Are you a real estate developer? Building in MA? You may be eligible for benefits under Chapter 40B Affordable Housing. See if you qualify below.

What is Chapter 40B?

Chapter 40B, The Regional Planning Law, is a Massachusetts state statute which enables local Zoning Boards of Appeals to approve affordable housing developments under flexible rules if at least 20% to 25% of the units have long-term affordability restrictions. These restrictions must run at a maximum of 30 years. The associated regulations are administered by Massachusetts Department of Housing and Community Development (DHCD).

Under Chapter 40B, in any municipality where less than 10% of its housing qualifies as affordable under the law, a developer can build more densely than the municipal zoning bylaws would permit, allowing more units per acre of land when building a new development, if affordability restrictions are met.

Sections 20-23 of Chapter 40B, known as Chapter 774 of the Acts of 1969 or Comprehensive Permit Law, creates a process for granting comprehensive permits for the construction of subsidized low or moderate income housing. These permits streamline the development process by consolidating local permitting.

Is Chapter 40B limited to MA residents?

No, anyone building in MA can take advantage.

How it works

In most cases, Chapter 40B developments are a mix of market rate and affordable homes, apartments, or condominiums. The market rate units often service middle-income singles, seniors, and families who make between 100% and 150% of the area medium income (AMI). Affordable unit rents are determined by creating a "window" of affordability based on rents equal to 30% to 80% of AMI. Rents must include heat and utilities or a utility allowance.

The following example is provided in the latest “Guidelines” published by the DHCD, dated December 2014, for a project located in the Barnstable Town MSA in 2012:

Developments under Chapter 40B require the submission of a cost certification prepared by a qualified independent CPA within 180 days after “Substantial Completion” of the project, as defined. The purpose of the cost certification is to assist the project administrator in determining whether the developer has complied with the applicable development cost and profit limitation for the project under the Chapter 40B guidelines. The cost certification will also determine the annual limited dividend amount as required under the Chapter 40B regulations.

Annual compliance requirements

Developments under Chapter 40B are subject to a Regulatory Agreement and monitored by a public agency. The Regulatory Agreement limits developers’ profits, which are monitored annually, in part through a required an annual audit of the financial statements by an independent CPA. Certain developments require the annual audit to be performed in accordance with Generally Accepted Governmental Auditing Standards, a more restrictive audit process.

Key Takeaways

If you qualify for benefits under Chapter 40B you’ll want to take advantage! As discussed above, the main benefits are:

1. Streamlined comprehensive building permit process
2. Flexible zoning requirements

Do you qualify? We can help you navigate your responsibilities.

KLR works with developers who have taken advantage of Chapter 40B benefits. For more information, contact info@kahnlitwin.com.