Affordable housing is generally defined by the income of the household in relation to housing costs. For example, The US Department of Housing and Urban Development (HUD) identifies units as affordable if gross rent (including costs of utilities borne by the tenant) is no more than 30% of a household’s net adjusted income (with a small deduction for each dependent, for child care, for extraordinary medical expenses, etc.) or if the carrying costs of purchasing a home (mortgage, homeowners association fees, property taxes and insurance) is not more than typically 30% of income. If households are paying more than these amounts, they are described as experiencing housing affordability problems or cost burdens; and if they are paying more than half of their income for housing, they have severe housing affordability problems and cost burdens.
Affordable housing can also be defined according to percentages of median income for the area as summarized in the following table: (Source: US Dept. of Housing and Urban Development; Note: Ashland is included in the Boston Metropolitan Statistical Area)
|# of Persons in Household||30% of Area Median Income||50% of Area Median Income||80% of Area Median Income|
Housing subsidy programs are typically targeted to particular income ranges depending upon programmatic goals. More information can be found on the DHCD website here.
What is 40B?
Massachusetts General Laws Chapter 40B is designed to facilitate construction of affordable housing in communities where less than 10 percent of its housing stock is affordable (accessible to low and moderate income levels). Under Chapter 40B, developers are able to ignore certain local zoning laws, including specifically the allowable density, as long as 20 to 25 percent of the units being built meet the state’s definition of affordable. The law provides only limited opportunity for the local town or city officials to alter the developer’s plans.
The most commonly used definition of affordable housing is that which applies to the Chapter 40B comprehensive permit law. For a unit to be affordable under Chapter 40B, and thus counted towards a community's progress towards reaching the 10% affordability threshold and included as part of its Subsidized Housing Inventory (SHI), a unit must meet specific state requirements including the following:
- Units must be subsidized or approved by a subsidizing agency.
- Occupants must have income at or below 80% of area median income, adjusted by household size and presented in the above table.
- The unit must be deed restricted for specified periods of time including in perpetuity for newly constructed affordable homeownership units. These deed restrictions are monitored and enforced.
- The units must be affirmatively marketed through the implementation of a state-approved Affirmative Fair Housing Marketing and Tenant Selection Plan.
The 10 Percent
The 10 percent calculation is based upon the total housing inventory, per the national census. Housing units that are built and deed restricted as affordable (accessible to incomes at or under the 80 percent area mean income level) are eligible for inclusion on the state's Subsidized Housing Inventory (SHI); however, the state values rental units over for-sale units and as such in a development where all units built are rental, all units will count towards the SHI. For example, a 20-unit housing development where the homes are for-sale, only the houses specifically set aside as affordable will count (25 percent or 5 units) towards the SHI. If that same 20-unit housing development were rental units, all 20 units will count towards the SHI.
The rental vs. for-sale difference is important because all of the units built go towards the total housing inventory, which affects the 10 percent calculation. A 20-unit for-sale development increases the total housing stock by 20 but only adds 5 to the SHI whereas rental units provides a more even distribution of 20 units to each list and reaching the 10 percent goal faster.
Current Conditions in Ashland
As of the SHI of June of 2015, 3.66% of the housing units in Ashland counted as affordable housing. By late November of 2016, Ashland's percent affordable units rose to 5.18%. Currently, both the Village of the Americas Phase VII project and the Campenelli/Thorndike project in the RTD are scheduled to add more units to the total in 2017. While just these projects will not get us to the goal of 10% affordable units, it will be substantial progress towards this goal, and will allow Ashland to enjoy some "Safe Harbor" protections.
When a town is below the required 10 percent, leaving it susceptible to unfriendly 40B developers, the town has an option to proactively plan for developing affordable housing on its own terms by creating a state-approved Housing Production Plan (HPP). If the town adds a certain number of affordable units to the overall housing stock, the Commonwealth will grant the town "Safe Harbor" status, which gives protection to the town from future unfriendly 40B developments. In other words, developments that have not already been applied for. Ashland currently has an approved Housing Production Plan (found on the Planning webpage), and we are currently in the process of obtaining certification from the Commonwealth. A 0.5% increase in affordable units buys a 1 year safe harbor. A 1% increase gives the town a 2 year safe harbor. Because Ashland has raised the percent of affordable housing by over 1% in the last couple of years, Ashland expects to be granted a 2 year "Safe Harbor" status.