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40B isn’t all doom and gloom

September 8, 2011

The recent announcement that Walpole Woodworkers will sell its iconic East Street property to a developer intent on constructing a 40B affordable housing complex has generated fears among town officials and residents that schools and municipal services will suffer under a massive surge in population. Walpole town officials and others in the community are concerned that the complex will burden the town to the point that services like education and public safety will suffer without large overrides. But these claims, while well-intentioned, aren’t backed up by any major evidence and pessimism towards the project is only going to make matters worse in the long run. Rather than moaning and groaning, Walpole officials may want to look at the better aspects of the project and express some cooperation as the project moves forward.

Houston-based Hanover Company, which has built other housing complexes in other towns in the state, purchased the property from Woodworkers to construct a 250-unit apartment complex. Under the state’s controversial 40B law, Hanover will make a quarter of those units, or about 62, affordable for those earning less than the median income in the local area, in exchange for being able to bypass local zoning restrictions. Under 40B, even if Walpole officials fail to give the project approval, Hanover can still go to a state board to have the local board’s decision overturned. The complex will still pay property taxes, but officials are concerned the revenue generated won’t compensate for the added costs on municipal services required for its residents, like schools.

The 40B law is definitely in need of reform and may even need to be outright repealed. State Inspector General Gregory Sullivan has uncovered countless examples of developers taking advantage of the law to make record profits at the expense of the communities where they build the housing. There is also evidence that the law, adopted in 1969 to make the state more affordable to homeowners, hasn’t actually achieved its goal. The law also causes controversy in Town and City Halls across the state because the projects generally fail to consider the town’s own concerns about community growth and their ability to meet that growth.

But the fact is, the deal in Walpole is done. The town has a choice – they can either oppose Hanover’s project kicking and screaming the whole way, or work with the developer to construct a complex that is as least burdensome on the community as possible. If the town fights the project and sours relations with Hanover, the company won’t have any incentive to listen to local concerns, and the town will likely lose their fight if it ultimately comes before the state.

Cooperation, on the other hand, could yield significant benefits for the town. The town could persuade Hanover to build apartments with only one or two bedrooms to avoid families with high numbers of school-aged children that would put a burden on our school district, among other concessions from the company.

The issue worth celebrating as a direct result of this project is that it moves Walpole even closer to having 10 percent of its housing deemed affordable. Under the 40B statute, once 10 percent of a town’s housing is considered to be affordable, developers can no longer bypass zoning laws in order to build affordable housing in that community. According to the most recent statistics from the state Department of Housing and Community Development in June, 5.3 percent of homes in Walpole are considered to be affordable. With the addition of the East Street property, Walpole will be at 6 percent.

The state’s voters rejected an effort to repeal the 40B law last November, and there appears to be little movement at the State House for repeal or reform. So the sooner Walpole achieves its 10% quota, the better. At that crucial point, the town won’t have to fear that another developer will scoop up empty properties, and officials won’t have to worry about pursuing tax overrides for vacant property purchases to avert developers.

But there is also a lot of evidence that the doom and gloom Walpole officials are anticipating from the Hanover development may not actually come to fruition. Walpole already has 40B in the form of The Preserve on Route 1, and the effects have not been particularly jarring. The 300-unit apartment complex was finished in 2004, but the resulting surge in population doesn’t seem to have had a particularly significant impact on the school system and has not caused a tremendous drag on municipal services other than an occasional need for police.

The town has not passed a school override since 2001, despite calls to do so, and yet the school system continues to thrive. Our school district was ranked 55th in the region by Boston Magazine this year and our high school was 49th in the state last year by the same magazine. School officials keep talking about a need for more money, but those financial pressures are mostly being caused by continued cuts in state and federal aid – and there is no evidence that financial pressures are caused directly by The Preserve.

Between 2000 and 2010, the number of students enrolled in the Walpole Public Schools has only increased by 258 students according to Massachusetts Department of Education figures. Compared to the enrollment increases seen in other communities during the same time, an increase of that magnitude isn’t all that unusual. Boyden Elementary School, which has served The Preserve complex since its construction, hasn’t experienced any abnormal surge in enrollment that other Walpole elementary schools haven’t seen during the past six years.

In May 2009, four students at Tufts University included The Preserve in a field project on 40B developments across the state. The project, done in association with the Citizens’ Housing and Planning Association, was presented in testimony to the Massachusetts Joint Committee on Housing in September 2009. According to their final report, “40B On the Ground: Before and After,” Walpole officials overestimated their concerns about the project and most of the problems officials anticipated from the project were “not realized to the extent feared.”

After conducting interviews with local community members and examining data, the group at Tufts found that costs for everything from school enrollment to water service to The Preserve turned out to be lower than expected. The group also saw no evidence the schools were unable to grapple with the complex. “While the town has experienced some impacts on their schools because of the development, the schools, traditionally under-funded have nevertheless managed the growth well,” the report concluded.

The team also determined that while Walpole is consistently below the state average in expenditures per pupil, this is a problem that is not connected to the Preserve or any other 40B development. Increases in English-as-Second-Language and Special Education students have been seen as a direct result of The Preserve, but the school hasn’t needed to hire a large number of teachers to cope with that. The report even quoted Boyden Elementary School Principal Michael Stanton calling The Preserve a “positive” addition to the community in that it brought more diversity.

The Tufts report noted that crime continues to be an issue at The Preserve, but its location on Route 1 away from the heart of downtown just adds to the distance required for cops to patrol there regularly and to respond quickly to incidents.

