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State may deny grants to communities that don’t comply with new MBTA housing law

The grants combined provide tens of millions of dollars to communities for an array of local planning and development programs

Coolidge Corner in Brookline could see an overhaul amid proposed zoning rules mandated by the state's new MBTA Communities Law, which requires new denser zoning in cities and towns served by the MBTA.David L. Ryan/Globe Staff

Massachusetts housing officials on Thursday added to their arsenal of financial penalties for communities that don’t comply with an ambitious new state law to boost housing development near transit stops, while granting them one big compromise that may make it easier to meet its requirements.

The new rules threaten towns that avoid rezoning under the new law with losing out on more than a dozen state grant programs, which combined provide tens of millions of dollars to communities for an array of local planning and development programs. That’s on top of two major programs — MassWorks and Housing Choice — from which state officials could already withhold money, as well as the threat of legal action from community groups and the attorney general.

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The new guidance marks the state’s latest effort to compel municipalities to go along with the MBTA Communities Act, the most consequential housing law adopted in the state in more than 50 years. It requires 177 communities across Eastern Massachusetts that are served by the MBTA to pass new zoning to create denser housing.

Advocates say it could unlock space for more than 100,000 new units at a time of a severe shortage. But since the outset, officials in some towns have toyed with the idea of ignoring the law, and absorbing any financial penalty.

Thursday’s move was designed to deter that, said state Housing Secretary Ed Augustus.

“If you say no, there’s now [15] different programs that a community might lose access to,” he said. “That impact[s] all sorts of other things that the community might be trying to get done.”

The new rules also contain an important change intended to defuse a frequent sticking point with the law in cities and towns immediately around Boston. Communities can now require that a portion of the zoning created under the law require ground-floor commercial space, which some residents see as a step to protect existing small businesses from being displaced by residential-only development. Previously, communities could encourage developers to add commercial space, not require it.

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State housing officials have worked in recent months to make clear that MBTA Communities is not optional. But they have been careful not to adopt an overtly confrontational approach on an issue — zoning — that has long been handled at the local level in Massachusetts. (While state officials ultimately have the legal authority to dictate zoning rules, they generally choose not to do so.)

The grant programs added to the enforcement list Thursday are relatively small, amounting to a few million dollars a year each, and have helped fund anything from cleaning polluted sites to developing co-working spaces. But they can be valuable to small communities that are trying to piece together financing for complex real estate or infrastructure projects.

“You can look at it as a carrot or a stick, but each of these programs the state has put on the table is important,” said Rachel Heller, chief executive of the Citizens’ Housing and Planning Association, a housing advocacy group. “I’ve seen the impacts of these firsthand, and you can imagine that communities do not want to give up any of them.”

Inner-ring suburbs with significant commercial districts — such as Newton and Brookline — have been complaining for months that the original guidance only allowed communities to incentivize first-floor commercial space in their zoning districts, not mandate it, a stipulation they feared could harm small businesses.

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Opposition groups in those communities have frequently used this threat to argue against rezoning altogether. The issue has been a huge flashpoint in Brookline, for example, where town planners had proposed to rezone the main business district along Harvard Street. Opponents feared the law would drive out local businesses, and were so adamant that town officials scaled back the plan.

Newton is planning a big rezoning effort around its village centers as part of its approach to the MBTA Communities multifamily housing law. Should the plan pass the City Council, the 13 village centers would allow for several stories of multifamily housing by-right, at least in part undoing pieces of Newton's decades-old zoning code. Jonathan Wiggs/Globe Staff

“Some of our most cherished and vital local businesses, such as Brookline Booksmith, could be displaced if we incentivize redevelopment through adoption of zoning based on the guidelines as written,” Brookline by Design, a group that has advocated for a less ambitious rezoning plan, argued in a letter to the town early this year.

Now the new rules will allow up to a quarter of the units zoned under the law in each community to be located in mixed-use districts, but the state will have to approve those proposals before they are voted on by local officials to ensure towns don’t include rules that make it too hard to build housing.

“This is a change that was really needed,” said Greg Reibman, president of the Charles River Chamber of Commerce, a group that represents businesses in Newton, Needham, Watertown, and Wellesley. “We desperately need new housing, but we also want that housing to be near our commercial centers so we can have vibrant, walkable neighborhoods.”

The guidance is also strict: While cities and towns can now count some potential housing in mixed-use zones toward their unit goals, they can’t craft zoning that would limit the feasibility of that new housing. For example, towns won’t be allowed to dictate smaller apartments in those zones — a strategy often used to prevent bigger units suitable for families — or to implement minimum parking requirements, which often drive up the price of new development.

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But there was some concern among housing advocates that the new mixed-use rules could be used as something of a “poison pill” to prevent development in key corridors. Mixed-use buildings are financially complex, they note, and mandating them could make it prohibitively costly to build housing in those areas.

“The original guidelines had it right — the original guidelines allowed for incentives to build commercial space without mandating it,” said Heller. “That’s the way to both foster these vibrant neighborhoods and make building economically feasible.”

Heller said Lexington’s approach of adding a “height bonus,” which allows developers to build higher in certain areas if they build commercial space on the ground floor, is a better model because it leaves the decision to include commercial space in a given spot up to its developer, who will have a better sense of what works financially.

Community leaders welcomed the tweak as a victory, but one that may complicate the planning process as some rush toward an impending end-of the year deadline. The 12 communities with access to the MBTA’s main rapid transit lines are deep into the planning process, and may now have to recalculate their efforts based on the new rules.

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“We had, essentially, already solved the puzzle in Newton by expanding our efforts so that we could rezone the village centers and still have the housing we need to meet the law,” said Deborah Crossley, a city councilor who chairs Newton’s zoning and planning committee.

Ultimately, she said, the change is good, and Newton had been advocating for it because communities want apartments and business in the same area.

But, “this may hurt us logistically and politically. Because we may have to consider recalculating at this late hour, and then still sell the new zoning to the public.”

Stephanie Ebbert of the Globe staff contributed reporting.

Newton is planning a big rezoning effort around its village centers as part of its approach to the MBTA Communities multifamily housing law.Jonathan Wiggs/Globe Staff

Andrew Brinker can be reached at andrew.brinker@globe.com. Follow him @andrewnbrinker.