Hudson Board of Appeals
Hudson, Massachusetts 01749
Minutes of Meeting – September 4, 2008 page 1
Minutes of Meeting— September 4, 2008
The Hudson Board of Appeals met in the Selectmen’s Hearing Room, Town Hall, Hudson, Massachusetts. At 7:30 p.m., Chairman Lawrence Norris called the meeting to order.
Present: Lawrence Norris, Joe Peznola, Dorothy Risser, Christopher Tibbals, Todd Pietrasiak, James Smith, Aldo Cipriano, Town Counsel, Jennifer Burke, Planning Director and Teresa Vickery, Clerk.
Petition 2008-03, 248-250 Main Street, Deliberative Session
The Board reconvened the deliberative session for Petition 2008-03. Mr. Norris explained the basis for which the ZBA needs to make it’s ruling. He then asked Mr. Petriasiak to inform the Board what he discovered when researching the economics of the project.
Mr. Petriasiak began by explaining that he sought to answer the question, does the over 55 age restriction contribute to the uneconomicability of the project. He then defined uneconomic using local 40B guidelines. He found that any amount less that 15% return of the project cost can be considered uneconomical. The Esplanade can clearly be defined uneconomical as the developers are seeing a 9.58% return, however the original anticipated profit was 11.8% which still makes the project uneconomical. Mr. Petriasiak concludes that if the project was uneconomical to begin with then the self imposed condition of the age restriction does not contribute to the economics of the project.
Mr. Petrasiak believes that the CBRE Reports conclusions are not supported by a complete analysis of the data. He cited that no margin of error can be determined as it is not a statistical report and it was more of a professional opinion.
Mr. Peznola explained that during the last deliberative session he had presented the Board with the six options he believes are available to them. He stated that he is leaning toward two options. One being approval with conditions and the other being a denial because the developer has not proven his case. He went on to explain that that when a Board conditions a project under 40B, the burden is on the developer to prove the case of the project being uneconomical due to the specific condition.
He also took issue with the fact that it was the developer that came up with the 11-month time frame and the CBRE Report had to substantiate the claim. Mr. Peznola argued, along with Avery Associates, that there was not enough data to substantiate the developers claim. Mr. Peznola feels that he does not need to deliberate further, citing that there is no substantiation for the claim of uneconomics.
Mr. Peznola stated that while he feels this is an unconscionable travesty unfortunately the Board cannot consider the concern for the unit owners as a reason to deny the request.
One concern that can be considered is the impact to traffic and parking. The Board has reviewed traffic studies and the parking plan.
He then discussed the issue of local need for affordable housing. He noted that all but three of the affordable units have been sold and that Hudson has met is 10% as required by the state in part by this development. He feels that it can be argued that the local concerns outweigh the local need for affordable housing.
The Board discussed potential findings and decided on the following:
After public hearings on April 8, 2008, May 8, 2008, June 12, 2008, July 10, 2008 and July 31, 2008 and deliberative sessions held on August 14, 2008 and September 4, 2008, the Zoning Board of Appeals considered the following findings:
The Petitioner has standing to bring the Petition and is the Developer of record for the project under the original Petition 2004-2, and;
The request to remove the age restriction condition must be considered by the Zoning Board of Appeals in accordance with 760 CMR 56 as most recently amended, and;
The history of the project as attached as Exhibit A, and;
The ZBA is therefore bound by the 760 CMR 56 to base the answer to the question of whether or not to allow the removal of the age limit on the statutory wording of section 11-c, and;
This section directs the ZBA to consider only “changes in the project~ aspects of ~the project affected thereby”~ for purposes of the basis of any decision the ZBA may come to, and;
The Esplanade Project is a 140-unit age restricted 40 B development having 93 units sold or 66% of which 63 are market rate units and 31 affordable units. The proposed commercial/retail component of the project (12,000 s.f.) has been separated through establishment of a commercial condominium unit and sold to a related entity of the developer, and;
The Esplanade Project has been fully completed since 2004 and the 93 sold units are occupied, and;
The Developer admits in their letter to the Board dated March 28, 2008 that the project is uneconomic and forecasts a loss of $3,217, 061 or a loss of 9.58% of total project cost, and;
The Developer has requested a modification to the Comprehensive Permit to remove the age restriction claiming the project with the restriction is significantly more uneconomic, citing HAC guidance Avalon Cohasset, Inc. V. Cohasset, No. 05-09. The Developer believes lifting the restriction will reduce losses to $2,416,799 or a loss of 7.20%; a difference of $800,262 or 2.38% difference, and;
The Developer provided the Board with detailed financial information relative to what they believe to be extensive marketing efforts, increased cost of soil contamination remediation, and the increased costs due to the increase in the length of time to sell out units from property taxes, construction interest, utilities and property management. The Developer presented information relative to final hard construction costs exceeding estimate by only $45,923. The original hard cost estimate was $24,282,959 or 0.2% growth, and;
The Board finds information relative to additional marketing costs and carrying costs such as property taxes, construction interest and management incurred between the original forecasted sell out time frame of 19 months and the 48 months of sales the Developer had reached at time of application for modification before the Board has no bearing on the analysis. The Developer has admitted the project with and without the restriction is uneconomic. The Developer believes the remaining units will sell eleven months faster (41 versus 52 months) without the restriction claiming under Cohasset that the $800,262 of additional carrying cost should be considered “substantially more uneconomic”, and;
The Board reviewed the Developer’s forecasted costs over the next 41 to 52 months and finds them to be reasonably representative of his costs to date, and;
