2018-11-13-AC-STM-rpt - Laserfiche WebLink

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APPROPRIATION COMMITTEE - STM 2018-1 Memorandum of Understandin This report is conditioned on our understanding that the Town and the developer will sign a memorandum of understanding (MOU) which includes, among other things, a commitment from the developer to cover the cost of extending water and sewer services to the two sites, and one-time payments for improvements to infrastructure and emergency response services. Impacts Relative to Alternative Land Uses The Committee believes that when evaluating the net fiscal impact of a proposed project, it is essential to consider the revenues and costs relative to the likely alternative use of the land if the project were not undertaken. One possibility is the land would remain undeveloped, in which case the revenues from the proposed development should be reduced slightly to reflect the loss of the minimal property taxes now collected on the land (which has conservation restrictions). As a result, considering the impacts of the pro- posed development relative to the status quo land use probably would not make much difference. Consideration of alternative uses of the land could have a much larger effect if they involved other types of development. Considering the current owner's interest in selling the property to raise revenue, it seems unlikely that the land will remain undeveloped. The most obvious alternative use would be to develop single-family homes as allowed by right under the current RO zoning. The developer has submitted plot plans showing that 13 single-family houses could be built on lots of 30,000 square feet or more. If those houses and their lots averaged assessed values of $1.5 to $2 million, the annual property tax revenues would total about $280,000 to $370,000, substantially less than the revenue from the proposed development. On the expense side, it is likely that such houses would be occupied primarily by families with school-age children, which would increase school department expenses, which currently average about $20,000 per pupil per year. If the 13 households averaged 1.5 children each, the additional school expenses would be about $390,000, which is more than the incremental property tax revenues even before incorporating other Town costs associated with 13 new single-family homes. Over time, the number of school-age children in the households might decline (if the new families stayed in Lexington after their children graduated), low- ering incremental school costs, but other, non -school costs would remain. Financially speaking, the development of 13 single-family houses would be less attractive than the currently proposed development. Possible Indirect Effects The proposed development also would have indirect fiscal impacts, although those are even more difficult to predict. The original impact study submitted by the developer argued that because about 25 percent of the residents are likely to be existing Lexington residents, only 75 percent of the estimated costs should be counted against the project, because they would have been incurred even absent the development. That argument assumed that, absent the proposed development, those residents would have stayed in their exist- ing Lexington housing and would not have moved to elderly (or other) housing elsewhere. To the extent they would have moved elsewhere anyway, there would be no reason to reduce expenses associated with the proposed development, because the properties would have turned over in any event. More importantly, if the proposed development triggered the movement of existing elderly Town residents who would otherwise stay in their homes in Lexington, the existing housing they vacate would be occupied by new households. Presumably those new town residents would include families with school-age children, which would, on average, increase Town expenses. The change in occupants of existing housing would not increase tax revenues except to the extent new owners make substantial improvements that raise assessed values. As a result, indirect impacts associated with existing elderly residents moving into the development probably would reduce the relative fiscal attractiveness of the proposal, though the costs attributable to any such effects are extremely uncertain. Moreover, over time those extra indirect costs would tend to shrink toward zero as more and more of the existing elderly households that moved into the new development would have moved out of their Lexington homes in any event.