Tag Archives: #marealestate

Commercial Real Estate, Real Estate

BU Synthetic Turf Field Project Trips Up Architect

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Statute of Repose No Defense Against Lawsuit

A Massachusetts statute bars tort lawsuits arising from defective or neg­ligent design, planning, construction or general administration of build­ings and improvements, unless filed within six years after construction completion.

This statute is known in the construction industry as the “statute of repose.” Statutes of repose operate much like statutes of limi­tations. Both protect potential defendants from having to respond to lawsuits filed many years after the alleged wrongdoing, but there are significant differences. Stat­utes of limitations can be suspended for various reasons, such as when plaintiffs cannot discover their injuries, or cannot de­termine responsible parties. This gives flexi­bility to the end point of the limitations pe­riods in statutes of limitations.

Boston University’s Charles River campus spans 113 acres centered along Commonwealth Avenue between Massachusetts Avenue and Packard’s Corner.

In contrast, statutes of repose cannot be suspended for any reason. They impose ab­solute time limits on when plaintiffs can sue potential defendants. Statutes of repose bar plaintiffs’ claims after the statutory period expires, even when plaintiffs’ injuries or damages occur later or are not discoverable within the limited timeframe.

However, last month in Trustees of Bos­ton University v. Clough, Harbour & Associ­ates LLP, the Massachusetts Supreme Judi­cial Court ruled, in effect, that the statute of repose limiting suits for design defects can be contractually negated.

Boston University engaged an architec­tural firm in 2012 to design a synthetic turf athletic field above a parking structure de­signed by the same firm. The contract pro­vided for about $970,000 in payments to the architects for professional services. It also required the architects, “to the fullest extent permitted by law,” to indemnify the univer­sity from all expenses, including attorney’s fees, caused by the architects’ negligence.

A $25K Defect

After the athletic field went into service in 2013, it became apparent that the field had design defects that rendered it unsafe. The defects arose from the architects’ fail­ure to account for seasonal expansion of joists in the underlying parking structure.

The university spent $25,000 to remedy the defect, and demanded indemnification from the architects, who refused to pay for the remediation. In 2020, more than six years after the athletic field was first used, the university sued the architects in Supe­rior Court for breach of the indemnification.

The architects moved for summary judg­ment, seeking dismissal of the university’s suit under the statute of repose.

The Superior Court judge agreed, and ruled in 2024 that the statute of repose barred the university’s contractual indemni­fication claim. The Supreme Judicial Court granted an application for direct appellate review.

The SJC noted at the outset of its deci­sion that the statute of repose bars negli­gence claims for design and construction defects, unless the claim is brought within six years after completion.

The SJC also noted that a negligence claim is an “action in tort,” but the universi­ty’s suit included a claim against the archi­tects for breach of the indemnification agreement, which is an “action in contract.”

Lawsuit Created an Unusual Situation

The SJC recognized that the university’s lawsuit created an unusual situation under the statute of repose, because the university was seeking compensation under a contrac­tual indemnification clause for a loss that resulted from the architects’ negligence.

Therefore, according to the SJC, it was necessary to look beyond whether the uni­versity’s suit arose in tort on in contract, and to instead examine the “gist of the ac­tion.”

The SJC next compared the differences between actions in tort and actions in con­tract. Actions in tort arise where defendants fail to meet standards imposed by law, while actions in contract arise where defen­dants fail to meet standards set by the de­fendants’ promises made in their agree­ments with plaintiffs.

The SJC determined that the gist of the university’s claim against the architects was essentially “the enforcement of a contract for indemnification,” observing that the ar­chitects explicitly promised to indemnify the university from costs incurred as a re­sult of the architects’ negligence.

Time Limits Can Be Negotiated

Therefore, the university’s claim was con­tractual in nature, and the statute of repose did not bar it.

