Investing In Affordable Housing in Massachusetts: A Complex Landscape

By Sean Higgins and Cayla Nyante Brown

Investing in affordable housing in Massachusetts involves navigating a complex landscape. Developers should be aware of the following key considerations:

1. Massachusetts General Law Chapter 40B:   Chapter 40B is a key piece of legislation aimed at addressing the state’s affordable housing needs by allowing developers who allocate at least 20-25% of proposed units as long-term affordable housing to bypass certain local zoning restrictions.  Chapter 40B encourages the development of affordable housing, particularly in communities that have not met the state’s affordable housing goals. 
   
2. Navigating Local Zoning and Permitting: Each municipality has its own zoning laws and permitting processes. Engaging with local planning boards and understanding community concerns can help developers obtain necessary approvals.
   
3. Securing Financing and Incentives: Massachusetts provides several programs that offer financial incentives including tax credits and grants for affordable housing development. These programs include the Massachusetts Low-Income Housing Tax Credit and the Massachusetts Housing Investment Corporation Tax Credit. Developers should explore these options in addition to federal tax credits and grants to support their projects.
   
4. Addressing Community Concerns: Community opposition can impact project timelines and success. Proactively engaging with residents and addressing their concerns is crucial for project acceptance. Engagement may consist of hosting or attending town halls and providing development plans for community feedback.
   
5. Complying with Environmental Regulations: Affordable housing projects must adhere to environmental laws, including those related to wetlands, endangered species, and pollution. Conducting thorough environmental assessments is necessary to ensure the development project follows all relevant environmental laws and the communities’ comprehensive development plan.
   
6. Ensuring Long-Term Affordability: To retain certain financial incentives, such as the Low-Income Housing Tax Credit, the project must maintain its low-income housing units for a period specified by law.  Developers must implement mechanisms to maintain affordability over time, such as deed restrictions or affordability covenants.
   
7. Understanding Market Dynamics: Analyzing local housing markets helps in determining the appropriate scale and type of affordable housing to meet community needs.
   
8. Managing Construction Challenges: Affordable housing projects may face unique construction challenges, including site constraints and the need for cost-effective building materials.
   
9. Engaging with State Housing Agencies: Collaborating with agencies like the Massachusetts Department of Housing and Community Development can provide guidance and support throughout the development process.
   
10. Staying Informed on Policy Changes: Housing policies and regulations can evolve over time. Developers should stay updated on legislative changes that may affect affordable housing development.

To effectively navigate the complexities of affordable housing investment in Massachusetts, developers must understand ever-evolving legal and regulatory areas.  Working with trusted legal counsel is critical to maximize the financial benefits of any affordable housing project.