Housing agency greenlights 40B project despite objections by city

Courtesy imageA rendering of the proposed five-story apartment building for the Elks Lodge property on Oak Street in Peabody.

PEABODY — The developers for a large apartment complex at the site of the Peabody Elks Lodge have support from the quasi-state agency tasked with determining feasibility of affordable housing projects, despite strenuous objections from the city.

"I was disappointed certainly (at the decision)," said Mayor Ted Bettencourt. "A project of that magnitude does not fit in that neighborhood."

MassHousing awarded a project eligibility letter to Larkin Real Estate Group, Inc. on March 21. The letter, which is valid for two years, allows the developers to proceed with local permitting in the form of a comprehensive permit that would be issued by the city's Zoning Board of Appeals.

The proposal is for 80 units — 72 apartments in a five-story building with an additional eight units as townhouses — on the Elks property at 40 Oak St. All of the units will be rentals, and 25 percent (20 units) will be deemed affordable under state and federal guidelines.

The development is called the Residences at O'Shea Field.

City officials had sharply criticized the plan to MassHousing, saying it was retaliation by the developers who, sensing they would not receive necessary city approvals for a much smaller condo development at the site, withdrew that plan before it could be rejected and sought to build under the state’s affordable housing law (Chapter 40B) instead.

Two big issues are density and flooding around the existing site, which is almost entirely situated in an established FEMA flood plain, according to the city.

These issues give rise to public safety concerns at adding exponentially more residents in a flood zone, as well as traffic volume and adequate access to the property.

Prior to issuing the letter, MassHousing staff reviewed the site as well as the project designs. Agency officials recognized the city's concerns in their comments, but only said Larkin should address the issues during the local hearing process.

Eligibility factors

The agency said the project appears "generally eligible" under housing subsidy program requirements, and is still subject to final review and approval. That last stamp of approval, however, comes after the local permitting.

Bettencourt said Wednesday the city awaits a move from Larkin now to apply for the comprehensive permit. While he had hoped the city's numerous concerns might dissuade MassHousing from advancing the project, he said he was encouraged by the fact that all those issues were outlined in the project eligibility letter.

In explaining the eligibility factors, the agency noted proposed rents for the 40B units met the 80 percent or less threshold for affordability, based on area median incomes.

Those rates are:

*$1,278 for a studio

*$1,370 for a one-bedroom

*$1,643 for a two-bedroom

*$1,899 for a three-bedroom

The proposed rents for the market-rate units are significantly higher. Two- and three-bedroom apartments, for example, would be $1,950 and $2,500, respectively.

The agency also said the property is suitable for residential use, it's within short walking distance to different amenities, the city's housing production plan identifies it as a logical spot for infill development, similar size buildings exist in the downtown, and there is strong demand for rental units.

And further, Peabody would still need an additional 182 units of affordable housing to achieve the required 10 percent threshold of its housing stock.

As for similar size buildings, MassHousing appeared to treat the downtown as a whole.

The agency acknowledged most of the immediate neighborhood is two and three-family homes, but pointed to five-story buildings on Foster Street, and taller complexes down along Walnut Street — on the other side of the downtown.

Response to city concerns

Flooding concerns were not directly addressed, other than to say the building foundation would be elevated above the existing parking lot at the club, and Larkin should be prepared to address those concerns with the city.

That included "potential risk to future residents, and increased impacts to nearby properties during incidents of flooding. The applicant should address proposed evacuation plans, including provisions for off-site parking, should the site become inundated," the letter stated.

MassHousing also noted it was limited to certain findings and thus had no basis to judge the claim of retaliation as well as concern from the Peabody school board that an influx of new students from the complex would lead to overcrowding in local elementary schools.

The letter clarifies that the site approval is for no more than 80 units at the site and not less than 20 must be designated affordable housing for low- to moderate-income residents.

The ZBA would hold several hearings with input from the public and city departments and then vote on a comprehensive permit.

If the board were to deny the permit, Larkin could appeal to the state Housing Appeals Committee, which could overturn the city’s decision and override any local objections.

Tom Farmer, a spokesperson for MassHousing, had said the agency’s review of the eligibility does not have any money attached to it. Larkin would have to apply separately for financing.

The eligibility letter indicates Larkin intends to secure financing through the New England Fund Program of the Federal Home Loan Bank of Boston.

John Smolak, an attorney representing Larkin, did not return a phone call for comment on this story.

Staff writer John Castelluccio can be reached at 978-338-2677 or jcastelluccio@salemnews.com.

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