“There can now be little doubt that our communities have been defrauded of tens of millions of dollars by unscrupulous developers,” Sen. Hedlund said. “We should move swiftly to ensure that our communities are able to recover this money.”

The report, which concludes a months-long investigation by the committee at the request of Sen. Hedlund, also determined that the Department of Housing & Community Development has failed to properly monitor the projects and abused the regulatory process to exclude public debate and adopt 40B rules that unfairly favor private developers.

During a press conference on the report held at the State House, Inspector General Gregory Sullivan said DHCD’s response to the problems identified by his office has been to essentially legalize the troubling practices.

“It would be like saying you fixed the speeding problem by raising the speed limit to 80 miles per hour,” Inspector General Sullivan said.

The report specifically urged the Legislature to consider adopting a bill filed by Sen. Hedlund at Inspector General Sullivan’s request that would toughen the cost certification process and increase penalties for those developers who try to game the system. The report also indirectly endorsed bills filed by Sen. Hedlund that would limit the allowable density of affordable housing projects, and require DHCD to compile, maintain and update a list of all 40B projects and their progress.

“I am hopeful that with this committee’s backing, we will see movement on my bills shortly,” Sen. Hedlund said.

The report also scolded DHCD for establishing new policies through the guideline process, which does not require a public hearing. The committee urged DHCD to revoke recent guideline changes that allow developers to build more than 160 units on a single acre, that prevent local zoning boards from being able to reduce project size, and that guarantee affordable housing developments a 20% profit margin on projects.

Sen. Hedlund did respectfully disagree with one finding of the committee, that

Chapter 40B has been an “innovative and effective method” to build affordable housing.

“The fact is, the state remains at the bottom of the nation when it comes to affordability, with 40B generating three high-priced housing units for every marginally affordable unit built,” Sen. Hedlund said.  “The Chapter 40B program remains ‘broken’ and must be replaced with a housing program that actually builds affordable housing without providing windfall profits for private developers.”

To download the report, click here.