Bill S.799

SENATE DOCKET, NO. 1173 FILED ON: 1/17/2019

SENATE . . . . . . . . . . . . . . No. 799

By Mr. Eldridge, a petition (accompanied by bill, Senate, No. 799) of James B. Eldridge, Denise Provost, Mary S. Keefe and Mike Connolly for legislation to create affordable housing in every community. Housing.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-First General Court
(2019-2020)

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An Act creating affordable housing in every community.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. To provide for a capital outlay program to increase production of affordable housing units in the commonwealth, the sums set forth in section 1A, for the several purposes and subject to the conditions specified in this act, are hereby made available subject to the laws regulating the disbursement of public funds.

SECTION 1A.

EXECUTIVE OFFICE OF HOUSING AND ECONOMIC DEVELOPMENT

Department of Housing and Community Development

XXXX-XXXX For a program of loans or grants for the production of affordable housing units; provided however, that affordable housing units shall mean a housing unit to be rented or owned by families and individuals whose income at initial occupancy is no more than 50 per cent of the area median income as determined by the federal department of housing and urban development guidelines and adjusted for family size and that thereafter such units shall be rented or sold, subject to such restrictions on appreciation as determined by the municipality to be reasonable and necessary to maintain long term affordability, to families or individuals at incomes of no more than 50 per cent of the area median income; provided, however, that not less than $250,000,000 shall be distributed to public housing authorities established pursuant to section 3 of chapter 121B …….…………$500,000,000.

SECTION 2. To provide for a program of affordable housing production incentives, the sums set forth in section 2A are hereby made available, subject to the laws regulating the disbursement of public funds. These sums shall be in addition to any amounts previously authorized and made available for these purposes.

SECTION 2A.

EXECUTIVE OFFICE OF HOUSING AND ECONOMIC DEVELOPMENT

Department of Housing and Community Development

7004-8016 For the Smart Growth Housing Trust Fund established by section 35AA of chapter 10 of the General Laws to establish a competitive grant program pursuant to section 3 of chapter 40X of the General Laws and for incentive payments pursuant to section 4 of chapter 40X of the General Laws…………...……………………………………..…………$10,000,000

SECTION 3. The General Laws are hereby amended by inserting after chapter 40W the following chapter:-

CHAPTER 40X. AFFORDABLE HOUSING PRODUCTION INCENTIVE PROGRAM

Section 1. As used in this chapter, the following words shall have the following meanings unless the context clearly requires otherwise:

“Affordable housing unit”, a housing unit to be rented or owned by families and individuals whose income at initial occupancy is no more than 50 per cent of the area median income as determined by the federal department of housing and urban development guidelines and adjusted for family size and that thereafter such units shall be rented or sold, subject to such restrictions on appreciation as determined by the municipality to be reasonable and necessary to maintain long term affordability, to families or individuals at incomes of no more than 50 per cent of the area median income.

“Department”, the department of housing and community development.

“Developable land area”, shall have the same meaning as in section 2 of chapter 40R.

“Eligibility period”, the five year period immediately preceding receipt of a municipality’s affordable housing production incentive application by the department; provided, however, that no eligibility period shall begin before January 1, 2020.

“Eligible municipality,” a city or town that has increased the share of affordable housing units located in the city or town by 1 per cent over the most recent eligibility period.

“Trust fund”, the smart growth housing trust fund established by section 35AA of chapter 10.

Section 2. (a) In order to qualify as an eligible municipality, a city or town shall submit an application to the department including the following information:

(1) the name and population of the municipality;

(2) the total number of housing units in the municipality;

(3) the per cent of total affordable housing units on the date five years prior to the date of the application;

(4) the per cent of total affordable housing units on the date of the application;

(5) a list of affordable housing units constructed during the eligibility period; and

(6) a list of current or future development plans for additional affordable housing units, if any.

(b) If the number of affordable housing units in a municipality represented as a per cent of total housing units has increased by not less than 1 per cent during the eligibility period, the department shall certify the municipality as an eligible municipality; provided, however that the department may reject a municipality’s application if it has reason to doubt the accuracy of the information provided by the municipality.

(c) The department shall create a process for a municipality to appeal the department’s rejection of a municipality’s application.

