Melrose 40B Issues and Responses
As we watched public comment and community reaction to various development projects, ours and those of others, in recent years, we have often wanted to enter the conversation. However the forum was never appropriate, or adequate. Here we have assembled a collection of issues that seem to be repeated often, but rarely addressed head on. Our hope is that this page is helpful to those that are truly seeking to understand these controversial and nuanced issues. If a general primer on affordable housing in Massachusetts is what you’re looking for, check out this series of pages we’ve put together.
Chapter 40B
We understand why the term 'affordable' can sometimes be misleading, especially given the high cost of living in our region. When we refer to 'affordable' units in our development projects, we are adhering to a specific definition set by the U.S. Department of Housing and Urban Development (HUD) under programs like Chapter 40B.
Here's how 'affordable' rents are determined:
- Set by HUD: The prices for affordable rental units are established annually by HUD, not by the developer, the municipality, or the state.
- Based on Area Median Income (AMI): The vast majority of Chapter 40B rental developments, including ours, are held to an affordability level for Lower-Income households, meaning those earning less than 80% of the Area Median Income (AMI).
- Regional Fair Market Rent (FMR): Melrose is part of the Boston-Cambridge-Quincy, MA-NH HUD Metro Fair Market Rent (FMR) Area. This region consistently has one of the highest FMRs in the country. This is primarily due to a robust job market, limited housing supply, and strong demand, all of which drive up market-rate housing costs.
- Relative Affordability: The 'affordable' designation is defined in comparison to these very high market-rate rents that are set by current economic forces. While these rents may still seem high, they are significantly lower than equivalent market-rate units in our area, making them accessible to a broader range of incomes as intended by the law.
It's common for residents to have concerns about local control over development and how state laws might impact established zoning regulations. This is a key area of discussion, particularly when it comes to Chapter 40B.
The Purpose of Chapter 40B:
Chapter 40B was enacted because, historically, local zoning bylaws across Massachusetts often led to very restrictive development patterns, primarily allowing only single-family homes on large lots. This created a significant shortage of housing, particularly for diverse income levels, and drove up housing costs statewide.
Therefore, a core purpose of Chapter 40B is to provide a mechanism that allows for the creation of affordable housing even where local zoning would otherwise prohibit it. It serves as an alternative pathway to promote the development of much-needed housing supply.
Local Control and the 'Safe Harbor' Provision:
The law also includes a provision known as 'Safe Harbor.' This allows municipalities to retain greater local control over housing development once they demonstrate they have made substantial progress in addressing the regional housing shortage. Specifically, communities achieve 'Safe Harbor' status when at least 10% of their total housing stock is listed on the state's Subsidized Housing Inventory (SHI) or they increase their SHI by .5% in one year or 1% in two years.
Once a community reaches this 10% threshold, it gains the ability to deny Chapter 40B development applications based on local zoning concerns without the automatic appeal process that typically applies. Melrose is actively working towards this 10% goal and is making progress, it currently has 8.28% of its housing stock listed on the SHI.
Ongoing efforts, including developments that utilize Chapter 40B, are part of the broader strategy to reach the 10% SHI goal which would allow Melrose to exercise more localized control over future housing projects.
The core principle behind 40B's affordable unit requirements is the critical role of private investment in meeting the state's housing needs. If the law were to mandate a much higher percentage, or exclusively affordable units, it would significantly undermine the financial viability of development projects.
Real estate development is expensive and carries substantial risk, especially in Massachusetts. Developers rely on private investment, and those investors need to see a reasonable return on their capital. They achieve this by selling or renting market-rate units, which effectively subsidize the creation of affordable units. Mandating too many affordable units would narrow profit margins to a point where private developers would not be willing to undertake the projects.
The current percentages, typically 20-25% affordable, represent a carefully considered balance. They have historically proven to be a sufficient incentive to encourage development across various economic conditions. This approach ensures a pipeline of housing construction, providing both market-rate and essential affordable homes, which is crucial for addressing Massachusetts' overall housing shortage.
Since all the units, including the market rate units, are listed on the cities SHI, and the threshold for safe harbor is 10%, each 40B rental development, moves the city closer to safe harbor. While it might seem odd that market-rate units contribute to an affordable housing metric, this is a deliberate design choice with several goals:
- Incentivizing Overall Housing Production: The law aims to stimulate all housing construction in communities with a housing shortage. Counting all units offers a stronger incentive for municipalities to approve developments, providing a faster path to safe harbor for them and more housing production to address the shortage.
