to the neighborhood.

What Is “Substantially More Detrimental” to the Neighborhood?

Prior court decisions may not be too helpful in clarifying these issues because the other decisions are often tailored to a municipality’s specific code and project. The Supreme Judicial Court (SJC) attempted to facilitate approval of certain “small scale” alterations in its 2008 decision titled “Bjorklund vs. Zoning Board of Appeals of Norwell”. However, the SJC’s list of small scale projects was so limited as to have little practical effect for owners proposing even modest additions or reconstructions. For example, the SJC’s list of small projects included adding one dormer, enclosing a porch or sunroom, constructing a 2-car garage, and installing a storage shed for gardening or pool equipment.

Some municipalities handle the Section 6 Finding as an “administrative finding”, usually by the zoning board of appeals (ZBA) based upon a simple majority vote. However, some municipalities have made the Finding subject to a discretionary “Special Permit”, with all the strict requirements imposed by Section 9 of the Zoning Act, such as written notice to all “interested parties”, legal advertisements in the newspaper, long time frames for opening the public hearing and issuing a decision, and, very importantly, a “supermajority” vote (e.g., four affirmative votes of a five member board).

In addition, a municipality may seek to impose a detailed list of “Special Permit criteria” to the statutory test of whether the proposal is substantially more detrimental to the neighborhood. Of course, because “substantial detriment” is not susceptible of a fixed measure, the public hearing often delves into amorphous issues like, is it too big, is it in harmony with the neighborhood, does it impact views, etc.

This complex process begs a simple question: If other homes in the neighborhood are roughly similar to the proposed house, is it possible for the new home to be “substantially more detrimental” to the neighborhood?

As if the discretionary Section 6 Finding was not challenging enough, some municipalities have also adopted a discretionary “site plan review” requirement (or, even more onerous, a “site plan special permit” requirement), or wetland regulations with strict “no build” zones, or sewage disposal restrictions more stringent than the State standards. These all have their own complexities, often necessitating a team to navigate them. However, apropos of Seinfeld, not that hiring a team of experts is a bad thing!

Please contact me if you or a colleague has a question on permit requirements for building a home or other real estate issues.