Section 3. (a) Each municipality with not less than 5,000 permanent residents shall identify and secure a developable land area for affordable housing unit development and may use its boards and committees for assistance, including, but not limited to, an affordable housing trust, a community preservation committee or a housing authority.

(b) After identifying a developable land area, a municipality shall create a smart growth zoning district pursuant to chapter 40R that is superimposed directly over the identified developable land.

(c) After identifying a developable land area, a municipality may, pursuant to section 35AA of chapter 10: (i) apply to the department for a technical assistance grant in an amount not to exceed $25,000 to guide the process for municipal approval, acquire the land and receive development subsidies; (ii) apply to the department for a grant in an amount not to exceed $25,000 to study the traffic effects of proposed developments of affordable multifamily housing units in the smart growth zoning district; and (iii) apply to the department for a grant in an amount not to exceed $25,000 to complete a nexus study to identify a proposed linkage fee amount for a specific development project.

Section 4. (a) Each eligible municipality shall be entitled to payments pursuant to this section.

(1) The commonwealth shall pay from the trust fund an affordable multifamily housing development incentive payment, according to the following schedule:

Increase in per cent of housing unitsPayment

that qualify as affordable multifamily

housing units over the eligibility period

1% - 2%$50,000

2% - 5%$100,000

The affordable multifamily housing development incentive payment shall be payable upon confirmation of certifying the municipality as an eligible municipality under this chapter.

(2) The commonwealth shall pay from the trust fund a one-time multifamily housing payment to each eligible municipality. This payment shall be $10,000 for each affordable multifamily housing unit of new construction created in the eligible municipality. The amount due shall be paid on a unit-by-unit basis in accordance with department regulations.

(b) Each eligible municipality shall be entitled to adopt the provisions of section 14 of chapter 64D.

SECTION 4. Section 35AA of chapter 10 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by inserting after the word “40R” in line 6 the following:-

“and chapter 40X”.

SECTION 5. Section 1 of chapter 64D of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by inserting after the word “dollars;” in line 14, the following words:-

provided, however, that when the consideration of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of the sale, exceeds one million dollars, for each additional five hundred dollars or fractional part thereof, four dollars; and

by inserting after the word “consideration”, in line 16, the following words:-

and three dollars for each five hundred dollars or fractional part of said consideration over one million dollars,

SECTION 6. Chapter 64D of the General Laws is hereby amended by adding the following section:-

Section 14. Excise taxes collected pursuant to section 1 where the consideration of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of the sale, exceeds one million dollars, shall be distributed in the following manner: (a) if the city or town where the property is located is an eligible municipality pursuant to chapter 40X and has established a Municipal Housing Trust Fund pursuant to section 55C of chapter 44, chapter 482 of the Acts of 1991, or other municipally established Affordable Housing Trust Fund, 50 per cent of the excise collected shall be deposited in said trust fund and 50 per cent of the excise shall be deposited in the Affordable Housing Trust Fund established in section 2 of chapter 121D; (b) if the city or town where the property is located is not an eligible municipality pursuant to chapter 40X or has not established a Municipal Housing Trust Fund pursuant to section 55C of chapter 44, chapter 482 of the Acts of 1991, or other municipally established Affordable Housing Trust Fund, 100 per cent of the excise collected shall be deposited in the Affordable Housing Trust Fund established in section 2 of chapter 121D.

SECTION 7. To meet the expenditures necessary in carrying out sections 1 and 1A, the state treasurer shall, upon request of the governor, issue and sell bonds of the commonwealth in an amount to be specified by the governor from time to time but not exceeding, in the aggregate, $500,000,000. All bonds issued by the commonwealth as aforesaid shall be designated on their face, Housing Production, Planning and Local Impact Grants Loan Act of 2020, and shall be issued for a maximum term of years, not exceeding 30 years; provided, however, that all such bonds shall be payable not later than June 30, 2055. All interest and payments on account of principal on such obligations shall be payable from the General Fund. Bonds and interest thereon issued under the authority of this section shall, notwithstanding any other provision of this act, be general obligations of the commonwealth. An amount not to exceed 2 per cent of the authorizations may be expended by the department of housing and community development for administrative costs directly attributable to the purposes of this act, including costs of clerical and support personnel. The director of housing and community development shall file an annual spending plan with the fiscal affairs division, the house and senate committees on ways and means, the house and senate committees on bonding, capital expenditures and states assets and the joint committee on housing which details, by subsidiary, all personnel costs and any administrative costs charged to expenditures made pursuant to this act.