- Addressing the Broader Housing Crisis: Massachusetts needs more housing across all income levels. Increasing overall supply, including market-rate homes, helps ease pressure on housing costs generally.
- Encouraging Town Cooperation: The "safe harbor" gives towns a concrete goal. By including all rental units, towns can reach this protective status—where local zoning control is largely restored against new 40B applications—more quickly, encouraging them to approve projects that include affordable units.
The belief that only homeowners put down roots in a community overlooks the diverse housing needs of modern residents. Apartments are crucial for creating an inclusive, intergenerational community. They allow older residents to downsize and stay in the community they love as a 2023 study by the Joint Center for Housing Studies of Harvard University notes that more adults live in multifamily buildings as they age to seek amenities and reduced maintenance. At the same time, apartments offer a viable option for young people who grew up here but can't afford a house, helping Melrose retain its local talent, a trend supported by this 2024 Lending Tree survey. This diversity in housing options creates a more resilient community for everyone.
Furthermore, a growing number of people, particularly younger generations, are choosing to rent as a long-term lifestyle. This shift is driven by a desire for financial flexibility and a less permanent living situation, as noted by Arbor Research, and it challenges the traditional view of homeownership as the only path to a stable life. While a 2025 report from Boston Agent Magazine notes that Boston ranks low for millennial homeownership, these renters are active community members who support local businesses, participate in events, and contribute to the social fabric of the neighborhood. A mix of housing types, including apartments, is key to ensuring that everyone—regardless of their housing status—feels welcome and has a place to call home in Melrose.
The provision requiring a certain percentage of 3-bedroom units in 40B developments is not part of the original 1969 Chapter 40B statute itself. Instead, it's a requirement that was introduced later through regulatory changes by the Department of Housing and Community Development (DHCD), now known as the Executive Office of Housing and Livable Communities (EOHLC).
Purpose of the Provision
The purpose of this provision is explicitly stated in the regulations and related guidance from EOHLC:
- To meet the housing needs of families with children: The primary goal is to ensure that affordable housing developments cater to the diverse needs of households, including families who require more space. Without such a requirement, developers might overwhelmingly build and local boards might tend to encourage smaller units (studios, one-bedrooms, two-bedrooms) because they are often less expensive to construct and market and have less of a fiscal impact to the town budget.
- To prevent housing discrimination against families: While not explicitly framed as "anti-discrimination" in every sentence, the underlying intent is to ensure that affordable housing opportunities are available to families of all sizes and that developments do not inadvertently exclude families with children due to a lack of adequately sized units.
- To address the shortage of family-sized affordable units: There has long been a recognized shortage of affordable housing suitable for families in many Massachusetts communities. This provision aims to encourage the production of these larger, family-friendly units within the 40B framework.
Infrastructure Impacts
Traffic impacts are a very difficult concept to understand. They make heavy use of statistics and modelling, and often the results feel counter-intuitive. While it is generally the case that more people means more cars in an abstract sense, that is not the whole story.
First of all, it is true that the Melrose of today is a very car dependent place to live. That is not a function of human nature or something that is a fixed feature of the geography. There was a time when Melrose was a very transit friendly place. One of the key features of that time was that housing was concentrated around the transit nodes. The outer areas of Melrose where very sparsely populated. The people who lived in those outer areas chose to live there for their own reasons, and those that relied on public transit chose to live near the center of town. That is still true today. While it would probably be true that someone who lives in a single-family home a mile or more away from an MBTA station or other amenities would not represent the likely tenant of one of these buildings, it’s also true that there are other people, who for their own reasons, by choice or circumstances, depend on other forms of transportation. It is also true that Gen Z and Millennials rely on car travel less than older generations and evidence suggests that due to digital connectivity, the rise of ride sharing and car sharing, economic factors, and environmental concerns, that trend will continue even as they age. See this Federal Highway Administration study for in depth analysis.
