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Massachusetts courts now have the ability to make people appealing projects’ special permits post a cash bond of up to $50,000, reducing the power of litigious gadflies.
A paradise for NIMBY homeowners. That’s long been the rap against Massachusetts among developers.
There are multitudinous ways for the loudest mouths in the room to derail projects, especially when it comes to desperately needed affordable housing, no matter how thinly veiled the racial bigotry or cockamamie the logic.
But with the passage of the state’s $627 million economic development bill early last month, the playing field got a bit more even.
Tucked away in the newly–inked law are a pair of provisions in the bill – dealing with zoning and legal appeals – with the potential to accelerate the construction of badly needed new housing, while not costing taxpayers a dime.
Championed by Gov. Charlie Baker, the so-called Housing Choice measure is the better-known of the two, though not necessarily the one with the quickest payback.
The provision gives cities, towns and suburbs across the state the ability to pass zoning changes needed for new housing developments with a simple majority vote, in place of the daunting two-thirds majority that has long been the requirement.
Yet as big as a step forward as this change is, it will likely take years for this important but still relatively modest piece of zoning reform to achieve its full potential, for a very simple reason: It will likely only create change on a project-by-project basis, absent a sudden explosion of well-organized, pro-development groups across the Massachusetts.
And the attention given to the passage of Baker’s Housing Choice plan, years in the making, has overshadowed another provision in the economic development bill that should provide a more immediate check to our state’s rampant NIMBYism.
Death by Delay
State courts, when hearing appeals of special permits granted to development projects, will now have the power to require project opponents to post a surety or cash bond of up to $50,000.
Typically, local zoning boards issue special permits to give a green light to projects that would not otherwise be allowed, such as housing in a district zoned for commercial businesses, but local officials aren’t exactly known for doling these out like candy.
For projects that are likely to draw opposition, such as apartment proposals with some affordable units, it can take years for a determined developer to work their way through the various local approvals and reviews and come out the other side with that coveted permit in hand.
However, even after all that, developers can face appeals in state court as opponents challenge their hard-won approvals, often betting that yet another delay in an already long and arduous process will be the straw that finally breaks the camel’s back.
The content of the appeal, from the perspective of project opponents, is beside the point. It could be complete trash, in legal terms, but just by filing it opponents can effectively throw another monkey wrench into the works, delaying a project by six months or even causing the lender to back out.
That’s because already overburdened courts simply don’t have the capacity to take on such appeals in a timely fashion, effectively freezing all action until the case is finally heard.
Time is Money
And time is money in development, especially in a high-cost state like Massachusetts where land is exorbitantly expensive. A developer may have to make debt payments on a would-be construction site for years before any income-producing apartments or shops are ready to open.
Opponents are thinking “I can win by delaying and extending a project and killing it by a thousand cuts,” said David Begelfer, principal at CRE Strategic Advisors and former CEO of NAIOP Massachusetts. “There is not risk for them. You are dealing with someone who is just stalling you in hopes of killing your deal.”
Sometimes, all it takes is a solitary gadfly, with the ability to get a few others to sign on to a so-called “10 taxpayer” lawsuit, to delay a project for months or longer.
Just take Stevan Goldin, a North Shore resident with an apparent lively interest in s development, who led such appeals of Boston’s Fan Pier project and reportedly of 20 other seaside projects closer to home, leveraging the state’s Chapter 91 law governing coastal development.
In the case of Fan Pier, Goldin’s appeal back in the mid-2000s added months more to the already long-delayed harborside project’s timetable.
Skin in the Game
Now, under the state’s newly passed economic development bill, state courts will get a chance to head off transparently frivolous appeals designed simply to obstruct and delay.
If a judge on the case decides it is merited, opponents could be on the hook for tens of thousands of dollars, provided the “court finds that the harm to the defendant [developer] or to the public interest resulting from delays caused by the appeal outweighs the financial burden of the surety or cash bond on the plaintiffs.”
Scott Van Voorhis
Now finding damages of more than $50,000 from a delay of six months or more shouldn’t be too hard to find.
Especially if you are a developer on the hook for tens of thousands in debt payments every month to carry a prime site you plan to build on, but can’t start construction because of a dubious appeal.
“It is actually a big change,” said Begelfer. “You now have to have some skin in the game.”
So, fire away, but just make sure you are ready to put your money where your mouth is.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