The SJC reversed the Superior Court’s dismissal of the university’s contract claim, while stating that in order for the university to prevail, it must prove the existence of an enforceable indemnification agreement, the occurrence of an event triggering the archi­tects’ indemnification obligation, the giving of adequate notice to the architects, and the architects’ breach of the indemnification agreement.

The statute of repose remains in effect for tort claims in building design and con­struction defect cases, but the SJC’s deci­sion shows that project developers can avoid the strict six-year limit, by including properly drafted indemnification clauses in their contracts with design professionals and contractors.

Download the article as seen in Banker & Tradesman on April 28, 2025. Learn more about Christopher R. Vaccaro.

Commercial Real Estate, Real Estate

North Attleborough Landlord Liable Under ‘Unfair Practices’ Statute

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Failed Bid for Adjacent Land Led to Lease Breaches

Now and then, a commercial land­lord engages in conduct so peculiar, that others can only shake their heads in be­wilderment. That was the case in H1 Lincoln, Inc. v. South Washing­ton Street, LLC.

Entities controlled by Alfredo Dos Anjos own several properties in a North Attlebor­ough area known as “Auto Road.” Two of Dos Anjos’s limited liability companies signed a long-term lease with Majestic Honda as tenant in 2016. Majestic planned to redevelop the site as a car dealership.

The lease allowed the Dos Anjos LLCs to review and approve Majestic’s plans, with a limited right to terminate the lease if they did not approve the plans. The LLCs agreed to cooperate with Majestic’s permitting ap­plications.

Lease Negotiations Sour

Majestic provided a site plan to the Dos Anjos LLCs in 2017, showing demolition and replacement of one building, and renova­tion of another on the leased premises. The plan also disclosed that Majestic intended to use adjacent property, recently acquired by Majestic, for inventory display and park­ing. Dos Anjos had unsuccessfully tried to purchase the adjacent property.

When Dos Anjos learned of this purchase by Majestic, his relationship with Majestic soured. The LLCs did not respond to Majes­tic’s initial plan submittal. When Majestic re­submitted its plan two months later, the LLCs advised Majestic that they would ap­prove Majestic’s plan if Majestic agreed to limit its use to a Honda dealership. Majestic agreed to this condition, although it was not required under the lease.

A North Attleborough landlord tried to “extort” benefits from a Honda dealership tenant, according to a Superior Court judge, eventually leading to an over $20 million judgement against the owner.

Surprisingly, the LLCs next sent Majestic a lease termination letter.

When Majestic tried to resuscitate the deal, Dos Anjos expressed interest in reinstating the lease if Majestic agreed to sell the adja­cent property to the LLCs for $1 and add the property to the lease with no additional rent.

Majestic was amenable to this arrange­ment, and Dos Anjos’s lawyer sent Majestic a draft lease reinstatement agreement. Two months later, however, the LLCs sent Majes­tic a letter confirming the lease termination and returned Majestic’s rent checks. Majes­tic sued the LLCs in Superior Court.

Court Awards Double Damages Twice

A jury found that the LLCs had breached the lease, and a Superior Court judge con­cluded that their attempts to terminate the lease were mere pretexts concealing bitter­ness over Majestic purchasing the adjacent land.

This conduct amounted to a violation of Massachusetts General Laws Chapter 93A, which prohibits unfair and deceptive busi­ness practices. The judge found that the LLCs used tactics to “string Majestic along to extort unwarranted benefits,” such as re­stricting Majestic’s use to a Honda dealer­ship, and requiring Majestic to sell the adja­cent property for $1.

The judge awarded Majestic double dam­ages under Chapter 93A, totaling $8,925,000. The judge also ordered the LLCs to cooper­ate with Majestic’s permitting applications.

During the permitting process, Majestic learned that trusts controlled by Dos Anjos, not the LLCs, were the true record owners of the leased premises, contrary to the LLCs’ representations in the lease and Dos Anjos’s sworn testimony.

The LLCs refused to correct this discrep­ancy, causing additional delays to Majestic’s project.