The Developer’s claim that the project with the condition is “substantially more uneconomic” than the project without the restriction is solely tied to the time difference to sell the remaining units as the carrying costs are known and fairly uniform month to month as presented by the Developer, and;
The Developer presented a report prepared by Steven Kaye, MAI, CRE and John McLaughlin of CB Richard Ellis (CBRE) purporting to substantiate the Developer’s claim that the remaining market rate units would sell eleven months faster without the age restriction in place. Messrs Kaye and McLaughlin did not establish the 11-month differential. As noted in their report “MP Development (the developer) presented the forecast of absorption under both scenarios…”, and;
The CBRE Report speaks to demographics, first time home buyers, age-restricted cash buyers need to sell existing homes, prior sales trends at the Esplanade, decreases in home sales prices, historic available inventory of 55+ condominiums and historic available inventory of single family houses. The report presents the absorption rates for fourteen 55+ condominium developments in the area, and;
The Board engaged John H. Avery, MAI, CRE of Avery Associates to perform a peer review of the CB Richard Ellis study. Mr. Avery presented a report to the Board dated July 9, 2008. Mr. Avery concluded the CBRE report presents an accurate picture of the current negative conditions in the 55+ condominium housing market and accurate demographic data showing “potential significant demand” by non-age-restricted buyers. However, Mr. Avery found the report does not present a clear enough picture of the entire residential market to support the developer’s conclusion regarding the difference in time to sell out the units with and without the age restriction. Mr. Avery reviewed the absorption data of the fourteen area 55+ projects and found several to not be appropriate for inclusion in the
analysis thereby skewing the absorption rates down. Mr. Avery notes that no absorption data was presented for non-age-restricted condominiums. Mr. Avery also states “The Developer has concluded, and CBRE supports, that by removing the restriction a 33% increase in the pace will occur. Without showing actual absorption rates for non-age-restricted developments in the PMA this projection is not supported.”, and;
The CBRE Report purports that 60% of the 93 buyers in the Esplanade are 65-74, 15% are over 85 and 25% are between 55 and 64. The impact to sales of units to persons under 55 and by Mr. Kaye’s assertion, specifically targeting first time buyers within a development that has 93 of the units presently occupied by persons of these ages has not been studied by the Developer. The Board finds this fact could negatively impact sales of unit to non-age-restricted buyers, and;
Mr. Kaye responds to Mr. Avery’s report in a letter to MP Development dated July 28, 2008. Mr. Kaye states, “If they (Mr. Avery) agree that this assumption “may be correct”, then the letter should address the reasons why and the support for the conclusions that were presented in the CBRE Consulting Report”. As per 760 CMR 56.07(2)3, “in the case of an approval with conditions, the Applicant shall have the burden of proving that the conditions make the building or operation of the project uneconomic”. The Board and its consultant clearly do not bear this burden, and;
In the CBRE July 28, 2008 letter, Mr. Kaye does present absorption information for five condominium developments reporting only one absorption rate for an apartment conversion development in Framingham. The letter fails to draw any comparison of this project to the Esplanade without the age-restriction, and;
The Esplanade is now a four year old, established, thriving age-restricted community with over 150 residents in 93 units. These homes were purchased in good faith under the express representation that the project was an age-restricted community. The Board believes the elimination of the age restriction would pit the noble intentions of Chapter 40B against the recognized ability of our senior population to choose to live in a peaceful, segregated community with their peers. This would be a travesty and severe detriment to the current unit owners. However, we find this attempted action by the Developer, as a local concern, evidence that can not be heard as a local concern as defined in 760 CMR 56.07(3)(h)3 as the age restriction is a Use Restriction, and;
The Board has reviewed other possible Local Concerns related to parking and traffic impacts the project with and without the restriction. Reports were submitted by the Developer and the Esplanade residents and reviewed by the Board’s Peer Review Engineer. The Board finds no local concerns that would carry the weight of a local concern in which the health and safety of occupants or~municipal residents are imperiled, the natural environment is endangered, the design of the site and the proposed housing is seriously deficient to a manner or degree that the local concerns would outweigh the regional need for affordable housing, and;
The Board does note that Hudson has surpassed the state mandated affordable housing quota of 10% of its housing stock since the Esplanade was originally approved. Only three affordable units remain unsold in the Esplanade Project. These units are fully completed and having been built under valid building permits are not in peril of being removed from the Massachusetts Department of Housing and Community Development’s Subsidized Housing Inventory. 760 CMR 56.07(3) B.2 state that “a stronger showing shall be required on the Local Concern side of the balance sheet where the Housing Need is relatively great than where the Housing Need is not as great”. The Board believes the converse could be argued in this case where the need for affordable housing is small and in Hudson’s
case actually satisfied. The Board reserves the right to further consider the regulatory implications of Hudson’s SHI status if the Developer were to provide sufficient information to substantiate their claim of an increased pace of sales of eleven months.
Accordingly on September 4, 2008, the Zoning Board of Appeals took the following vote:
Lawrence Norris, seconded by Joseph Panola, made a motion to deny Petition 2008-03 finding that the Developer has not sufficiently substantiated the difference in time to sell out the remaining units and therefore has not established that the project with the condition is substantially more uneconomic than the project without the age restriction. The Developer’s request for modification to the Comprehensive Permit is denied.
Vote: 5-0-0, Unanimous (Dorothy Risser not voting; Darja Nevits and Sara LaFleur not present)
At 9:00 p.m., Joe Peznola, seconded by Lawrence Norris, moved to adjourn.
Vote: 6-0-0, Unanimous