2007-10-10 Appropriation Committee Report

Browse Search

APPROPRIATION COMMITTEE REPORT, OCTOBER 9, 2007 TO STM Appendix B: Demonstration of various revenue scenarios for parcels 200, 300, and 400 The following spreadsheets provide estimates of the revenues the Town will receive both from property taxes and the $3.1 million in mitigation monies over the time period FY09 — FY2008 for parcels 200, 300, and 400 at Lexington Technology Park. They also provide calculations of net present value (NPV) for FY09 using 4% and 5% deflators, which are typical of recent trends in the State and Local Government Implicit Price Deflator. The shaded columns on each page represent the 20 -year scenario that results from approval of the TIF agreement. The first shaded column (with the double -lined border) mirrors the assumptions about future assessed values and tax rates made by the Town in its analysis. The other three columns demonstrate the results if the Town's assumptions about future tax revenues from the three parcels are varied by +/- 20% and by 40 %, that is, if one assumes the Town has been too pessimistic ( +20 %) or too optimistic ( -20% and -40 %) in its assumptions. On each page of this appendix, the TIF scenario appears alongside a different "no TIF" scenario. These alternative scenarios can be described as follows: • TIF is turned down, but Shire follows the presently projected build -out anyway. • TIF is turned down; after a one -year delay another tenant comes without a TIF and executes a build - out plan similar to Shire's full build -out plan. • TIF is turned down; after a two -year delay another tenant comes without a TIF and executes a similar build -out plan. • TIF is turned down; after a four -year delay another tenant comes without a TIF and executes a similar build -out plan. • TIF is turned down; no other tenant comes forward to build out parcels 200 and 400 (the worst case among these scenarios). Note that in each of the scenarios, Shire's occupation and development of parcel 300 is assumed, since Shire has indicated that its decision on this parcel has been made and is independent of the decision on the TIF. In the scenarios where Town Meeting turns down the TIF and we have to wait for another tenant to come along for parcels 200 and 400, the 20% and 40% discount columns can be used to evaluate the impact if that eventual tenant builds something in a different commercial class with a lower valuation — i.e., office space instead of lab /manufacturing space. Since office space valuations are expected to run 35 -40% lower than Shire's expected commercial classification, the 40% discount column is a reasonable approximation of this difference. Page 13 of 18