2012-11-SPTM-rpt2 - Laserfiche WebLink

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APPROPRIATION COMMITTEE 2' REPORT TO THE NOVEMBER 2012 STM In addition, we base our scenarios on the representation by Hobbs Brook Management that they intend to develop the property and that three of their last construction projects were done on spec without a tenant committed prior to construction. The bottom line for each of several scenarios is summarized below in Table 2, including expected incremental property tax revenue (excluding personal property tax), and additional net benefit collected until the end of the TIF. Appendix A contains these data as well as the FY2013 net present values (computed using a 3% and a 4% deflator). These figures are presented as a model to compare the relative impact on tax revenues using reasonable assumptions in regard to tax rates and property values. These are not projections for the actual revenue collected since the tax rates and property assessment over the 13 -year period of the TIF are uncertain. In considering expected net fiscal benefit to the Town, it is appropriate to also consider personal property and the effects of accelerating occupancy on the cost of providing municipal fire and police services to the facility. Vistaprint is a high technology company with a greater concentration of high -value equipment per employee as well as high -end telecommunications equipment. The valuation of Vistaprint's personal property is roughly twice the amount of what is generally found in class A office space. In addition, mitigation payments of $500,000 associated with the rezoning of the property in 2009 are due upon the beginning of construction. Table 2 also illustrates the expected additional net benefit to the town taking into account these various factors through the end of the TIF period. Scenario 1 and 2 yield the same additional net benefit since these revenues and expenses are not subject to the TIF and the scenarios differ only in whether the TIF is granted or denied. Scenario 5 illustrates the potential loss of revenue to the Town if Vistaprint leaves its current facility and is replaced by a more conventional tenant with less valuable personal property. As should be expected, the Town receives the greatest revenue if construction proceeds without a TIF on the accelerated schedule to meet Vistaprint's rapid growth requirements (scenario 1). The TIF agreement was constructed so that the property tax revenue received by the Town during the lifetime of the TIF (scenario 2) would be roughly the same as if there were no TIF and Hobbs Brook built the facility on a slower construction schedule and with a 3 -year delay in occupancy (scenario 4). If Hobbs Brook were to build out the facility with only a 2-year delay (scenario 3), we would expect revenue to the Town to be mid -way between the no -TIF and TIF based scenarios. The worst case scenario in terms of revenue would be if no new construction occurred (scenario 5). 4 Property tax data are the same as published by the Town on November 15, 2012 but include the effects of property taxes collected during construction of approximately $500,000 for each scenario. < http:/ /www.lexingtomua.gov /towngovern nent/2012STM/Property- tax - analysis- of- TIF.pdf > 5 Net fiscal benefit refers to the difference between total taxes paid and the estimated municipal costs associated with the property. For our calculations we have only looked at the net benefit associated with the space covered by the TIF and for scenario 5 the additional loss of personal property taxes above those associated with a conventional tenant if Vistaprint vacates its current space at 95 Hayden Avenue.