Majestic reopened the superior court case, joining the Dos Anjos trusts in the ac­tion, and claiming further violations of Chapter 93A. The judge awarded additional double damages to Majestic of $3.18 million.

A $20M Judgement

Ultimately, with attorneys’ fees added, and various post judgment maneuvering, Majestic obtained a total monetary judg­ment of over $20 million against the Dos Anjos defendants, with post judgment inter­est accruing at almost $5,000 per day. The Dos Anjos defendants appealed, but the Su­preme Judicial Court upheld the judgment.

While their appeal was pending, the Dos Anjos defendants did something unex­pected – they paid the entire $20 million judgment to Majestic, to avoid accrual of post judgment interest. The Dos Anjos de­fendants eventually lost their appeal, but Majestic still claimed post-judgment interest for the time prior to the SJC’s final decision.

Last month the SJC held that the Dos Anjos defendants’ payment to Majestic halted the accrual of interest, despite the appeal, because Majestic had full, uncondi­tional use of the payment during the appeal.

The Dos Anjos defendants’ payment of the $20 million judgment to Majestic pend­ing the appeal was a risky move. If a defen­dant prevails on appeal, it cannot recover the judgment from a plaintiff that later is unable to repay the defendant.

Dos Anjos’s willingness to pay the $20 million to Majestic showed Dos Anjos’s con­fidence in Majestic’s reliability and good faith. If the Dos Anjos defendants had shown similar qualities in their dealings with Majestic, they could have avoided the harsh result of their misconduct.

Download the article as seen in Banker & Tradesman on April 28, 2025. Learn more about Christopher R. Vaccaro.

Commercial Real Estate, Real Estate

Earth Removal Dispute Can’t Bury Concord Development

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Land Court Lambastes ZBA for “unwarranted” Hurdles

Massachusetts courts seldom label local zoning boards’ denials of permits as arbitrary and capricious, but that’s exactly what happened recently in a recent state Land Court decision, Symes Development & Permitting LLC v. Smith.

Symes Development & Permitting LLC underwent an eight-year ordeal to obtain local permits for an 18-unit residential subdivision. In 2017, Symes entered into a purchase and sale agreement for eight acres near the West Concord commuter rail station.

Symes prepared an 18-lot subdivision plan for the property, with all lots conforming to Concord’s zoning requirements. The subdivision plan did not require any waivers from the Concord planning board.

The Case at Hand

In 2020, the Planning Board approved the subdivision plan, but with conditions requiring that Symes reserve three lots for affordable housing and two lots for a park, for a three-year period without compensation to Symes.

The Planning Board also conditioned its endorsement of the subdivision plan on Symes obtaining an earth removal permit from the Concord Zoning Board of Appeals. Symes appealed these conditions to the Land Court, which ruled in Symes’ favor the following year, annulling the board’s conditions to the plan approval.

Meanwhile, Symes applied for the earth removal permit from the ZBA. Symes’ site presented topographical challenges, requiring the removal of 60,000 cubic yards of earth to build the subdivision. This vastly exceeded Concord’s 1,000 cubic yard limit for as-of-right earth removal. The ZBA conducted hearings on Symes’ application during the spring and summer of 2021, and denied Symes by a 3-0 vote. Symes returned to the Land Court to appeal the denial.

The state Land Court said a Concord board’s ruling illustrates unreasonable barriers to housing development in Massachusetts.

Symes’ appeal of the ZBA decision made its way through the Land Court over the next three years, with a trial in April 2024, followed by post-trial briefs and closing arguments last fall. The Land Court issued its decision in favor of Symes in January.

The court’s decision comes in an environment where towns are implementing the MBTA Communities Act, which requires municipalities with MBTA service to create zoning districts with higher density housing, and the state Legislature recently passed the Affordable Homes Act, which allows single-family zoned properties to add accessory dwelling units and offers numerous other housing production incentives.

Political Emphasis on Housing Production

These statutes are a legislative response to a recognized housing shortage in Massachusetts. Gov. Maura Healey is also clearly committed to finding ways to promote housing development. The Land Court’s decision in the Symes case can be regarded as a judicial response to the housing shortage.

