Where has all the smart money gone?
Official says smart growth funding is in doubt
Chapter 40R, the 3-year-old state smart-growth housing law, promises something for almost everyone. Developers get to build denser blocks of housing than local zoning laws normally allow, working-class families and recent college graduates get more affordable homes, environmentalists get development in town centers rather than on virgin land, and cities and towns get state money for agreeing to the projects.
The smart fund
But, according to a state official who oversees the 40R program, that last piece of the puzzle may be in danger.
Donald Schmidt, the director of the smart growth zoning program for the Department of Housing and Community Development, says the fund used for incentive payments to communities where 40R projects are constructed is almost empty, and the state has not provided a way to fill it up again. At the same time, the weakening of the housing market since the law was passed has made developers and communities more wary about taking on any big effort to build more homes.
So far, the state has given preliminary approval to 16 of the 40R projects in communities around the state, including Grafton, Lunenburg and Natick, but with funding in question, several Central Massachusetts communities could be left in the lurch.
Running dry
When 40R became law in 2004, the state agreed to place money from the sale of surplus land into a "smart growth housing trust fund" to provide the payments to communities. Schmidt said about $3.4 million went into the fund. He said the state has already paid communities about $2 million in initial payments, and it will soon write two more checks, leaving only about a half million in the fund. That's before making any per-unit payments, and before half the approved communities have gotten any money at all.
"The practical answer is we need more money, to be blunt about it," Schmidt said.
Schmidt said there is one more piece of state property in Boston that could send up to $10 million into the fund if it is sold, but it is unclear when that might happen. And even if the sale does go through, there will be no more after it since a sunset provision in the 40R law has cut off money from state property sales.
Schmidt said his department has already decided not to make any per-unit payments until more money goes into the trust fund to ensure that as many communities as possible get at least the initial payment.
The FY08 state budget does not provide any direct funding for the 40R program. It does call for part of any FY07 state surplus over $50 million to go to the Bay State Competitiveness Investment Fund, some of which would probably be allocated to support 40R, according to Rachel Heller, housing policy director for Sen. Sue Tucker, D-Andover, the Senate chair of the Legislature's housing committee. Heller also said the Senate is looking into other methods to keep the smart growth fund going in the long term.
At the same time, Benson and other local leaders say their reasons for supporting a 40R project go beyond financial gain. Both Benson and Stephen Bishop, Grafton's town planner, said they like the fact that towns can craft 40R zoning districts so that developments fit in with the surrounding area.
"There is the ability to shape the physical environment of a project," Bishop said. "I think that that's often overlooked but an important aspect of this legislation."
Grafton's 40R district, which is in an earlier stage of planning than Lunenburg's, would allow the site of an old mill that was destroyed by a fire to be transformed into 240 multifamily housing units and about 60,000 square feet of commercial space.
Affordable fear
Another reason for Grafton's support of the 40R project may have been that the mill's owner was considering developing the property under another special state provision, Chapter 40B, which forces communities with less than 10 percent affordable housing to relax zoning rules to allow the development of new affordable homes. Schmidt said the threat of 40B developments was a factor in many communities' support for 40R districts.
"I think it would be a fair statement to say that 40B has driven many of the 40R applications," he said.
Smart growth developments can be all housing or mixed use, but the housing must be at least 20 percent affordable. When the district is approved, the state pays the community up to $600,000 depending on number of homes in the proposed project, and, as construction moves forward, it pays an extra $3,000 for each unit of housing.
Of course, with the slumping housing market, developing homes of any kind has become a less attractive option for builders since 40R was passed. Gardner's plan is currently on hold after a developer decided to drop the number of housing units in a proposed mixed-use development from 650 to around 300.
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