Posted by Ed on June 4, 2007, 2:45 pm http://www.boston.com/news/local/articles/2007/05/31/whos_profiting/ Who's profiting? The loft-style apartments in Billerica, 324 of them, are tucked Outside the imposing gates, though, past the signs and down a bumpy Seven years ago, a developer bought the land where the housing Now, the property has changed hands again. The finished Villas, "Someone is making an awful lot of money on these projects," said Others are asking the same question. Michael Rosa, chairman of the "We need to take a look at all the 40Bs in the town, to make sure the Located in the Riverhurst neighborhood, the Villas project started in Veo initially told neighbors he planned to demolish the houses and Outraged, Town Meeting members rejected his request. But Veo made good on his housing plan. By agreeing to set aside 25 Six days later, he sold the land and permit for $5.4 million. "It looks like he made millions," Greene said. Typically, what developers make on a real estate deal is no one's But in Chapter 40B developments, profits are a community concern, Because 40B developers can control their project costs, the state has Last year, as Massachusetts Inspector General Gregory W. Sullivan Speaking generally, Sullivan says, this practice is an abuse of the "It's a massive fraud on the public," Duxbury Selectman Jon Witten, a Witten did not comment on the Villas development in Billerica. And a Sullivan has advised communities to be on the lookout for In Billerica, officials say they are astounded at the amount of money "As far as I can see, the only thing all this has done is made a A spokesman for Sullivan said the inspector general has no comment on Laura Veo, David Veo's wife and business partner, told the Globe State records show that within a year of selling their Riverhurst The Veos' lawyer, Robert Buckley, of the Burlington law firm Riemer & Brandt Bowden, a Hanover Co. executive, said his firm has complied State records show that after the Hanover Co. bought the Veos' This past February, when the complex was complete, the company sold When contacted by the Globe, UBS spokesman Kris Kagel said, "We are According to Billerica officials, those requirements include making Many in town are upset over the Villas, and some hope local and state Al Ramos, vice chairman of the panel, called the financial history of "It sickens me to see how our town is getting exploited," he said. Committee chairman Ronald Diorio said the group will meet in June to Maryann Ardell can see the four-story complex from the kitchen window After the Villas were built, she said, her home's value decreased, "My taxes have been going up, $220 to $300 a year, in the last couple Christine McConville can be reached at cmcconville@globe.com.
24.34.144.49
Where is your tax money going!!!!
Interesting - Link and full text included
An affordable project begun on an $800,000 parcel sells for $80
million. But Billerica hasn't seen any money.
By Christine McConville, Globe Staff | May 31, 2007
behind glossy black gates. Gold-embossed signs announce "The Villas
at Old Concord Road."
road, there is another side of this proudly blue-collar town that is
neither proud nor happy about the villas and the impact of Chapter
40B, the state's affordable-housing law.
complex stands for less than $1 million. On July 24, 2003, he won
approval to build on the parcel under Chapter 40B. A week later, he
sold the property for $5.4 million.
glossy black gates and all, just sold for $80 million, raising more
than a few eyebrows in town, and beyond, for its stunning turnaround.
state Representative William G. Greene Jr., a Billerica Democrat who
has followed the history of the development, where some one-bedroom
units rent for $1,800 a month, since it was first proposed six years
ago. "I want to know why we aren't seeing any of it."
Billerica Board of Selectmen, said he plans to bring up the Villas
and other local Chapter 40B developments for discussion at an
upcoming selectmen's meeting.
developers are complying with profit limits" under the affordable-
housing law, Rosa said.
2000 when David Veo, then a Belmont home builder, began buying houses
and vacant lots in the area near the Route 3 north exit.
build an office park on a 9-acre parcel that he had assembled. But
because local zoning allows only dwellings on the property, he needed
the town's permission to put offices there. Several months later, at
a crowded Town Meeting, Veo's lawyer said if Town Meeting didn't
approve the zoning change, Veo would build a low-income housing
complex on his land, according to town officials.
percent of the proposed units for low- and moderate-income people, as
called for under Chapter 40B, he was able to bypass various local
zoning restrictions. In July 2003, he was given a comprehensive
permit to build 180 apartments, on the parcel that had cost him about
$800,000 to assemble, according to state records.
business but their own.
because the developer has received a reprieve from local zoning
rules, which is considered a public subsidy. In accepting that
subsidy, the developer agrees to limit his or her profits to no more
than 20 percent; in most cases, the developer's excess profits are
supposed to be handed back to the community, and used to create more
low-cost housing.
imposed strict guidelines for those costs. When stating the value of
the project's land, for example, the developer is required to use the
property's pre-permit appraised value, because the permit -- as
evidenced in the Villas project -- tends to add tremendous value to
the land.
began investigating the profits of various 40B developments, he
noticed a pattern that he has since called "profiteering." The
original developer would pay a certain sum for a piece of land, then
obtain the 40B permit. That developer sells the permitted land at a
significant markup to a second developer, who then uses the marked up
price in calculating the project costs.
40B law, because two sets of developers extract incremental profits
at taxpayers' expense. The first developer profits from obtaining and
selling the permit, and the second developer bolsters the overall
project costs -- and allowable profits -- with the higher land cost.
lawyer who has helped dozens of communities fight 40B developments,
said of such practices.
spokesman for Sullivan said the inspector general had no comment.
profiteering when determining a project's profits, and several
municipalities have taken developers to court, accusing them of
withholding money owed to the community. Some cities and towns have
also begun issuing "nontransferable" 40B permits.
that has changed hands in the Villas project, and wonder why none of
it has come back to the town. With the Villas, the town increased its
affordable-housing stock by 81 units, but it's still short of the 10
percent threshold set by the state for communities to be exempted
from 40B rules.
couple of developers rich," Rosa said.
the Villas development.
recently that she and her husband did not make any money on the deal.
She refused to comment further, and said her husband would not
discuss the deal either.
parcel to the Hanover Co., a Texas-based real estate investment firm,
the Veos bought a $2.5 million home in Acton.
Braunstein, said in an interview last year that his clients
spent "hundreds of thousands" of dollars to get the permit. He did
not respond to several calls seeking comment for this story this
month.
with the terms of the 40B permit, but he refused to discuss the
matter in any detail.
parcel, it acquired additional land and was able to modify the
accompanying permit to encompass a larger building area and add 144
apartments to the original 180.
it for $80 million to 4 Riverhurst Road Apartment Investors LLC, a
private real estate investment trust managed by the international
financial services firm UBS.
aware of the property's 40B status, and we will comply with the local
requirements."
all financial records available for a review of the entire
development.
officials will take a closer look at the financial aspects of the
project. Two years ago the town formed a 40B Audit Committee, which
recently released its first report. Some residents want the panel to
audit the Villas project next.
the development "astounding."
determine its next steps.
of her home on Kirk Road, where she has lived for 33 years.
but the taxes she pays to the town have continued to climb.
of years," she said. "There's something wrong here. Why should their
gain be our loss?"
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