SECTION 8. The General Laws are hereby amended by striking out chapter 40S in its entirety and inserting in place thereof the following:-

CHAPTER 40S.

HOUSING PRODUCTION SCHOOL COST REIMBURSEMENT

Section 1. As used in this chapter, the following words shall have the following meanings, unless the context clearly requires otherwise:

''Additional chapter 70 aid'', for each municipality, an amount calculated by the department of education equal to the actual increase in chapter 70 aid payments, including, but not limited to, foundation aid increases and minimum aid increases, that is attributable to the number of each municipality's eligible students from the school district. In the case of a regional school district, the amount of additional chapter 70 aid in the region shall be apportioned among member communities proportionally based upon the number of eligible students from each member municipality. For any municipality with eligible students from more than 1 school district, additional chapter 70 aid shall be the sum of the additional chapter 70 aid at the municipal school district plus the municipality's share of additional chapter 70 aid at each district of which the municipality is a member.

''Average actual net school spending per student'', for each school district, the actual net school spending per pupil, as defined by and reported to the department of education, for the immediately preceding fiscal year.

''Division'', the division of local services within the department of revenue.

''Education percentage'', the average across all communities in the commonwealth of total education expenditures in relation to total municipal expenditures as certified at the end of the preceding fiscal year by the department of revenue. This percentage shall be the total actual net school spending of all districts as defined by the department of education divided by the sum of total General Fund municipal spending and regional school district aid.

''Eligible student'', a child living in a new smart growth development pursuant to chapter 40R or new affordable housing development pursuant to chapter 40X that is enrolled as of the prior year in a district or charter school in kindergarten through grade 12, attends a residential or other school pursuant to special education requirements, attends pre-kindergarten or post 12th grade sessions pursuant to special education requirements, or attends a school district through the so-called school choice program, established under section 12B of chapter 76, or a similar program.

''Local smart growth and affordable housing excise tax revenues'', for each municipality the total excise taxes for the subject year on vehicles garaged at a new smart growth development or new affordable housing development, as calculated by the division.

''Local smart growth and affordable housing property tax revenues'', for each municipality, the product of the local levy rate times the amount of assessed valuation due to new smart growth development and new affordable housing development as certified by the commissioner of revenue, as calculated by the division.

''Local smart growth and affordable housing revenues for education'', for each municipality, the product of the education percentage times the sum of local smart growth and affordable housing property tax revenues plus local smart growth and affordable housing excise tax revenues, each for the preceding fiscal year.

“New affordable housing development”, any new residential development constructed pursuant to chapter 40X that is subject to the payment of local property taxes.

''New smart growth development'', any new residential or commercial development, including the substantial redevelopment of existing properties, subject to the payment of local property taxes that: (a) occurs in a smart growth zoning district after the adoption of such zoning by the community, and (b) is permitted under the provisions of the smart growth zoning district. A redevelopment shall be considered substantial if its cost exceeds 50 per cent of the building's pre-renovation assessed value or if it constitutes a change in use from nonresidential to residential.

''Smart growth zoning district'', a zoning district adopted by a community and approved by the department of housing and community development which is eligible, and which remains eligible for density bonus payments under chapter 40R.

''Total education cost for eligible students'', for each municipality, the product of the total number of eligible students in the prior fiscal year times the average actual net school spending per student as calculated by the department of education. This calculation shall first be made separately for each school district attended by eligible students, and the results of such calculations shall then be summed.

Section 2. Subject to appropriation, for each fiscal year commencing with fiscal year 2008, any city or town that has established 1 or more smart growth zoning districts shall receive school cost reimbursement from the commonwealth. For each fiscal year commencing with fiscal year 2021, any city or town that is an eligible municipality under chapter 40X shall receive school cost reimbursement from the commonwealth. These combined reimbursements shall be equal to the positive difference, if any, between: (i) total education cost for eligible students, and (ii) the sum of local smart growth and affordable housing revenues for education plus additional chapter 70 aid. The department of education shall add the smart growth and affordable housing school cost reimbursement amounts to each district's required net school spending, as defined in chapter 70. For purposes of the net school spending calculation, the department shall allocate a municipality's smart growth and affordable housing school cost reimbursement among the districts to which it belongs in proportion to the number of eligible students from the municipality attending each district.