Hanover’s project at the Woodworkers site will be near Walpole Center, allowing for more routine police patrols and dramatically cutting the distance required to respond to incidents without affecting response times for incidents in the rest of the community.

Walpole’s other major brush with affordable housing, in 2008, might have produced few negative effects if it had moved forward. That year, The Fairfield Group sought to construct 40R affordable housing at the Walpole Woodworkers property amid significant opposition from residents and officials. Fairfield eventually went out of business with the souring economy, but Fairfield did get the opportunity to fund a study by Melrose-based Connerty Associates to determine the fiscal impact their development would have had on Walpole.

One of the major differences between 40R and 40B is that the state will actually pay cities and towns to have 40R housing in their communities, whereas they won’t do the same for 40B. As such, the group’s study found that their development would actually generate a net fiscal benefit of about $93,000 per year to the town of Walpole. The group also found evidence that the net benefit would be “sustainable for the long term.”

The town hired their own firm to review Fairfield’s study, and did find some red flags with some of their estimates of costs and revenue. But overall the study was considered to be reasonable, and didn’t appear to be dramatically unrealistic in the town’s assessment.

Because Hanover is proposing a 40B and not a 40R, it’s not clear Walpole would see as much of a gain as they would have from Fairfield. But there was another important point made in Fairfield’s analysis that deserves notice. According to the study, the complex would have generated more than $2 million in additional retail sales for existing Walpole businesses. The Woodworkers property is located within walking distance of downtown, and could be just what Walpole Center needs in its ongoing revitalization efforts. Because The Preserve isn’t near any significant Walpole businesses, the economic impact of the East Street 40B would likely be far greater than that of The Preserve.

Economic development from 40B was also a central point of a recent study done by the Donahue Institute at the University of Massachusetts. According to their September 2010 study, “the expenditure of household incomes by residents of Chapter 40B units built from 2000 to April 2010 was an estimated $1.86 billion annually as of April 2010.”

The Donahue Institute, in addition to numerous other organizations, has done numerous other studies during the past decade examining the impact of 40B on communities. Studies have generally concluded that affordable housing is not necessarily a drag on towns. “For many Massachusetts communities, population growth associated with new housing is not inevitably followed by increased demand for services and higher municipal costs,” a 2003 report published by the Institute found. “Many of our fastest growing communities experienced the slowest growth in per capita tax burden during the 1990s,” the report noted.

In 2007, the Institute studied mixed-income ownership developments, similar to what Hanover is proposing for the Woodworkers property today. Looking at seven different communities, the study concluded that these complexes “did not have any measurable negative impact on public services in their municipalities.” The report also pointed out that school costs are climbing in districts with both declining enrollment and increasing enrollment, and that increased enrollment due to housing is not necessarily a drain on the school district.

Countless other studies have found few negatives, if any, from 40B projects. For example, in 2005, the MIT Center for Real Estate reviewed seven 40B projects across the state, including one in Norwood, and found no evidence that property values near 40B properties go down. The 20-year study found that “large, dense, multi-family rental developments made possible by chapter 40B do not negatively impact the sales price of nearby single-family homes.”

In 2008, the Board of Selectmen in Chelmsford, Mass. commissioned a study to determine how much of a financial impact four 40B developments in their town were having on the community. The four apartment complexes ranged in size from a complex with 16 townhouses to a 170-unit apartment complex. The study considered both municipal costs and education costs and ultimately found just one of the four developments – the one with only 16 townhouses – had a negative net fiscal impact on the town. In fact, the other three complexes cost less than $1 in municipal costs for every dollar generated in revenue, resulting in a neutral or positive fiscal impact.

Above all, Walpole considers itself to be “The Friendly Town.” Although there is no evidence that this is a friendlier town than any other community, and in fact there is vast evidence that Walpole is the least friendly out of other towns, Walpole residents should consider that motto when thinking about this housing development.

The people who need 40B housing have to live somewhere, and as long as the 40B law is on the books Walpole will inevitably be a potential candidate. Walpole is in the wealthiest county in the 10th most expensive state in the nation, according to CNBC. In that sense, the 40B law seems to be working: owning a home – even if it’s just an apartment – is now possible in a community like Walpole for those who don’t have the luxuries the rest of us have. Judging by the fact that numerous studies have shown that their presence is not necessarily a drag on the community and in fact may be just the opposite in terms of generating economic development at businesses, it’s okay to be friendly to our new neighbors in this development.

The construction of 40B at Walpole Woodworkers also adds yet another reason to the long and ever-growing list of reasons to eliminate the Economic Development & Grants Officer from the municipal budget. The Woodworkers site would have been an excellent location for new commercial development, and the town had a prime opportunity to attract a new business to town. Under the leadership of Governor Deval Patrick, who has done little to improve the state’s business climate, and with the futile Economic Development Officer in Walpole, businesses just don’t see a big reason to come to Walpole.

Another note: As it is, the town budget is already reckless and out-of-control. Just recently, town officials announced that they want to purchase a new Emergency Management vehicle, at significant expense to the taxpayers, that will only be used a few times per year. The town has never had such a vehicle before, and large-scale emergencies in the community are rare. But the town can’t seem to pass up an opportunity to expand its vehicle collection, so the truck will still be purchased. With 40B coming down the pike, one would think town officials would be watching spending more closely while they make bold statements about the estimated costs of the development on our fiscal situation.

If the town cuts spending, gets serious about the budget, and fires the current spendthrifts in town leadership, the town will have a much easier ability to absorb any significant costs from the Hanover project.

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