The Land Court did not hide its disappointment with the ZBA’s denial.

“Those who lament the barriers to the construction of […] housing, and the sometimes unwarranted regulatory hurdles that contribute to making housing in Massachusetts even more expensive than it might otherwise be, might point as an example to the saga of [Symes] in its efforts to develop an 18-lot residential subdivision […],” the first sentence of its decision reads.

Court Dismantles ZBA’s Arguments

After this opening, the court systematically dismantled every argument that the ZBA offered in its defense.

The court reserved special criticism for the ZBA’s noise expert, who had testified that Symes’ earth removal would unleash excessive noise in the neighborhood of passing commuter trains. The court noted that the ZBA’s noise expert failed to consider ambient neighborhood traffic noise and the buffering effect of new homes on sound transmission.

But the court did not stop there. It also took judicial notice that the ZBA’s noise expert had offered a contradictory expert opinion in an unrelated case before the same Land Court judge, involving a warehouse development in Lakeville.

In that case, the expert’s firm represented the developer trying to build the warehouse, instead of the town. The court noted that the ZBA’s noise expert’s opinion in the Lakeville case actually supported testimony of Symes’ noise expert in the Concord case, which undermined the ZBA’s noise expert’s credibility.

After rejecting the ZBA’s legal arguments and humbling its noise expert, the court concluded that the ZBA’s denial was “legally untenable, arbitrary, capricious, unreasonable, and otherwise beyond the proper exercise of [its] authority.” The court annulled the ZBA’s decision and ordered the ZBA to issue the earth removal permit.

This decision shows judicial concern about roadblocks that housing developers often face from municipal boards. It suggests that such roadblocks could face increased skepticism from the courts. If this is the case, maybe fewer housing developers will be forced down regulatory rabbit holes with expensive litigation, to get their projects approved.

Download the article as seen in Banker & Tradesman on March 31, 2025. Learn more about Christopher R. Vaccaro.

Commercial Real Estate, Real Estate

The Pros and Cons of Hotel Franchise Agreements

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Brands Wield Broad Oversight over Properties

There are good reasons for hotel owners to affiliate with national brands such as Marriott, Hyatt and Hilton. Hotel brand owners offer proven operating programs, staff training, marketing support and reservations systems, and restrictions on similarly branded hotels from operating nearby.

They also enable hotel owners to flag their properties with brands associated with desirable levels of comfort and guest services.

But these benefits come with costs, which are documented in hotel franchise agreements between brand owners, known as franchisors, and hotel owners and operators, known as franchisees.

Franchise agreements are designed to generate income for hotels by associating them with a well-known brand, but franchisors demand extensive control over hotel management decisions.

Calculating Royalties and Franchise Fees

Franchise agreements are designed to protect the franchisor’s brand and generate fee income for the franchisor. Typical franchise agreements require franchisees to operate under the brand for several years, while observing franchisor standards, paying licensing fees to franchisors, committing to property improvement programs and giving franchisors veto power over changes in ownership or management.

Franchisees bear hefty termination fees if they terminate their franchise agreements early, or when franchisors terminate agreements because of franchisee defaults. Prospective franchisees have limited power to negotiate franchise agreements, yet some provisions are open to discussion.

Premium franchisors can charge franchise fees in the range of 4 percent to 6 percent of gross room revenue (net of room taxes). This percentage often rises when franchisees enroll in brand marketing and online reservation plans.

However, franchise fees are negotiable. For newly constructed or renovated hotels, and hotels that are new to the brand, franchisors will sometimes agree to lower these fees initially, then gradually increase them when the hotel’s income stream is expected to stabilize. Also, hotel owners should make sure that franchise fees are tied to gross room revenue, and not to other sources of revenue unrelated to the brand, such as food, drink, and spa services.

Change of Ownership Comes with Risks

While franchisees may own their hotel properties, they do not own franchisors’ brands.

