About Affordable Housing & Chapter 40B
One impediment to economic development within Massachusetts is the scarcity of suitable housing options for people earning at the lower end of the wage scale. With their options for housing severely limited, many such people are leaving Massachusetts. This contributed to the State’s declining population in 2005 and 2006 – the only state to lose population two years in a row. As a result, many businesses are having a difficult time filling all the jobs required by their business.
The Massachusetts legislature has recognized this problem and enacted legislation intended to promote development of affordable housing. Because it is the subject of State and Federal regulation, affordable housing has a very specific meaning which will be explained below. The primary legislation enacted in Massachusetts to address lack of affordable housing is Chapter~40B.
Affordable Housing
Most Affordable Housing regulations are based on the premise that the target population should not have to pay more than 30% of annual income on housing. Families that pay more than 30% on housing are considered “cost burdened” because they may have difficulty paying for other necessities such as food, clothing, medical care and transportation.
For ownership units, housing costs include mortgage principal and interest, PMI if applicable, property tax and insurance, as well as condominium or neighborhood association fees.
For rental units, housing costs include rent, heat and utilities or a utility allowance.
The income limits used to determine eligibility for Affordable Housing are generally based on Median Incomes as determined by the Department of Housing and Urban Development (HUD).
The generally accepted upper income limit for eligibility for affordable housing is 80% of an area’s Median Income, adjusted for household size. Some affordable housing projects target households earning no more than 50% of the Median Income, and a few projects target households earning no more than 30% of the Median Income. In 2007, these limits were as shown in the table below.
|
Number of Persons in Household |
Income Limit Category |
1 |
2 |
3 |
4 |
5 |
6 |
80% of MI |
$41,700 |
$47,700 |
$53,650 |
$59,600 |
$64,350 |
$69,150 |
50% of MI |
$27,350 |
$31,300 |
$35,200 |
$39,100 |
$42,250 |
$45,350 |
30% of MI |
$16,400 |
$18,750 |
$21,100 |
$23,450 |
$25,350 |
$27,200 |
Chapter 40B
Chapter 40B is a state statute that enables local Zoning Boards of Appeal to approve affordable housing developments under flexible rules if at least 20% of the units have long-term affordability restrictions.
Chapter 40B was created to help address the shortage of affordable housing units throughout the Commonwealth of Massachusetts. This statute encourages affordable housing development by granting the developer the right to exceed local zoning and wetland restrictions in return for building affordable housing.
The state standard and required goal is for communities to have a minimum of 10% of their housing inventory be affordable. To date 47 communities have reached this goal. North Andover currently is at approximately 6%. An additional 320 units or so are needed to reach the 10% threshold. Once this goal has been met developers then lose the right to use the Chapter 40B statute to overstep specific town restrictions.
Chapter 40B has been responsible for the production of housing developments that in most cases could not have been built under traditional zoning approaches. Developments built through Chapter 40B in North Andover include multi-family condominiums, single-family homes for active over 55’s and townhouses. Future 40B’s might include multi-family rentals, single-family homes and mixed-use rentals. North Andover has always stipulated that a percentage of the affordable units be for households with North Andover connections.
Who is Served by Chapter 40B Housing Developments?
In most cases Chapter 40B developments are communities with market rate and affordable homes, apartments or condominiums.
· Affordable units are reserved for seniors or families who make less than 80% of the Area Median Income, adjusted for household size. These income limits are shown in table above.
· Market-rate units often serve middle-income singles, seniors and families who make between 100% and 150% of the Area Median Income.
The following websites have useful information on Chapter 40B:
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