MARC DRAISEN
‘Pretty confident’

A dozen communities in Massachusetts are taking advantage of a state program that offers cash payments to towns that promote mixed-income housing development near town centers and public transportation.

But despite the positive buzz the program has generated in some towns, a nagging issue that continually pops up is funding.

Supporters of the program, known as Chapter 40R, believe it offers powerful financial incentives to get more housing built in the Bay State. Twelve cities and towns have adopted Chapter 40R – which could lead to the creation of up to 4,000 units – and at least eight more are in the process.

Some local officials, however, fear that funding for 40R won’t materialize.

“Some communities are skeptical,” acknowledged Matthew Feher, a legislative analyst for the Massachusetts Municipal Association, which helped draft Chapter 40R. “The problem is – and this goes with any statutory obligation – the risk that the Legislature will not fully fund its obligations.”

But Feher said more communities are embracing 40R despite their reservations and the risk of not receiving any of the funding that’s been promised. “Is [40R] perfect? No. But I think it’s better than doing nothing,” he noted.

Under Chapter 40R, communities that establish smart-growth zoning districts can receive one-time zoning incentive payments of up to $600,000. When a town begins issuing building permits, it is also eligible to receive a $3,000 density payment for each new unit that’s created within the district. Chapter 40S, a companion piece to 40R, helps communities pay for extra educational costs stemming from new development in smart-growth districts. Funding for 40S is built into the state’s school-aid formula.

A Smart Growth Housing Trust Fund was set up to cover payouts to communities. The fund will have $1.3 million after the city of Haverhill, whose 40R district received final state approval late last year, receives a $600,000 payment, according to the state Department of Housing and Community Development.

So far, the state has paid a total of $1.41 million in incentive payments to five communities that have requested them, according to DHCD spokesman Phil Hailer. Those communities are Dartmouth, Lunenburg, Norwood, North Reading and Lakeville.

The money currently in the fund already is committed to the remaining communities that have approved 40R districts, Hailer said in an e-mail. The state anticipated doling out more than $2.8 million in 40R payments this fiscal year, according to a December letter that former DHCD Director Jane Wallis Gumble sent to Sen. Therese Murray, then chairman of the Senate Committee on Ways & Means, and Rep. Robert DeLeo, chairman of the House Committee on Ways and Means. Haverhill, Natick, Chelsea and Plymouth were among the communities in line to receive funding.

“Although the trust fund will eventually dry without recapitalization if the status quo were to prevail, it is anticipated that it would not happen for months due to the time it takes for all of the plans and contract details and procedures to be worked out between the individual communities and the state,” explained Hailer.

Hailer said the Legislature and administration are dedicated to resolving the funding issue.

No ‘Major Problem’
An initial source of money for the Smart Growth Housing Trust Fund was supposed to come from the sale of surplus state-owned property. But critics say that funding mechanism is unreliable, particularly since a law that allowed for the quicker sale of surplus state land expired. Now, every property sale must be approved by the Legislature, a process that can take years.

“It’s not easy or even possible to predict what kind of funding will be available under the sale of state surplus land,” said Eleanor White, a member of the Commonwealth Housing Task Force, which spurred 40R and 40S.

But White pointed out that the sale of surplus state-owned land was supposed to be just one mechanism for providing funding. “There’s general agreement that the sale of surplus land is not a secure source of long-term funding,” said White. “Everybody recognized that at the front end. [The sale of state-owned land] was put forth as a possible initial source of funding but was never intended to be what everybody would rely on.”

Task force members have been working with state leaders to identify a more reliable funding source, according to White. Rep Brian Honan filed a bill this year that would temporarily put income taxes paid by occupants of new housing units in 40R districts in the trust fund. Any tax money not used for bonus payments in a given year would then go to the state’s general fund.

“It’s a long-term proposal. I don’t know whether it will pass, but we’re happy that it was filed,” White said.

Another idea that has surfaced is using part of the state budget surplus. The Senate’s recently released budget proposal includes a section that would set aside a portion of the budget surplus, up to $12.5 million, for the trust fund. But a budget surplus isn’t guaranteed.

“The uncertainty is still there, of course,” Feher said of the Senate’s surplus idea. “Obviously, we want to see the Smart Growth Housing Trust Fund funded.”

Housing advocates are clear that they don’t want funding for other housing initiatives and programs to be sacrificed for Chapter 40R funding.

“Whatever funding source we find, we have to make absolutely sure that the funding source does not take money away from existing housing programs,” said Marc Draisen, executive director of the Metropolitan Area Planning Council.

Draisen said now that some communities have adopted 40R, more are likely to consider the program. “While I understand that there are concerns about funding, there’s tremendous political pressure to fund this program and I feel pretty confident that when communities need the money it will be there,” he said.

White expressed optimism that a solution to the funding question will be found.

“Everything that we’ve been told from both the House and Senate and the administration is that everybody is in strong support of 40R and is committed to resolving the [funding] issue this year,” she said.

She added, “This is an issue rather than a problem. We’ve gotten across-the-board support for this program from all the decision makers. [Funding] clearly is an issue that needs to be addressed and kind of put to bed, but we don’t see it as a major problem for the program.”