Middleborough v. Housing Appeals Committee

• Decision Date: 20 July 2007
• Docket Number: SJC-09808.
• Citation: 449 Mass. 514,870 N.E.2d 67
• Parties: TOWN OF MIDDLEBOROUGH & another<SMALL><SUP>1</SUP></SMALL> v. HOUSING APPEALS COMMITTEE<SMALL><SUP>2</SUP></SMALL> & another.<SMALL><SUP>3</SUP></SMALL>
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

870 N.E.2d 67

449 Mass. 514

TOWN OF MIDDLEBOROUGH & another¹ v. HOUSING APPEALS COMMITTEE² & another.³

SJC-09808.

Supreme Judicial Court of Massachusetts, Plymouth.

Argued March 8, 2007.

Decided July 20, 2007.

Jonathan D. Witten, Duxbury (Barbara M. Huggins with him) for the plaintiffs.

Pierce O. Cray, Assistant Attorney General, for Housing Appeals Committee.

Joseph J. Czerwonka, Fall River, for Delphic Associates, LLC, was present but did not argue.

Paul D. Wilson & Benjamin B. Tymann, Boston, for Citizens' Housing and Planning Association & others, amici curiae, submitted a brief.

David S. Weiss & Michael S. Rabieh, Boston, for Fairfield Residential LLC & others, amici curiae, submitted a brief.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, & CORDY, JJ.

MARSHALL, C.J.

We consider in this case whether a financing commitment given under the New England Fund of the Federal Home Loan Bank of Boston (FHLBB) to the developer of a planned low or moderate income residential housing project qualifies the project as one "subsidized by the federal or state government" within the meaning of the comprehensive permitting statute, G.L. c. 40B, §§ 20-23(act).⁴ The issue arises on an appeal by the town of Middleborough and the board of appeals of Middleborough (board) (collectively, Middleborough) from a Superior Court judgment affirming a decision of the Housing Appeals Committee (committee) of the Department of Housing and Community Development. The defendant, Delphic Associates, LLC (Delphic), sought a comprehensive permit from the board, see G.L. c. 40B, § 22, which the board denied. Delphic appealed to the committee, which directed the board to issue the permit. The committee determined, and a judge in the Superior Court affirmed, that project funding under the New England Fund qualified as a valid subsidy program under the act. In a thoughtful and detailed opinion, the Appeals Court affirmed, although its analysis of whether a financing commitment under the New England Fund constituted a "subsidy" differed from that of the committee and the judge in the Superior Court. See Middleborough v. Housing Appeals Comm., 66 Mass.App.Ct 39, 845 N.E.2d 1143 (2006). We granted Middleborough's petition for further appellate review limited to the question noted above.⁵ We affirm the judgment of the Superior Court.⁶

1. Background. The material facts are not in dispute. In order to place them in context we describe briefly the history of relevant portions of the act, which has been thoroughly canvassed in earlier opinions. See, e.g., Dennis Housing Corp. v. Zoning Bd. of Appeals of Dennis, 439 Mass. 71, 76-78, 785 N.E.2d 682 (2003); Board of Appeals of Hanover v. Housing Appeals Comm., 363 Mass. 339, 347-354, 294 N.E.2d 393 (1973).

The act allows a public agency, nonprofit organization, or limited dividend organization interested in constructing low or moderate income housing to circumvent the often arduous process of applying to multiple local boards for individual permits and, instead, to apply to the local board of appeals for issuance of a single comprehensive permit. See G.L. c. 40B, § 21. An applicant who is denied a comprehensive permit or is granted the permit under conditions that make the proposed development "uneconomic," G.L. c. 40B, § 22, may appeal to the committee for a de novo review of whether the board's decision was "reasonable and consistent with local needs." See G.L. c. 40B, § 23. If the committee finds that the local board's action does not meet these standards, it may order that the comprehensive permit issue. Id. A party aggrieved by a decision of the committee may appeal to the Superior Court, see G.L. c. 30A, § 14 which will uphold the committee's determination if it is supported by substantial evidence, which is "such evidence as a reasonable mind might accept as adequate to support a conclusion." Board of Appeals of Hanover v. Housing Appeals Comm., supra at 376, 294 N.E.2d 393. These steps were followed in this case, as we now describe.

In March, 2000, Delphic applied to the board for a comprehensive permit to subdivide a four-acre parcel in the town of Middleborough into ten buildable lots. Three of the lots were to be reserved for affordable housing.⁷ Delphic informed the board that the project was eligible to receive funding through the New England Fund of the FHLBB. In that respect and pursuant to 760 Code Mass. Regs § 31.01(2) (1993),⁸ Delphic provided the board with a "project eligibility letter" confirming that eligibility that it had obtained from the Norwood Cooperative Bank (Norwood Bank), a member of the FHLBB. The proposed financing described in the project eligibility letter was to be provided by the FHLBB to the Norwood Bank through the New England Fund. Norwood Bank, in turn, would provide a loan to Delphic at below-market interest rates.⁹ See Middleborough v. Housing Appeals Comm., supra at 44, 845 N.E.2d 1143.