Another fact that may be counter intuitive is that creating more parking spaces is actually the thing that would impact traffic the most in the end. Making parking easy, cheap, and readily available will encourage people who own cars and prefer car travel to move to the area. While there is nothing wrong with that, transportation friendly, amenity rich locations are not the places where that should be incentivized. Making it harder and more expensive to own a car will decrease the number of cars on the road, and ultimately improve traffic. The recent MACP update to their previous studies, Perfect Fit Parking Initiative, Phase 4 concluded that “the same three variables explain most of the variation in parking demand: parking supply, transit access to jobs, and housing affordability. Increased parking supply again was the dominant factor associated with increased parking demand, with each additional parking space per unit associated with an increase of 0.25 parked cars per household”.
The concern about a development overwhelming existing water and sewer systems is a valid and frequently raised issue. However, municipalities like Melrose have robust processes in place to address these concerns.
Firstly, as part of the standard permitting and due diligence process for any new development, comprehensive flow and capacity tests are universally required for both water and sewer infrastructure. These aren't just minor checks; they involve detailed engineering analyses, modeling, and often real-world flow measurements to assess the existing system's ability to handle the projected increase in demand from the new residents or businesses.
The results of these critical tests are thoroughly reviewed by the DPW. If the analysis identifies any existing deficiencies or areas where the system's capacity would be exceeded by the proposed development, the developer is typically required to implement mitigation measures. These could include:
- System Upgrades: Funding and constructing necessary upgrades to water mains, sewer lines, pump stations, or even contributions to wastewater treatment plant capacity.
- On-site Solutions: Implementing on-site retention or treatment systems for stormwater to reduce peak flows into the municipal sewer system.
- Phased Development: In some cases, development might be phased to allow for infrastructure improvements to occur concurrently.
The concern that new housing developments, particularly multi-family projects, will overwhelm local school systems is a very common and understandable one. It's often fueled by anecdotal evidence or assumptions about family size. However, this is a topic that has been extensively studied, and robust data consistently provides a different picture than popular perception.
In the current Melrose Housing Production Plan (HPP) p.66 notes that "multifamily and mixed-use development has not been the main contributor to increases in Melrose’s school population… instead, most of the growth in the school population has occurred as a result of families moving into the many single-family homes in Melrose." This phenomenon is well-documented: as older families or "empty nesters" move out of single-family homes, they are often replaced by younger families with school-aged children, leading to a significant increase in student enrollment from existing housing stock.
Beyond Melrose's specific data, numerous studies at the regional and national level corroborate these findings:
- Regional Planning Agencies: Organizations like the Metropolitan Area Planning Council (MAPC) in Massachusetts have published detailed analyses on this topic. Their research consistently shows that multi-family housing, especially one- and two-bedroom units typical in transit-oriented developments, generates significantly fewer school-aged children per unit compared to single-family homes. For example, MAPC's data often indicates that larger single-family homes contribute a much higher ratio of school children per unit.
- Academic Research and Consulting Reports: Various academic studies and reports by consulting firms specializing in housing and demographics have analyzed student generation rates. These studies almost uniformly conclude that student generation rates for multi-family units, particularly apartments, are substantially lower than for single-family homes. This is often because multi-family units are more frequently occupied by young professionals, empty nesters, and smaller households without children, or with very young children not yet in school.
- "Housing and School Children" Reports: Many planning departments and school districts across the U.S. commission or conduct their own "student generation rates" studies. These often find that studios and one-bedroom apartments generate very few, if any, students, while two-bedroom units generate a small number, and three-bedroom+ units in multi-family buildings still generate fewer than single-family homes of comparable size.
Cost to Melrose
The idea that commercial space is universally "better" for a city's tax base because it's taxed at a higher rate is a common misconception, and it often doesn't tell the whole financial story. While it's true that in Massachusetts, and specifically in Melrose, the commercial tax rate per $1,000 of assessed value is indeed higher than the residential rate, the actual revenue generated is determined by more than just the rate.
Here's why the full picture is more nuanced:
- Tax Rate Application: In Melrose, as with most municipalities in Massachusetts, the tax assessment is based on the classified use of the square footage. So, if a building is 80% residential and 20% commercial, 80% of its assessed value will be taxed at the residential rate, and only 20% at the commercial rate.