Section 3. (a) Upon certifying and approving a zoning district as a smart growth zoning district under chapter 40R or certifying a municipality as an eligible municipality under chapter 40X, the department of housing and community development shall provide a list of all addresses of new smart growth development within each smart growth zoning district and new affordable housing development, in this chapter called the smart growth and affordable housing address list, to the municipality, the department of education, the division of local services within the department of revenue, and the registry of motor vehicles.

(b) The chief executive officer of every municipality with a smart growth zoning district and every eligible municipality pursuant to chapter 40X shall appoint a reporting officer who shall be responsible for collecting all relevant data and transmitting it to the appropriate state agencies in a timely fashion. The reporting officer shall transmit the smart growth and affordable housing address list to the superintendent of schools of the municipal school district and to the superintendent of each district or charter school in which local residents were enrolled as of October 1. Superintendents shall provide to the reporting officer a list of each eligible student from the school. The reporting officer shall compile these data into a single list of eligible students, in this chapter called the eligible student list, including the name, address and school district of each eligible student, and transmit the eligible student list to the department of education. The reports and list shall be made in a manner and form to be prescribed by the commissioner of education.

(c) Upon receipt of the eligible student list, the department of education shall certify that all students listed are living in a new smart growth development within a smart growth zoning district or a new affordable housing development. Upon such certification, the department shall calculate the additional chapter 70 aid amount, and the total education cost for eligible students and shall transmit the calculation to the division of local services and to the municipal reporting officer.

(d) The reporting officer shall provide the smart growth and affordable housing address list to the municipality's assessors, who shall be responsible for providing the reporting officer with a compilation of all commercial and residential development comprising new smart growth development in the smart growth zoning district, all affordable housing developments and all vehicles garaged therein. Said compilation shall contain the addresses of each parcel within the zoning district or affordable housing development, the classification code for each parcel, the assessed value of the parcel, the number of units at each address, the number of vehicles garaged at each address, and the excise tax paid on each vehicle. The reporting officer shall transmit the assessors' list to the registry of motor vehicles and the division of local services. The reports and lists required by this paragraph shall be made in manner and form to be prescribed by the commissioner of revenue.

(e) Upon receipt of the assessors' list, the registrar of motor vehicles shall verify the number of vehicles and the excise tax paid on these vehicles and provide that verification to the division of local services. The division shall use these lists to calculate local smart growth and affordable housing excise tax revenues, local smart growth and affordable housing property tax revenues, and local smart growth and affordable housing revenues for education.

(f) Upon receipt of all data and calculations required by this section, the division of local services shall calculate the smart growth and affordable housing school cost reimbursement pursuant to section 2. Subject to appropriation, the commissioner of revenue shall make a single payment to each municipality for the amount of its smart growth and affordable housing school cost reimbursement; but if the appropriation is insufficient to fully fund the cost of the reimbursement, the division shall calculate the percentage of each municipality's reimbursement as a share of the statewide reimbursement, and pro-rate each municipality's reimbursement proportionally.

(g) The commissioner of revenue, in consultation with the commissioner of education, the director of housing and community development, and the registrar of motor vehicles, shall adopt all regulations necessary to carry out this chapter.

Section 4. The commissioners of revenue and education, the director of housing and community development and the registrar of motor vehicles shall annually report on the cost and effectiveness of the reimbursement program. This report shall include, but not be limited to, the number of municipalities which have adopted the provisions of chapters 40R and 40S, the number of eligible municipalities under chapter 40X, the number of smart growth zoning districts in the commonwealth, the number of eligible students per municipality, the number of municipalities receiving the smart growth and affordable housing school cost reimbursement, and the total reimbursement and per pupil reimbursement provided to each municipality. They shall provide the report to the chairs of the house and senate committees on ways and means, the house and senate chairs of the joint committee on housing, the house and senate chairs of the joint committee on community development and small business, the house and senate chairs of the joint committee on education, and the secretary of administration and finance.

SECTION 9. The department shall promulgate regulations to implement chapter 40X no later than December 31, 2020.

Name:	District/Address:
James B. Eldridge	Middlesex and Worcester
Denise Provost	27th Middlesex	1/31/2019
Mary S. Keefe	15th Worcester	2/1/2019
Mike Connolly	26th Middlesex	2/14/2019