2012-11-SPTM-rpt2 - Laserfiche WebLink

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APPROPRIATION COMMITTEE 2' REPORT TO THE NOVEMBER 2012 STM To obtain benefits under the EP, however, Lexington must grant a TIF or a special tax assessment and approve the Certified EP before Vistaprint applies to the Economic Assistance Coordinating Council (ECAC), the organization that administers the Commonwealth's program. TIF Proposal TIF Year Fiscal Year TIF % 1 FY16 45% 2 FY17 40% 3 FY18 35% 4 FY19 31% 5 FY20 28% 6 FY21 26% 7 FY22 24% 8 FY23 19% 9 FY24 14% 10 FY25 9% 11 FY26 2% 12 FY27 2% 13 FY28 2% Table 1: Proposed TIF Schedule The proposed TIF covers a thirteen year period beginning when Vistaprint occupies the completed 100,000 square foot facility, assumed to be in FY16. Each year of the TIF the property tax obligation associated with this portion of the building is reduced by the percentage listed in the TIF % column of Table 1 above. This reduction is also reflected in the Town's "new growth" number used to determine the levy limit under Proposition 2'/z. The TIF does not apply to the additional, roughly 50,000 square feet of leasable space in the new building. Existing leased space and personal property located in either building is taxed at the full rate and is not subject to the TIF. Quantitative Analvsis In our analysis, we consider potential benefits to the town under several scenarios in an attempt to answer the question "Is the Town likely to be better off financially if it approves the TIF agreement or if it votes it down ?" In structuring the scenarios we have held certain factors constant: 1) The expected tax rate 2) The rate of inflation for the property value 3) The assessed value of the new building in a given year once in service' 2 The draft TIF agreement dated November 14, 2012 does not explicitly exclude this additional 50,000 square feet. It is our understanding that this will be corrected and our financial analysis assumes that this additional leasable space is taxed at the full rate. 3 Once construction is completed, the assessed value on the property is computed using the mass appraisal income method. This is roughly based on the class of space, square feet of leasable space, and prevailing occupancy rates. We assume that the same building conforming to the PSDUP will have been built in each scenario. Therefore, our models use the same assessed value in a given year for each scenario in which construction of the proposed space has been completed and the space is deemed to have been put in service.