Friday, November 19, 2010
Rocky Point developer to submit profitability statement
Rocky Point developer Michael Kenny reports that the profitability statement for that 2006 project is nearly complete (see “Rocky Point developer suspended from further 40Bs,” Mosquito, November 12.) “I’ve been working diligently with MassHousing,” he says. “I’ve gladly complied even though this was not required by my permit.” The Rocky Point project was financed by MassHousing under the state’s 40B law which allows developers to bypass town zoning if 20% of a development is affordable. Rocky Point contains two affordable units. The Rocky Point development, also known as Laurel Hollow, is located off Lowell Street and includes eight condominiums.
Developers are limited to 20% profitability under the 40B law, with excess profits to go to the town for more affordable housing. Asked why the profitability statement for Rocky Point took several years to complete, Kenny notes, “It’s received the attention I can give it. It’s a non-productive activity and an extraordinary pain.” Kenny showed the Mosquito a preliminary set of twelve spreadsheets that he said are now being submitted to a CPA for review and certification. He notes the spreadsheets indicate “I didn’t make remotely near 20%.”
The requirement for a profitability audit by a CPA arose after Rocky Point had begun, says Kenny. A May, 2006 investigation by the Inspector General’s office found that a developer in Acton, Stow Street Realty, submitted fraudulent profitability information (See www.mass.gov/ig/publ/acton40b.pdf). According to Kenny, this led to enhanced requirements for profitability statements. “Every developer was painted with a broad brush,” after the Acton scam was exposed, says Kenny, “and people like me are made to pay the price.” He adds, “I’ve made a career out of trying to do the right thing.”
Asked to comment, Housing Authority Chair Alan Lehotsky noted the requirement for an audit was a state regulation and would not have been part of a town-issued permit. He says the regulation was always in place, but “The state got serious about enforcement after they saw that cities and towns were being taken advantage of.” He adds, “I have no reason to believe Mr. Kenny has done anything untoward,” but notes multiple attempts have been made over the past four years to get him to comply with the regulations. He hopes the recent decision by the DHCD to suspend Kenny from further 40B financing has prompted movement on this issue, but adds, “Unaudited sheets don’t count for much.” ∆
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