The Truth About 40B Projects

There has been a concerted effort to scare folks away from supporting Right Size Newton’s petition for a referendum regarding the proposed Northland development.  It appears in many forms, from certain blogs, to listservs, to social media. It appears to have replaced the blitz of “Right Size just wants to kill this project” when it became clear that no one was falling for that lie.

There’s very little that is true about the current wave of hysteria, but the truth is 40B developments are not scary, but can be mysterious and complicated.  Please see below for the truth about 40B development:

  • They cannot be large!
    • The ZBA can deny any development larger than 640 units
      • The developer could choose to develop the site as 3 separate projects, but as Northland refused to even consider phasing its proposed development as a way to mitigate the neighbors’ concerns saying they could never get it financed that way, why would that change for a more costly 40B?
      • It is important to note that due to common ownership for a number of years, Northland’s three separate parcels that make up the site could have merged for zoning purposes
    • No one has been able to show us where a single 600+ unit 40B has been approved (much less 3 of them on adjacent sites)
  • They require rigorous review!
  • They require MORE affordable units than the current proposal!
    • 20-25% of a 40B development would have to be affordable, rather than 15% (with an additional 2.5% “workforce” housing under current proposal)
    • With a 640 unit development, that would be 160 units versus 140 in the 800-unit current proposal
  • They are RESIDENTIAL developments!
    • A 40B project has to be residential, and can only have retail that “serves” the residential uses
    • No commercial buildings as part of a 40B
      • Any commercial buildings on the site have to comply with underlying zoning
    • Northland has often stated that the commercial and retail portions of their proposal would drive interest in the residential portions (and vice versa)
  • They help us reach our 1.5% “safe harbor”
    • Once qualified affordable units are located on more than 1.5% of the total land area zoned for residential, commercial or industrial use, a ZBA denial cannot be appealed by a developer
    • When we reach the “safe harbor,” developers won’t be able to threaten the city with a 40B instead of making their proposals more acceptable to the city
  • They are NOT a bad thing!
    • 40B has resulted in the addition of much-needed affordability in Newton and elsewhere
    • It is a highly-regulated program with caps on developer profits and development size
  • They do not change reality!
    • 40B developments are more expensive to develop and have lower profit margins
      • This means that Northland will have to charge more rent to recoup their investment
      • This means that the site must remain attractive to potential tenants
      • This means that amenities such as underground parking, open space, and shuttle buses are likely to be retained to attract tenants
        • In fact, the Avalon on Needham Street, which is a 40B development has both open space and underground parking
    • Northland cannot finance a project that builds more units than they can rent
    • Northland can, of course, choose to rescind its offer to pay $1.5million towards renovation of Countryside, but that is a small fraction of the total cost of renovating this school (likely $40-$50million)

Given the very limited concessions that Northland has been asked to make in order to alleviate some of the neighbors’ concerns, why would they choose to go the much more difficult and costly route of a 40B rather than making those concessions?  In fact, had they made the concessions (such as phasing the project), the petition drive would not have been necessary.