DHCD Issues Chapter 40B Guidance in Response to Massachusetts SJC Decision

Beveridge & Diamond, P.C. - Massachusetts Environmental, Land Use and Real Estate Alert, 2008

In Board of Appeals of Woburn v. Housing Appeals Committee, 451 Mass. 581 (2008), the Massachusetts Supreme Judicial Court (the “SJC”) ruled that the Housing Appeals Committee (“HAC”) cannot consider a condition imposed by a local board of appeals on a comprehensive permit that reduces the size of a project to be a “de facto” denial of that project.  The SJC found on appeal to the HAC, a developer must demonstrate that a challenged condition renders a project uneconomic as “a necessary element of the developer’s prima facie case for relief” and that absent such a finding, the HAC has no power to modify or remove conditions.  Only if the developer demonstrates a condition is uneconomic does the burden then shift to the board to show “consisten[cy] with local needs.” In a footnote, however, the SJC suggested that, without revising Chapter 40B, the Department of Housing and Community Development (“DHCD”) could remedy this situation by promulgating regulations that would “more fully address the meaning of the term ‘uneconomic.’”  

In an apparent response to this invitation, on July 30, 2008, DHCD amended its Comprehensive Permit Guidelines. Specifically, the Guidelines now define “reasonable return” to mean “with respect to building or operating a Project, profits and distributions actually realized by the Developer that are not less than the limitations set forth... [elsewhere in the Guidelines].  A condition imposed by the Board to decrease the number of units of a Project by 5% or more shall create a rebuttable presumption that the Developer will not be able to achieve a reasonable return.  While rebuttable, this presumption shifts both the burden of producing evidence and the ultimate burden of persuasion from the Developer to the Board on both the ‘reasonable return’ and ‘uneconomic’ issues.”  (Emphasis added.)

For further information, contact Brian C. Levey at blevey@bdlaw.com or Krista L. Hawley at khawley@bdlaw.com.