2017-04-19-AC-ATM-rpt (Article 44)

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Although the current valuation of the Brookhaven facility is not available from the Assessors' Department, the Committee estimates that Brookhaven's existing PILOT represents roughly one- half to two-thirds of the residential property tax it would pay if it were deemed to be taxable. This is a very rough, back-of-the-envelope calculation based on taxes paid by Avalon at Lexington — and adjusting for the somewhat smaller size of Brookhaven. Once the expansion units are constructed, that ratio may be somewhat closer to one-half. The property tax status of Brookhaven is determined by the Town's Board of Assessors. At its September 12, 2016 meeting, the Board of Assessors determined that Brookhaven "has provided sufficient evidence to meet its burden of proof establishing entitlement to an exemption from the local property taxes pursuant to M.G.L. Chapter 59 Section 5 Clause Third" as a "charitable organization" and voted 2-0 in favor of continuing the charitable tax exemption which Brookhaven has had since its inception. It should be noted that an organization's status as a non-profit corporation or a 501(c)(3) entity under the federal tax laws does not per se entitle that organization to exemption from local property taxes see Mass. Dept. of Revenue, Taxpayer's Guide to Local Property Tax Exemptions, Religious and Charitable Organizations (2016), p.3 ("Non-profit status is not sufficient, nor is tax exempt status for state or federal tax purposes. The organization must be organized for charitable purposes and must actually operate as a public charity. To qualify for exemption, an organization's dominant purposes and activities must benefit the public at large, not just a limited group of people"). Continuing care retirement facilities in other communities have been determined to be taxable, even though organized and operated as non-profits, and there is no assurance that Brookhaven will continue to be treated as tax-exempt in the future. The Board of Assessors is the only body within the Town authorized to determine the charitable status of a property owner, and Town Meeting is not empowered to change that determination. In the event the Board of Assessors determines in the future that Brookhaven is not entitled to a charitable exemption, and that determination is not successfully appealed, the MOA provides that the PILOT payment will be replaced by actual taxes based on the assessed valuation of the Brookhaven facility. Brookhaven will continue to be responsible for the affordable housing mitigation payment even if determined subject to taxation. As Brookhaven is a continuing care retirement community with a minimum age of 62 and an average age of 86, its expansion will have no direct impact on the Lexington Public Schools. Indeed, a study recently done by OHI Engineering found that there would be relatively little impact to any of Lexington's public services. However, as Brookhaven is satisfying the Town's request to help maintain the Town's affordable housing ratio by contributing to the Town's construction of 5.5 external affordable units, rather than providing affordable units within its own complex, the external units can be assumed to have the same impact as any other new residential construction. If Brookhaven does not go forward with this project and sells the property, a developer would be able to put to put four single family homes on the property by right. With special permitting, it is possible that a subdivision with a substantially larger number of units, perhaps as many as 10-14, could be approved for the site. A residential development would likely have a greater impact on Lexington schools and town services. The Town's negotiating committee took this issue into account during the negotiations and felt that a conventional residential subdivision alternative would be a less desirable outcome. 5