Chapter 40B cases address the regional need for affordable housing standard

Issue March 2013 March 2013 By Timothy C. Twardowski

In a pair of cases decided in January 2013, the Supreme Judicial Court ruled that the availability of unsubsidized, affordable market-rate housing cannot be considered in weighing a city's or town's local concerns against the regional need for low and moderate income housing under the Massachusetts comprehensive permit act, G.L. c. 40B, §§ 20-23. In Zoning Board of Appeals of Sunderland v. Sugarbush Meadow, LLC, 2013 Mass. LEXIS 7, Sugarbush Meadow, LLC (Sugarbush) applied for a comprehensive permit to build five, three-story buildings containing 150 rental apartments. The Sunderland zoning board of appeals denied the application. Sugarbush appealed the denial to the Housing Appeals Committee (HAC), which overturned the decision and ordered the board to issue the comprehensive permit. The Superior Court subsequently upheld the HAC decision.

On appeal to the SJC, the board alleged that the HAC erred in "refusing to consider the availability of low-cost, market-rate, unsubsidized housing in the town in weighing the town's local concerns against the housing need." Id. at *12. In support of its position, the town provided expert testimony that:

the town has one of the highest percentages of rental housing in the Commonwealth, that 83 percent of all existing rental housing units in Sunderland are being rented at affordable rents, even though they may not be subsidized, and that 46 percent of Sunderland's housing stock is rented at affordable prices as designated by the department.

Id. at *12-*13 (internal quotations omitted). Notwithstanding this evidence, the SJC rejected the town's argument on the ground that the Act and its governing regulations do not allow the HAC to consider the availability of unsubsidized housing units in determining whether the "housing need" is outweighed by local concerns.

Under the regulations issued by the Department of Housing and Community Development (DHCD) to administer the Act, "housing need" is defined to mean "the regional need for Low and Moderate Income Housing considered with the number of Low Income Persons in a municipality affected." 760 Code Mass. Regs. § 56.02 (2012) (emphasis added). The Act defines "low or moderate income housing" to mean:

any housing subsidized by the federal or state government under any program to assist the construction of low or moderate income housing as defined in the applicable federal or state statute, whether built or operated by any public agency or any nonprofit or limited dividend organization.

G.L. c. 40B, § 20 (emphasis added). Based on these definitions, the SJC concluded that "the plain text of both the act and the governing regulations require the HAC, in weighing the housing need, to exclude from consideration any affordable housing that is not subsidized under a qualifying government-sponsored program." Sunderland, 2013 Mass. LEXIS 7 at *14 (emphasis added).

Although this analysis appears sufficient to dispose of the issue, the SJC went on to explain how the exclusion of affordable market-rate housing is consistent with the purpose of the Act, namely to "address an acute shortage of decent, safe, low and moderate cost housing throughout the commonwealth." Id. at *15 (quoting Board of Appeals of Hanover v. Housing Appeals Comm., 363 Mass. 339, 351, 294 N.E.2d 393 (1973)) (internal quotations omitted). First, an affordable market-rate unit may be affordable simply because it is neither decent nor safe, while subsidized units typically are required to meet minimum standards in order to qualify for a federal or state subsidy. Second, even if a market-rate unit is decent and safe, its affordability may be attributable to a weak housing market, in which case there is no guaranty that it will remain affordable as market conditions improve. By contrast, under the DHCD's Comprehensive Permit Guidelines, the affordability requirements must be met for a minimum of 15 years for rehabilitated units and 30 years for new construction in order to be counted in a community's subsidized housing inventory. See Comprehensive Permit Guidelines (July 30, 2008) § II(A)(1). Third, unlike subsidized low and moderate income housing units, which are required by 760 Code Mass. Regs. § 56.02 to be restricted to "income eligible households," there is no way to guaranty that a market-rate housing unit will be rented by, or sold to, a low or moderate income household.

In light of these differences, the SJC agreed with the HAC that "the Legislature required a state or local subsidy in order to ensure that housing constructed under the [Act] would be subject to enforceable controls on quality, sales price or rental rate, manner of marketing, and income of the occupants - all factors essential to the long-term stability of affordable housing." Sunderland, 2103 Mass. LEXIS 7 at *18.

The SJC applied the same analytical framework and reached the same conclusion in Zoning Board of Appeals of Lunenburg v. Housing Appeals Committee, 464 Mass. 38 (2013), which involved the denial of an application for a comprehensive permit to build 146 condominium units and followed the same procedural path as the Sunderland case.

