Commonwealth Capital and Sustainable Development

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A steady, long-term rise in prices is the best evidence of the need for increased housing development in Massachusetts. Despite a doubling of multifamily housing starts in the past year, most experts believe overall housing development needs to increase dramatically for the market to regain equilibrium. Spiraling housing costs affect the Commonwealth’s economy in many ways. Most obviously, they drive up the cost of living and doing business in a state that already struggles to maintain its competitiveness due to a high cost structure.

The primary authority for land use decisions in Massachusetts rests with municipal governments, which control zoning regulations. Poor local zoning regulations are the biggest reason the market fails to provide enough housing. These regulations have resulted in sprawling development, reduced density, and less open space. In addition, sprawl increases the cost of providing critical infrastructure like roadways, transit, water, and sewer because they must be provided over a larger, more diffuse area.

Given our long history of home rule, the Commonwealth faced the challenge of encouraging municipalities to make zoning changes while at the same time respecting home rule. The Massachusetts Office of Commonwealth Development (OCD), which oversees transportation, housing, and environmental agencies, looked to achieve goals in three major policy areas through zoning and other changes:

• promoting higher density development or redevelopment in urban and suburban downtown areas, as well as new growth centers
  
• encouraging municipalities to be partners in protecting water supply, sewer infrastructure, and other critical environmental resources
  
• coordinating local actions to ensure optimal use of resources through regional planning.

To achieve these goals within the confines of home rule, OCD has devised a program, dubbed Commonwealth Capital, which ties state funding to evaluations of local land use regulations. The Commonwealth’s transportation, environmental, and housing agencies control grant programs totaling about $50 million annually and more than $400 million in loan programs. When municipalities apply for these funds, they fill out a onepage application that includes 24 criteria broken into eight categories representing state sustainable development priorities. A municipality’s score on the Commonwealth Capital application counts for 20 percent of each individual program evaluation, so that how well aligned a project is with state development priorities could well determine whether it is funded. Commonwealth Capital scores are posted on a website, allowing communities to compare their score against other communities and reinforcing the message that adoption of zoning changes makes municipalities better able to compete for state funds.

Since the Commonwealth Capital program was implemented at the start of fiscal year 2005, 180 communities have applied for grants and loans. An analysis of 150 of these communities shows real movement toward local pro-growth policies that are consistent with environmental priorities and the construction of new housing. In the first year, municipalities have made more than 375 commitments to implement policies like inclusionary and mixed-use zoning, open space and recreation projects, and integrated water resources management plans.

The Future of Commonwealth Capital

Building on its experience during the first year of Commonwealth Capital, OCD plans several refinements to the program. The first-year criteria largely rewarded smartgrowth capacity (the presence of certain land use regulations). In the future, the criteria will increasingly reward actual performance, such as permitting of development under the new regulations. Among potential changes under consideration are the following:

• including other state grant and loan programs under Commonwealth Capital
  
• utilizing an electronic application
  
• increasing the weight assigned to the Commonwealth Capital score in the application review process
  
• adding new criteria such as transportation to the application
  
• addressing problems with the current criteria to even the playing field between urban and rural communities.

Commonwealth Capital is creating partnerships with municipalities that promote sustainable growth while respecting the Commonwealth’s long tradition of home rule.