Knock, knock: The impact of large subsidized housing developments on the surrounding community

Restrictive local zoning often limits the construction of large multifamily housing, driven in part by resident concerns that such developments will strain municipal budgets and degrade public service quality. This paper evaluates these concerns using evidence from large mixed-income housing developments built from 2002 to 2019 through Massachusetts Chapter 40B. Employing a staggered event-study difference-in-differences design with matched controls, I find that these developments lead to a persistent increase in population, but do not affect the long-run fiscal health of municipalities: municipal bond ratings and revenue-generating flexibility remain unaffected. Short-run increases in new tax growth, aggregating to over $2000 per capita in the three years following opening, offset the costs of serving new residents without requiring significant tax rate increases on existing structures. I find no evidence of measurable declines in public services and amenities, with no detectable impacts on school quality (class size and suspension rates), safety (arrest rates), or traffic outcomes (non-fatal crashes and commute times). These findings indicate that, in this setting, municipalities can accommodate large-scale affordable housing without sacrificing fiscal stability or public service quality.