FOR IMMEDIATE RELEASE:                                                                              CONTACT: Erin McNeill

June 1, 2009                                                                                                                                         (617) 722-1551

                                                                                                                                                                 erin.mcneill@state.ma.us

Senate oversight committee calls for greater transparency and accountability in state’s affordable housing law

 The state’s Chapter 40B affordable housing law, plagued by allegations of fraud and abuse, needs to improve standards of accountability and transparency to allow towns and cities, as well as developers, to regain confidence in the system, according to a report released today.

 “This program is long overdue for an overhaul,” said Sen. Marc R. Pacheco, chairman of the Senate Post Audit and Oversight Committee, which conducted the investigation. “For too long there has been a lack of accountability in this program. Over many decades and administrations, no one has gotten a handle on it.  Everyone was willing to ignore problems because of a desire to get affordable housing built.”

 The report, “Chapter 40B: Building Accountability into the Massachusetts Affordable Housing Program” calls for a more thorough process for certifying costs under the program, which allows developers to override local zoning in order to build more units than the underlying zoning would allow. It also calls for key rules to be established by an open, public process that would ensure that all stakeholders be consulted.  

Chapter 40B projects allow developers to override local zoning in order to build more units than the underlying zoning would allow.  In return, developers agree to set aside a percentage of affordable units, limit their potential profits, and return excess earnings to the municipality. Under the program, there has been no consistent auditing of developers. Cost certifications have been spotty and not well documented, resulting in fraud and abuse.

 “The history of the 40B cost certification program is outrageous,” said Pacheco, D-Taunton. “At the very least, municipalities should be assured that there is accountability in the cost certification process, and the opportunity for legitimate input, since 40B takes control from local government.”

 In addition, substantive aspects of the program – including cost certification, density limits, profit limits and the determination of what makes a project “uneconomic,” have been governed by guidelines instead of regulations.

 These particular issues are often the source of conflict between developers and municipalities. Such key aspects of the program should be governed by regulation, which has the force of law, the committee says. Regulations are more appropriate for governing a program that allows developers to override local zoning laws.

 “If there is a piece of good news here, it is that this administration is in the process of addressing problems that have been long ignored by previous administrations. The housing agency has already begun to act on our recommendations. We are now headed down the path of broader input, and greater transparency and accountability,” Pacheco said.

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