Franchisees do not have an unrestricted right to sell their properties with brands in place. Those who sell their hotels without franchisor assent, risk termination of their franchise agreements and assessment of termination fees.

Sales of stock or other equity interests in franchisees are also likely to trigger termination of franchise agreements and resulting fees, especially if the sales result in a change of control of the franchisee.

Nevertheless, franchisees can seek flexibility here. Franchisors might agree not to unreasonably withhold consent to brand transfers to another existing franchisee or experienced operator. Franchisees should also ask franchisors to allow transfers of equity interests that do not result in a change of control, or that arise from gifts or inheritance.

Banks and other institutional lenders make loans to hotels based on hotel revenues, which often depend on hotel brand recognition and other amenities derived from franchise agreements.

Comfort Letters Give Lenders Assurances

Franchisees should request that franchisors address lender concerns with “comfort letters” assuring that lenders can continue operations under franchise agreements if they take control of the hotel after a franchisee’s default on its loan obligations.

Comfort letters typically require franchisors to notify lenders when franchisees breach franchise agreements, and allow lenders to cure franchisees’ defaults and install replacement franchisees for the hotel property.

From a lender’s perspective, the loan documents should make it clear that a franchisee’s default under the franchise agreement is also a default under the lender’s loan documents.

Oversight of Management, Improvements

Because franchisors require that hotels using their brands adhere to brand standards, franchisors insist on controlling which hotel management firms operate franchisees’ properties.

Franchisees must respect these concerns, while insisting that franchise agreements provide workable mechanisms to terminate and replace unsuccessful hotel managers.

Franchise agreements also often require franchisees to periodically install expensive replacements, upgrades, and improvements to hotel properties.

Franchisees should negotiate how often franchisors can impose these property improvements programs, the scope and cost of such programs and the possible availability of key money from the franchisor to offset program costs.

Franchise agreements list numerous events of default that enable franchisors to suspend franchisees’ access to services or terminate the agreement. Events of default include nonpayment of franchise fees, failure to observe brand standards and sale of the property or change of management without franchisor consent.

Franchisees should require that franchisors give them notice and cure periods for defaults where appropriate, before franchisors exercise rights and remedies.

Hotels owners must think carefully before affiliating with a recognized national brand. Once they decide to do so, they should not accept an offered franchise agreement without ensuring that the agreement gives them appropriate legal protections.

Download the article as seen in Banker & Tradesman on February 24, 2025. Learn more about Christopher R. Vaccaro.

Commercial Real Estate, Real Estate

A Gateway to Clean Energy on Cape Cod

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Offshore Wind Projects Face Rising Challenges

Massachusetts law defines “Gateway mu­nicipalities” as those with populations be­tween 35,000 and 250,000, where median household incomes and percentages of resi­dents with bachelor’s degrees are below the state average.

House Speaker Ronald Mariano speaks to House colleagues and wind energy advocates as he tours the Block Island Wind Farm located about four miles off the coast of Block Island in 2021.

Many are former manufacturing centers that offer “gateways” to better lives for lower income and immigrant families. Al­though the resort town of Barnstable fits the demographic requirements of a gateway municipality, it lacks the typical industrial history and immigrant cultures.

But as offshore wind turbine projects take root in federal waters south of Mar­tha’s Vineyard, Barnstable is becoming the gateway for hundreds of megawatts of clean electrical energy.

Offshore wind energy is connected to the regional power grid through undersea ca­bles. Barnstable’s coastline along Nantucket Sound is well-suited for cable landing sites.

There are three offshore wind projects in various stages of development and permit­ting that need cable landing sites in Barnsta­ble – Vineyard Wind 1 with a landing site at Covell’s Beach, New England Wind 1 with a future landing site at Craigville Beach, and New England Wind 2 with a proposed land­ing site at Dowses Beach. Transmission lines will carry electricity to substations within Barnstable, then to the regional grid. Avangrid Renewables is behind these proj­ects.

