The Planning Board has expressed concern with a proposal regarding Duxbury Estates, which is looking to modify its payment schedule for its remaining units due to financial hardship.

Tom Giacchetto, through Duxbury Estates, LLC, presented a proposal to modify his “fee in lieu of payment” schedule to the Zoning Board of Appeals and the Planning Board.

The Inclusionary Housing bylaw requires at least 10 percent of the lots in a multiple unit development to be affordable units. The Bylaw offers an alternative to that requirement in which the “applicant may contribute to the Duxbury Housing Trust Fund to be used for the development of affordable housing in lieu of constructing and offering affordable units within the locus of the proposed development or off-site.” This is the “payment in lieu of” program to which Duxbury Estates, LLC, agreed.

Duxbury Estates is a 45- unit, age-restricted (over 55) townhouse development on Carriage Lane. The company received building permits in January 2007. There are currently 20 units sold and constructed at the development.

Giacchetto suggested three options to modify his payment schedule. The first was to build three affordable units within the development before submitting the first payment of $135,000 and then make no more payments. However, he is still required to provide a total of five units – 10 percent of the total number of units at the development, according to the Inclusionary Housing Bylaw – an obligation from which he is asking to be relieved. His second suggestion was to build three affordable units outside the development, forfeit the payment and only have to build those three units. His third suggestion was to reduce his total payments by 50 percent and pay a new amount of $675,000 at the end of the project.

“I spoke with town counsel and he advised that construction of the affordable units in- stead of the fee in lieu could legally be done, but it is purely discretionary on the part of the Planning Board and Zoning Board,” said Tom Broadrick, planning director. “There is nothing that would compel you to do that.”

The dollar amount of the fee in lieu of payments cannot be changed, although the schedule may be adjusted, according to town counsel. It is a signed contract, according to rules and regulations of the zoning bylaw and a developer would have to get a variance to change that calculation.

Broadrick said building five affordable units within the development may be difficult, as the units must be in- terspersed equally through the market-rate units and cannot be distinguishable from market- rate units. Two affordable units need to be provided before the issuance of the next building permit. One unit must be built by the issuance of the 14th building permit, which repre- sents the 30 percent building stage, another unit at the 22nd permit because that represents the 50 percent building stage, a subsequent affordable unit is required at the 33rd unit, which is the 75 percent stage, and another immediately after that at 34th permit, which is 75 percent plus one stage. The last unit must be provided at the 39th permit, which represents the 90 percent stage.

Duxbury Estates is a 45- unit, age-restricted (over 55) townhouse development on Carriage Lane. The company received building permits in January 2007. There are cur- rently 20 units sold and constructed at the development.

Giacchetto suggested three options to modify his payment schedule. The first was to build three affordable units within the development before submitting the first payment of $135,000 and then make no more payments. However, he is still required to provide a total of five units – 10 percent of the total number of units at the development, according to the Inclusionary Housing Bylaw – an obligation from which he is asking to be relieved. His second suggestion was to build three affordable units outside the development, forfeit the payment and only have to build those three units. His third suggestion was to reduce his total payments by 50 percent and pay a new amount of $675,000 at the end of the project.

“I spoke with town counsel and he advised that construc- tion of the affordable units in- stead of the fee in lieu could legally be done, but it is purely discretionary on the part of the Planning Board and Zoning Board,” said Tom Broadrick, planning director. “There is nothing that would compel you to do that.”

The dollar amount of the fee in lieu of payments cannot be changed, although the schedule may be adjusted, according to town counsel. It is a signed contract, according to rules and regulations of the zoning bylaw and a developer would have to get a variance to change that calculation.

Broadrick said building five affordable units within the development may be difficult, as the units must be interspersed equally through the market-rate units and cannot be distinguishable from market- rate units. Two affordable units need to be provided before the issuance of the next building permit. One unit must be built by the issuance of the 14th building permit, which represents the 30 percent building stage, another unit at the 22nd permit because that represents the 50 percent building stage, a subsequent affordable unit is required at the 33rd unit, which is the 75 percent stage, and another immediately after that at 34th permit, which is 75 percent plus one stage. The last unit must be provided at the 39th permit, which represents the 90 percent stage.

“The stages are all explicit in the zoning bylaw,” Broadrick said.

George Wadsworth, Planning Board chairman, said the affordable housing “in lieu of” calculation is very explicit in the zoning bylaw.

“We are not here to change the zoning bylaw,” he said. “We cannot change it without a Town Meeting vote. It is what it is.”

Giacchetto currently owes a payment of $270,000. Once he makes that payment, he can get the next 12 building permits because the next $270,000 payment isn’t due until the 33rd permit. He could make the next payment and easily get 12 building permits, or can build or buy two single-family dwellings right now at market price and provide them to someone who can only provide a $218,000 mortgage.

“It might be cheaper for the applicant to pay the next $270,000 payment on the fee in lieu agreement rather than to spend $600,000 to buy two market-price dwellings for affordable housing,” Broadrick said.

“There was a completely different market when we got those permits,” Tom Giacchetto said. “We understood going in that we would go payment in lieu of, which made sense at that time.”

Because of the change in market conditions in 2008, the company now finds itself in a financial situation where they cannot make the $270,000 payment on time. Duxbury Estates did not make enough sales on the units in order to keep up with the payments and have made a deal with Rockland Trust that every dollar the company makes on sales must go to pay off the loan it gave to Duxbury Estates.

“When we got the loan called on us, there were not a lot of banks that wanted to deal with us because we were an over-55 development,” Chuck Giacchetto said. “The bottom line is that we still have a significant site loan. We simply do not have the funds the make the payment.”

Various Planning Board members expressed their concern that, once the Giacchettos paid off Rockland Trust, they would walk away from the project, leaving the town without the money owed.

“My concern is that your company, Duxbury Estates, LLC, only has the assets from Duxbury Estates, not from any other project,” said David Uitti, Planning Board member. “If you walk and say ‘sue us,’ there’s nothing to go after.”

The Planning Board voted to continue the discussion regarding the modified payment schedule at the Jan. 27 meeting. The board asked the Giacchettos and their attorney, Bob Galvin, to draft a proposal for their payment modification schedule, to be discussed at the next meeting.

“You have heard from us that there is a certain level of nervousness,” Wadsworth said. “You need to show us we should not be concerned.”