- Assessed Value is Key: The most significant factor is the total assessed value of the property. While commercial rates are higher, commercial properties in the Greater Boston area, and often in towns like Melrose, frequently have a lower assessed value per square foot compared to well-located residential properties. This lower valuation can significantly offset the higher commercial tax rate. The demand for, and thus the market value of, residential units in desirable, transit-oriented communities often far outpaces that of many types of commercial space.
- Real-World Evidence from Redevelopment: When properties previously used for solely commercial purposes are redeveloped into residential or mixed-use predominantly residential, they often lead to a considerable increase in the overall tax revenue generated from that specific parcel. This is because the new residential use typically commands a much higher assessed value, even if taxed at a lower rate per $1,000.
- Efficiency of Development: Furthermore, compact, well-located residential and mixed-use developments, especially those near transit, often represent a more fiscally efficient use of land for a municipality. Studies by organizations like the Smart Growth America and the Metropolitan Area Planning Council (MAPC) frequently highlight that dense residential and mixed-use developments generate more tax revenue per acre and demand less in terms of new infrastructure and services (like roads, pipes, and distant police/fire coverage) compared to sprawling single-use commercial or residential developments.
While it's often asserted that condos generate more tax revenue and cost the city less to support than rental apartments, the reality is nuanced.
Tax Revenue: Condos generally yield a "condo premium" in tax revenue. This is because homeownership benefits, like potential appreciation and tax deductions, translate to higher market values and thus higher assessed values and property taxes compared to identical rental units.
Municipal Costs: Most municipal service costs are largely unaffected by ownership structure:
Emergency Services, Infrastructure, and Refuse Collection costs are driven by factors other than whether units are owned or rented. Multi-family developments, regardless of ownership, typically contract for their own trash and recycling.
School Costs: This is the primary area of potential difference, but its impact is minimal. Research from sources like the Melrose Housing Production Plan and MAPC consistently shows that new multi-family housing (both rental and condo) has a surprisingly low impact on school enrollment. The primary source of new students comes from families buying existing single-family homes. A 2020 NAHB study found that in Massachusetts new owner-occupied condo units (recent movers) generated a negligible number of school-aged children, while renter-occupied units generated approximately 0.126 children per unit.
Conclusion While condos may offer a modest "premium" in tax revenue, and potentially a very slight reduction in school-related municipal costs compared to an identical rental development, most municipal service costs remain largely unchanged. Additionally, for Melrose, who has not yet reached its 10% SHI threshold to gain more control over 40B development, the added incentive of having all rental units count vs only the deed-restricted affordable units in a condo project may outweigh this small potential difference.
The concern that new development will cost the city more in services than it generates in tax revenue is a frequent point of discussion. However, numerous independent studies and analyses consistently conclude that new development, particularly dense, transit-oriented, and mixed-use projects like those typically found near downtown and transportation nodes, provides a net positive fiscal impact to municipal finances.
These studies move beyond the simplistic assumptions of some early studies and AI generated analysis and, instead, conduct detailed examinations of both direct tax revenues and the actual costs of providing services to new residents and businesses. Here's why they consistently find a net positive:
- Higher Tax Yield Per Acre: Dense development, even if predominantly residential, generates significantly more tax revenue per acre compared to low-density, sprawling development. This efficiency of land use means more taxable value in a smaller footprint.
- Efficient Service Delivery: Providing municipal services (police, fire, EMS, road maintenance, trash collection, utilities) is more efficient and less costly in compact, walkable areas. Services can be delivered to more units and residents within a concentrated area, reducing travel times and infrastructure needs compared to dispersed development.
- Existing Infrastructure Leverage: Downtown and transit-oriented areas typically already have robust infrastructure (water, sewer, roads, sidewalks) in place, which means new developments in these locations often require minimal new public investment compared to development on greenfield sites.
- Demographic Factors: Residents of multi-family housing, particularly apartments and condos in transit-oriented locations, tend to be younger professionals, empty-nesters, or smaller households, generating fewer school-aged children per unit than single-family homes. School costs are often the largest single municipal expenditure, so this demographic profile significantly reduces the fiscal burden.
- Economic Multipliers: New housing brings new residents who spend money locally, supporting existing businesses and potentially attracting new ones, thereby bolstering the local economy and commercial tax base indirectly.
Follow the link below for an index of studies whose findings support these conclusions.