Smart Growth / Smart Energy Toolkit Modules - Chapter 40R (and Chapter 40S)

Learn about the Smart Growth/Smart Energy Chapter 40R (and Chapter 40S) module.


Chapter 40R of the Massachusetts General Laws encourages cities and towns to establish new overlay zoning districts to promote housing production and, more generally, smart growth development. Chapters 40R and 40S both provide financial incentives to communities to adopt these new zoning districts.


In order was created to encourage smart growth consistent housing production in the Commonwealth. Under Chapter 40R, communities that adopt special zoning districts allowing as-of-right higher density residential development are provided financial rewards.

Smart growth zoning districts can be in one of three locations:

  1. Areas near transit stations, including rapid transit, commuter rail, and bus and ferry terminals
  2. Areas of concentrated development, including town and city centers, other existing commercial districts in cities and towns, and existing rural village districts
  3. Areas that by virtue of their infrastructure, transportation access, existing underutilized facilities, and/or location make highly suitable places for residential or mixed use smart growth zoning districts.


  • Districts must be overlay and not base zoning.
  • Typically districts cannot exceed 15% of local land area, though the Department of Housing and Community Development (DHCD) can be petitioned to approve up to 25%.
  • While all residential and mixed use development must be as-of- right in a smart growth zoning district, communities can use design review to regulate the physical character of the development as long as requirements are not unduly burdensome.
  • Twenty percent of the housing in the district must be affordable to those earning 80% or less of the median income and be deed restricted for at least 30 years.
  • The district must provide a minimum allowable density of eight units per acre for single-family homes, 12 units per acre for two and three family buildings, and/or 20 units per acre for multi-family dwellings.
  • Smart growth zoning districts must provide a range of housing opportunities for a diverse population including households with children.

Any community with a population of less than 10,000 people may request a reduction from the minimum allowable density requirements. The community will need to show that:

  • compliance with the density requirements would create a hardship and that any proposed reduced density would be consistent with the smart growth goals of Chapter 40R.
  • development at the required densities:
    • would be highly inconsistent with the existing physical environment of the community
    • would create significant risks to water pollution due to poor soils
    • cannot be feasibly served by a piped water system.

State Approval

Before adopting a smart growth zoning district, communities must apply to DHCD for district approval. The Department must determine if the proposed location is an eligible site and must also approve the proposed zoning regulations and design standards. Once an application has been approved by the Department, a community then adopts the zoning regulations for the overlay district. Communities that adopt smart growth zoning districts receive an approval letter from the Department. The community is then eligible for incentive and bonus payments.

Financial incentives

A primary purpose of Chapters 40R and 40S is to provide a financial incentive to communities to build smart growth consistent housing. Four types of incentives are offered.

1) Zoning Incentive Payments: Upon approval of a district a municipality receives a zoning incentive payment. The amount of the incentive payment is based on the potential number of new housing units (The maximum number of units possible under the 40R overlay zone minus the total number of units permissible under the previous zoning.) that can be constructed in the district. The incentive payment is disbursed to the community after the issuance of the approval letter by the Department. Payments ranges include:

  • $10,000 for up to 20 units
  • $75,000 for 21-100 units
  • $200,000 for 101-200 units
  • $350,000 for 201-500 units
  • $600,000 for 501 or more units of housing

2) Bonus Payments: A community will also receive a bonus payment of $3,000 for each unit of new housing unit built in the district which is payable once the building permit has been issued for the housing unit.

3) Educational Costs (Chapter 40S): Communities are reimbursed for any net cost of educating students living in new housing in a smart growth district. The reimbursement is equal to the cost of educating students living in new housing in a smart growth district minus the percentage of new revenues from the district that would be otherwise be devoted to educational costs and any increase in state educational aid resulting from students living in new housing in the district.

4) Funding Preference: When awarding discretionary funds, DHCD and the Executive Offices of Environmental Affairs, Transportation, and Administration and Finance must give preference to municipalities with an approved smart growth zoning district.