Offshore wind projects require numerous federal, state and local permits. Federal law requires environmental reviews by the Bu­reau of Ocean Energy Management (BOEM), the U.S. Army Corp of Engineers (USACE) and the Environmental Protection Agency (EPA).

In Massachusetts, the Department of En­vironmental Protection conducts its own project reviews, and the Energy Facilities Siting Board (EFSB), Department of Trans­portation, Department of Public Utilities and other state agencies also scrutinize these projects. Energy infrastructure lying within the borders of cities and towns requires wet­lands orders of conditions and often zoning relief. Proponents are also expected to enter into host community agreements that pro­vide economic benefits to municipalities that accommodate energy infrastructure.

Agreement Governs Relationship with Town

Vineyard Wind 1 has secured all required permits, and construction is underway 15 miles south of Martha’s Vineyard. The cable landing at Covell’s Beach and related on­shore infrastructure is in place. The com­pleted project is expected to generate 800 megawatts of electricity – enough for 400,000 homes. Damage to a turbine blade recently caused fiberglass shards to wash up on Cape and Islands beaches, delaying offshore construction, but there is optimism that this project will reach its full potential.

During the permitting process, Vineyard Wind 1 entered into a host community agreement (HCA) with Barnstable, provid­ing assurances that the project will not harm the town’s public water supply. Per­haps more importantly, the HCA requires Vineyard Wind 1 to make payments to the town of up to $16 million, spread out over a 25-year period, in addition to ad valorem tax payments. In exchange, the town must support the project’s local permitting appli­cations.

New England Wind 1 and 2 are going through separate permitting processes. To­gether they should generate 2,000 mega­watts of electricity when complete. Both projects received BOEM approvals last year.

New England Wind 1 is further along in obtaining permits. It already has permits from the USACE and EPA. For state per­mits, New England Wind 1 has approval from the EFSB, and its environmental im­pact statement has been accepted, allowing the project to proceed with state permitting. The project proponent entered into an HCA with Barnstable in 2022, offering the town similar financial incentives to those offered to Vineyard Wind 1. New England Wind 1 construction is expected to begin this year.

Uncertain Financial Prospects for Industry

New England Wind 2’s future is less cer­tain. This project suffered a setback last Oc­tober, when the Barnstable Town Council voted to oppose the cable landing site at Dowses Beach. The non-binding vote leaves open the possibility of town council support for a different landing site in Barnstable. Perhaps another HCA with generous finan­cial incentives can sweeten the pot enough to appease this opposition. Meanwhile, Avangrid Renewables continues to pursue state permits for New England Wind 2.

Offshore wind turbines projects have their challenges. Construction has stalled or halted on some projects, because of in­creased interest rates and costs, and supply chain difficulties. The newly-installed Trump administration is less supportive of clean energy projects than its predecessor, creating insecurity for an industry that re­lies heavily on government subsidies and tax credits, as well as offshore leases in fed­eral waters.

Nevertheless, Vineyard Wind is now par­tially up and running, and New England Wind 1 seems likely to proceed. Although New England Wind 2 remains on the draw­ing board, Barnstable already plays an im­portant role in meeting clean energy goals.

Download the article as seen in Banker & Tradesman on January 27, 2025. Learn more about Christopher R. Vaccaro.

Commercial Real Estate, Real Estate

‘Affordable Housing’ Has a Special Meaning in Massachusetts

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State Regulations Set Definitions for Housing Category

Trinity Financial is proposing 700 apartments and condominiums in Charlestown, including 407 income-restricted units, on Austin Street parking lots offered by the city of Boston for a mixed-income development

 Massachusetts residents are familiar with entreaties for production of more “affordable housing” from well-meaning government leaders and housing advocates.

The commonwealth does indeed suffer from a shortage of reasonably priced dwelling units, but before joining the chorus of promoters of “affordable housing,” one might want to consider the meaning of that term, and the consequences of affordable housing initiatives.

