Lax oversight at the state’s Deptartment of Housing and Community Development of the 40B affordable housing law allowed developers to steal an estimated $100 million from cities and towns across Massachusetts, according to the state’s inspector general.
After a two-year investigation, Massachusetts Inspector General Greg Sullivan said, "Chapter 40B represents one of the biggest scandals in state history. What started out in the late ’60s as a well intended public-private housing program has turned into a license for abuse and profiteering."
A report from the Senate Committee of Post Audit and Investigations released today revealed that of 1,118 total projects, only 135 submitted cost certifications, and another 151 are potentially out of compliance.
Developers are only allowed to take profits of 20 percent from 40B-eligible projects. The rest is supposed to go back to cities and towns. At issue is how profits are defined and tracked.
The state Inspector General’s Office discovered the DHCD had no database of 40B projects. The investigators had to call all 351 municipalities and ask local governments what projects had been proposed and built.
Sen. Marc R. Pacheco (D-Taunton), chairman of the Senate Committee of Post-Audit and Investigations, recommended changes be made regarding density, profit limits and the definition of "uneconomic" in 40B projects, and the changes be upgraded from merely "guidelines" to "regulations."
"It’s clear that prior administrations have let the 40B program go unsupervised for too long," Pacheco said. "This administration has chosen to … recognize what’s going on and implement changes we’ve recommended."
Sullivan said previous administrations and officers of the DHCD responded to reports of corruption by relaxing standards instead of cracking down on graft. He said the ball is back in DHCD’s court regarding 40B regulations, and demanded tangible improvements be made to the program in the areas of accountability and transparency.
In a statement, DHCD Undersecretary Tina Brooks said the following, in response to the report:
"We thank Chairman Pacheco and the Senate Committee on Post Audit and Oversight for their work in helping us move forward to enhance the implementation of the state’s comprehensive permit law, Chapter 40B. We appreciate the Committee’s recommendations and we will continue to work with them and all other 40B stakeholders, including the Inspector General’s Office, to resolve to the best of our ability any ongoing issues. These actions are vitally important because for nearly forty years this zoning statute has served a critical need in the development of thousands of affordable homes for working families and individuals throughout Massachusetts. Affordable housing opportunities sparked by Chapter 40B for wage earners on all income levels help us to retain our best and brightest, spur business development and job growth and secure our long term economic prosperity. By working together, we can ensure that the future of this important zoning law is implemented in a way which best serves the needs of our communities and the entire Commonwealth."