After a public hearing, which lasted for some nine sessions, the board unanimously denied the permit, determining (among other things) that the parcel lacked adequate frontage and that it previously had been designated as one on which building could not take place. Delphic appealed from the denial of the permit to the committee. The committee held conferences with counsel, visited the proposed project site, held a de novo hearing in which it heard from witnesses for the parties and from intervening abutters,¹⁰ and considered post-hearing submissions. See G.L. c. 40B, §§ 22-23. In July, 2002, the committee issued a written decision overturning the board's denial of the comprehensive permit and directing that the permit issue to Delphic, with certain conditions not relevant to this appeal.

In August, 2002, Middleborough sought judicial review of the committee's order in the Superior Court, pursuant to G.L. c. 30A, § 14. In April, 2004, a judge in the Superior Court allowed the defendant's motion on the pleadings, and denied that of Middleborough. See Mass. R. Civ. P. 12(h), 365 Mass. 754 (1974). In relevant part, the judge rejected Middleborough's argument that the New England Fund loan was not a "subsidy" provided by the Federal or State government within the meaning of G.L. c. 40B, a necessary prerequisite to Delphic's right to proceed with its appeal under the act. In so holding, the judge gave considerable weight to the committee's analysis of the New England Fund program in a prior decision, Stuborn Ltd. Partnership vs. Barnstable Bd. of Appeals, Housing Appeals Committee, No. 98-01 (March 5, 1999) (Stuborn), which we discuss infra. Middleborough appealed.

The Appeals Court affirmed the Superior Court's judgment. Middleborough v. Housing Appeals Comm., supra at 41, 845 N.E.2d 1143. However, on the question before us—whether the New England Fund financing commitment provided a government subsidy within the meaning of the act—the Appeals Court rejected "much of" the reasoning of the Stuborn decision as having been "propelled, at least in part, by policy considerations rather than exclusive adherence to the language of the statute." Id. at 41, 46, 845 N.E.2d 1143. The Appeals Court nevertheless concluded that the New England Fund did provide a government subsidy, since the FHLBB and its debt instruments are exempt from certain Federal, State, and local taxes. See 12 U.S.C. § 1433 (2000). The Appeals Court thus reasoned that developers would receive a government benefit from a New England Fund loan in the form of tax exemptions to the FHLBB and its member banks that led to loans at reduced interest rates to entities such as Delphic. Middleborough v. Housing Appeals Comm., supra at 50, 845 N.E.2d 1143 ("the financial participation of the government in the form of . . . tax exemptions is sufficient to constitute a governmental subsidy for purposes of [G.L.] c. 40B"). This appeal followed.

2. Waiver. We consider as an initial matter claims concerning waiver made by the Attorney General, representing the committee, and by Middleborough. The Attorney General asserts that Middleborough has waived its right to contest whether funding from the New England Fund is a valid government subsidy because, during the administrative proceedings, Middleborough failed "adequately" to challenge the rebuttable presumption of fundability established by the project eligibility letter. See 760 Code Mass. Regs. §§ 31.01(2), 31.07(1)(a) (1993) (establishing rebuttable presumption of fundability on introduction of fundability letter). See notes 8 and 9, supra. Cf. Hingham v. Department of Telecommunications & Energy, 433 Mass. 198, 215, 740 N.E.2d 984 (2001) (issue not raised in administrative proceeding may not be raised on judicial review of proceeding). In response, Middleborough argues that the Attorney General, in turn, has waived the waiver argument by not raising it in the Superior Court.¹¹ See, e.g., Century Fire & Marine Ins. Corp. v. Bank of New England-Bristol County, N.A., 405 Mass. 420, 421 n. 2, 540 N.E.2d 1334 (1989) (issue raised for first time on appeal will not be considered). Middleborough also counters that, in any event, the issue of fundability is one of subject matter jurisdiction that may be raised at any time. See Litton Business Sys., Inc. v. Commissioner of Revenue, 383 Mass. 619, 622, 420 N.E.2d 339 (1981) (subject matter jurisdiction may be raised at any time).¹²

Turning first to the potentially determinative question of subject matter jurisdiction, Middleborough argues that, by statute and regulation, fundability is a "jurisdictional prerequisite to maintaining an appeal before the [committee]," and therefore is unwaivable. See, e.g., id. We do not agree. Subject matter jurisdiction is "jurisdiction over the nature of the case and the type of relief sought," Black's Law Dictionary 870 (8th ed.2004), which among the various trial courts and administrative agencies "is both conferred and limited by statute." Edgar v. Edgar, 403 Mass. 616, 619, 531...