The state Executive Office of Housing and Livable Communities (EOHLC) plays a major role in housing development and affordable housing programs. It is responsible for administering local housing authorities and overseeing state-aided housing projects, urban renewal regulations, housing voucher programs, low-income housing tax credits, smart growth zoning and comprehensive permits for affordable housing projects. It also determines whether municipalities are in compliance with the MBTA Communities law.

EOHLC regulations define “affordable housing” as “homeownership or rental housing which is restricted to occupancy by low- or moderate-income households and for which the sales prices or rents are affordable to such households.”  The regulations define “low- or moderate-income households” as those “with gross income at or less than 80 percent of area median household income as most recently determined by the U.S. Department of Housing and Urban Development (HUD) adjusted for household size.”

Housing production is the core of EOHLC’s mission.

Area median household income varies throughout Massachusetts, but it is generally in the vicinity of $100,000 per year. These definitions are essential to EOHLC’s affordable housing programs.

The city of Boston and many other municipalities have their own affordable housing requirements baked into their zoning ordinances and bylaws. Boston’s zoning mandate, known as “Inclusionary Zoning,” is particularly aggressive.

It requires new housing projects with seven or more dwelling units, to set aside up to 20 percent of units as income-re-stricted: 17 percent deed-restricted and another 3 percent set aside for holders of state or federal housing subsidy vouchers.

The Mayor’s Office of Housing (MOH) oversees compliance with Boston’s Inclusionary Zoning ordinance.

Boston Sets Minimum Requirement

In order for affordable housing programs to meet their goals, government agencies, such as EOHLC, MOH and local housing boards, must limit housing prices and rents on affordable units, and determine income eligibility of buyers and renters of those units. These monitoring agencies also must ensure that when affordable units are resold or relet, the household incomes of new occupants do not exceed eligibility limits.

These responsibilities require a lot of effort not only from monitoring agencies, but also from developers, landlords and property managers of affordable units.

To set pricing of affordable units and see that affordable units are only owned by or rented to income-eligible households, developers must accept deed restrictions under affordable housing agreements. These pricing and occupancy restrictions generally last for decades.

Developers intending to sell affordable units to homebuyers are expected to assemble and submit to monitoring agencies marketing plans directed at income-eligible buyers. Developers are sometimes required to give preferences to first-time home buyers, local residents or artists.
The deed restrictions limit resale prices on affordable units, to prevent owners from enjoying profits from a resale, and to verify that buyers meet income eligibility limits. Monitoring agencies must certify that resales meet these requirements.

Challenges in Upkeep and Monitoring

Similar restrictions apply to affordable rental units. Developers must present marketing plans acceptable to monitoring agencies, with limitations on rents and tenant incomes.

Affordable housing restrictions present interesting challenges.

For example, when properties inevitably require capital improvements or replacements, owners need the ability to recover their expenditures. Restrictions on resale prices and rents must be loosened to accommodate these expenditures, which owners of affordable units must verify with monitoring agencies.

Also, affordability restrictions on rental properties should be tailored to address increases to occupants’ income levels. Individuals who have low or moderate incomes when they first join the workforce often enjoy significant pay increases as they acquire skills, experience and responsibilities. Monitoring agencies should have mechanisms to prevent “over-income” households from enjoying the benefits of affordability restrictions intended for lower-income households.

Keeping track of tenant income, and moving over-income households out of affordable units to make room for income eligible households, can be difficult for monitoring agencies.

Affordable housing in Massachusetts has come to mean not inexpensive housing, but instead price-controlled housing set aside for lower-income individuals with associated governmental oversight. Imposing affordable housing requirements on developers might be good public policy, if combined with financial incentives that encourage production of more market-rate housing for the general public.

But, if local governments use overly restrictive zoning limitations to force developers to build affordable housing, and their restrictions result in less overall housing production, then it’s time to reevaluate those limitations.

Download the article as seen in Banker & Tradesman on December 30, 2024. Learn more about Christopher R. Vaccaro.

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