In Lunenburg, the town argued that the HAC should have considered the availability of affordable market-rate housing in the town and presented expert testimony that, within the Lunenburg region, "the maximum affordable sales prices for a household earning seventy and eighty per cent of area median income were $140,000 and $160,000, respectively, … that 11.5 per cent of the homes sold in the town in 2006 and 2007 were purchased for $160,000 or less, and that 8.2 per cent of the homes were purchased at prices at or below $140,000." Id. at 44. In a virtual carbon copy of its discussion of the issue in Sunderland, the SJC likewise rejected Lunenburg's argument, affirming the HAC's decision to exclude such evidence in its consideration of the regional need for affordable housing. See generally id. at 44-48.

While the Sunderland and Lunenburg decisions leave little question that unsubsidized, affordable market-rate housing units cannot be considered by the HAC in evaluating the "regional need for affordable housing," precisely what constitutes the pertinent "region" for the purpose of that anaysis remains an open question. As the SJC pointed out inSunderland, "region" is not a defined term in either the Act or the regulations. See Sunderland, 2103 Mass. LEXIS 7 at *21. The DHCD's Comprehensive Permit Guidelines also do not define the term or provide guidance for determining what constitutes the pertinent "region" within the meaning of G.L. c. 40B, §§ 20, 23. As a result, the HAC is left to define the region on a case by case basis, and the results are not always consistent, as the Lunenburg and Sunderland cases demonstrate.

In Lunenburg, the pertinent "region" was defined as a seven-community area comprised of Lunenburg and the six towns with which it shares a common boundary (Ashby, Fitchburg, Lancaster, Leominster, Shirley, and Townsend). This approach is generally consistent with dicta in the case Bagley v. Illyrian Gardens, Inc., 401 Mass. 822 (1988), in which the SJC stated: "Without attempting to define comprehensively the terms 'local need' and 'regional need,' we think that in this context it is clear that 'local' need relates to the municipality directly concerned, . . . while 'regional' need includes surrounding communities." Id. at 826 n.4.

In Sunderland, the town and the developer offered differing views on how the region should be defined. The town's version of the region was established by drawing a circle with a radius of twenty miles around the proposed site, while the developer argued in favor of a six-town region that included Sunderland and five abutting communities (Amherst, Hadley, Whately, Deerfield, and Montague). See Sunderland, 2013 Mass. LEXIS 7 at *21; see also Sugarbush Meadow, LLC v. Sunderland Board of Appeals, 2010 MA. HAC. 08-02 at *5. The HAC accepted the developer's delineation, noting that the town's radius approach was "arbitrarily determined" and "based only on a contrived interpretation" of testimony given by one of the developer's witnesses. Sugarbush Meadow, LLC, 2010 MA. HAC. 08-02 at *5.

The accepted Sunderland region might, at first glance, seem to employ the same "surrounding communities" approach espoused by the SJC in Illyrian Gardens and accepted by the HAC in Lunenburg. It is noteworthy, however, that this region did not include the Town of Leverett, which abuts Sunderland to the east and shares a longer common boundary with Sunderland than any of the communities that were included in the accepted region. Although the HAC noted that the Sunderland region was established "using national standards for examining supply and demand for the need for housing," it is not clear why Leverett was excluded from the defined region. It is also unclear whether the HAC's evaluation of the regional need for affordable housing would have been different if the region was drawn to include Leverett.

This comparison of the regions that were accepted in the Sunderland and Lunenburg cases highlights the importance of defining the "region" within the meaning of G.L. c. 40B, §§ 20, 23. In its Sunderland decision, the HAC began its analysis of the regional need for affordable housing with the following observation:

At the outset, we must address the regional affordable housing need -- a term that is not clearly defined in Chapter 40B, § 20 or our regulations and yet which is critical since it is the need that is to be balanced against local concerns in determining whether the proposed housing [is] consistent with local needs.

Sunderland, 2010 MA. HAC. 08-02 at *3. Until the term "region" is clearly defined, either in the Act or the regulations, this critical element of the regional need for low and moderate income housing standard will continue to be decided on a case by case basis and will remain vulnerable to inconsistent interpretation.

TIMOTHY C. TWARDWOSKI is an attorney at Robinson & Cole LLP in Boston, where his practice focuses on representing clients on development permitting matters and land use and planning law. He is a member of the Property Law Section Council of the Massachusetts Bar Association. He also is a member of the Zoning board of Appeals and the Master Plan Committee in the Town of Franklin.