In an opinion that may carry broader implications for the growing array of affordable housing projects on the Island, especially those built using Community Preservation Act money, a Concord attorney advised the West Tisbury planning board this week that it has no authority to relax restrictions on the 250 State Road project that make it permanently affordable.

Special counsel Mark Lanza said that 250 State Road has been stamped with clear language pledging permanent affordability: in the special permit issued by the planning board in September 2008, and in two previous town meeting votes that committed more than $500,000 in Community Preservation Act money to the project, one in 2008 and another in 2009.

The Island Housing Trust, which holds a ground lease on 250 State Road, had asked the planning board to amend the special permit for the eight-unit affordable housing project that would lift affordable restrictions in the event of foreclosure.

Trust spokesmen say language is required under bank lending rules that would allow the homes to be sold at market rates if they ever went into foreclosure.

Trust spokesmen on Monday again argued that the language is standard and intended to give buyers more flexibility and better financing options.

But Mr. Lanza found that the special permit for 250 State Road cannot be amended without a town meeting vote; as a result the planning board voted 3-1 to deny the request.

And some questioned whether the trust had misled the public, intentionally or not, when it asked for $400,000 in Community Preservation Act funding for the project during the 2008 annual town meeting.

“The CPA fund approval was couched in terms of permanent affordability,” said planning board member Leah Smith. “If everyone on the affordable housing committee, and everyone on the housing trust, understood under certain circumstances this was not permanent — that should have been, and must have been made clear to the people of this town.”

The vote could have implications for other affordable housing projects, because the decision finds that Community Preservation Act funding is restricted for use in housing projects that remain permanently affordable.

In his five-page opinion, Mr. Lanza concluded that the Community Preservation Act legislation specifically states any property purchased with CPA funds must remain permanently restricted. “It is my opinion that the board may not modify . . . the special permit as requested by the [Island Housing Trust] to allow holders of first mortgages to avoid compliance with the affordable restrictions on dwelling units in the development of 250 State Road upon foreclosure. Such a modification would be impressibly inconsistent with the provisions of [the Community Preservation Act],” Mr. Lanza wrote.

He also found that modifying the special permit would violate town zoning bylaws, which state that affordable housing “must be subject to permanent deed restrictions . . .”

And Mr. Lanza said the article presented at the 2008 annual town meeting asking for $400,000 in Community Preservation Act funds for 250 State Road project made no mention of a provision that would allow homes to be sold at market rates under any circumstances.

“Even if the provisions of [CPA] were not applicable in this case, the condition of the 2008 annual town meeting appropriation is legal and binding. This condition remains in effect unless modified by a subsequent town meeting vote. It cannot be waived or varied . . . in the context of a special permit application,” he wrote.

Leaders at the housing trust said later that while they disagreed with parts of Mr. Lanza’s opinion, they would move forward with plans for 250 State Road, which is nearing completion.

Trust executive director Philippe Jordi said the most immediate effect will be on potential homebuyers.

“Right now we have 14 interested homeowners; we will probably have 20 applications by the end of the week. But if the banks choose not to finance because the provision is not included, then people will have to put down between 10 and 20 per cent, which will basically eliminate a lot of people,” he said.

He also said:

“Our mission is to keep these houses permanently affordable, but practically speaking you have to do certain things to create protections for the banks and the homeowners. And this is going to affect people’s ability to obtain financing.”

Caroline Flanders, a board member for the trust and former member of the town affordable housing committee, also disagreed with Mr. Lanza’s legal opinion. She said West Tisbury has established its own regulations for affordable housing that are distinct from the state, which among other things raise income eligibility requirements from 80 to 140 per cent of median income.

“This attorney’s opinion doesn’t seem to reflect the fact that West Tisbury has done things a little differently to serve the needs of the community. We found a way to make this work . . . currently this is the best we have come up with to ensure affordabiltiy and make sure homeowners get the most affordable loan possible,” she said.

But Ms. Smith said all this did not excuse the Trust from failing to explain the provision at town meeting.

“No matter how much this has been used elsewhere, this was not the understanding on the floor of town meeting, and I believe we have to abide by that. And if something comes up in the future and the town is asked to support affordable housing, this [provision] should be made clear,” she said.