Loading...
HomeMy WebLinkAbout2025-03-13-AC-STM1-rptAPPROPRIATION COMMITTEE TOWN OF LEXINGTON Ij °fie '"; ' ll/r%i;, r" ' �,► APRIL19"7 ,.,,. REPORT TO THE 2025-1 SPECIAL TOWN MEETING RELEASED MARCH 13, 2025 APPROPRIATION COMMITTEE MEMBERS Glenn P. Parker, Chair • Sanjay Padaki, Vice Chair • Alan Levine, Secretary Carolyn Kosnoff (ex officio; non-voting) • Anil A. Ahuja • John Bartenstein Eric Michelson • Sean Osborne • Vinita Verma • Lily Manhua Yan 2025-1 STM APPROPRIATION CONMTTEE 13 MARCH 2025 Summary of Warrant Article Recommendations 2025-1 SPECIAL TOWN MEETING Art- Funds Funding Committee icle Title Requested Source Recommendation Amend Section 7.5 of the Zoning Bylaw 2 to Reduce Multi -Family Dwelling Unit None N/A Approve (9-0) Capacity Introduction This report covers Article 2 of the 2025-1 Special Town Meeting, which is being held in advance of the 2025 Annual Town Meeting. We omit the commentary and other appendices normally published in our report to the annual town meeting. In December 2024, the Select Board received a citizen's petition to call a special town meeting to consider an article to amend the Town's zoning bylaw. The Select Board was required to set the special town meeting to begin within 45 days of receiving the petition, so the date for the 2025-1 Special Town Meeting was set for February 3. Prior to any vote by Town Meeting on changes to zoning bylaws, time must be set aside to allow the Planning Board to conduct a hearing and prepare a report. Thus, the special town meeting was immediately adjourned to March 17. The Planning Board has since held the public hearing on February 12, February 26, and March 5. Their report was approved for publication on March 12. Two members of this committee were also active proponents of the citizen's petition for Article 2. They helped to present the motion during the Planning Board's public hearing, and later helped to negotiate a compromise motion with members of the Planning Board. This committee was notified in advance and agreed to allow these members to participate in the committee's deliberations and recommendation. We intended to publish this report on March 10, a week in advance of March 17 when Town meeting will reconvene to take up Article 2 of the 2025-1 Special Town Meeting. We regret that publication was delayed until March 13. 2025-1 STM APPROPRIATION CONMTTEE 13 MARCH 2025 Warrant Article Analysis and Recommendations 2025-1 SPECIAL TOWN MEETING Article 2 Amend Section 7.5 of the Zoning Bylaw to Reduce Multi -Family Dwelling Unit Capacity Funds Requested Funding Source Committee Recommendation None N/A Approve (9-0) Article 34 of the 2023 Annual Town Meeting added Section 7.5 to the Zoning Bylaw, and thereby created several zoning overlay districts that allow by -right development of multifamily housing in order to facilitate the construction of such housing and to comply with the MBTA Communities Act. Approval of Article 34 was driven in part by the acknowledgement that Lexington is located in a region with a serious housing shortage and that local housing production has not kept up with growing regional demand. The addition of Section 7.5 to the zoning bylaws also reflected support for diverse housing as captured in LexingtonNLXT, the Town's Comprehensive Plan published in 2022. Every municipality subject to the MBTA Communities Act is required to demonstrate compliance with the Act's requirements using a spreadsheet -based model from the Executive Office of Housing and Livable Communities (EOHLC) that works off a land data base to derive areas, dwelling unit capacities, and densities that are used in the compliance determination. The EOHLC model dwelling unit capacity for a parcel is based on simple formulas; it is not a detailed analysis of what could be built on a specific parcel. The new zoning overlay districts codified in Section 7.5 covered a total of 253 acres. This area, together with the dimensional controls imposed under Section 7.5, yielded a total model dwelling unit capacity of 13,421 (including the Lexington Center overlay district, which EOHLC determined non-compliant). The MBTA Communities Act required a minimum of 50 acres and a model dwelling unit capacity of at least 1,231 units. As its title indicates, Article 2 proposes significant changes to Section 7.5. The Committee normally does not comment or make recommendations on zoning bylaw amendments unless there are clear and imminent financial impacts. On February 14, the Committee published a memorandum' sharing its perspective on the rapid pace of development of multifamily housing that began following enactment of Section 7.5. This memorandum explored the problem Lexington now faces without endorsing any specific fixes. The memorandum's conclusion stated: The large area of 253 acres and allowance of very high unit densities are the fundamental aspects of Section 7.5 that are driving the current wave of multifamily development projects. In the near term, the rate of development for multifamily housing does not appear likely to abate. This development is likely to result in far more dwelling units in Lexington than were initially predicted by the Planning Board, with a commensurate increase in the population. The implications of massive development will be far reaching and will touch many aspects of life in Lexington. Under this article, Town Meeting will consider whether to modify Section 7.5 in order to limit rapid residential growth and its financial impacts. Therefore, we offer our analysis and recommendation. Expected Residential Construction As of March 10, 2025, applications for site plan reviews under Section 7.5 have been submitted for ten new developments comprising a total of 1,097 dwelling units .Z These are all multifamily units. Most will be rental 'https://www.lexingtonma.gov/DocumentCenter/View/13804/MBTA-Zoning-Impact-Memo 2 The ten projects propose 1,097 dwelling units on parcels with an EOHLC model capacity of 1,721 units, which is close to a ratio of 64%. This capacity has been calculated using updated land data files and may differ from calculations that use the 2023 land data files. 2 2025-1 STM APPROPRIATION CONMTTEE 13 MARCH 2025 apartments and some will be sold as condominiums. We estimate that these units would be occupied by around 2,700 new residents including 470 to 550 students attending Lexington Public Schools.3 The total number of units in the ten development proposals that have been submitted is equivalent to about 64% of the associated EOHLC model capacity. Therefore, for the purposes of this report we assume a property with an capacity of 100 units would yield 64 dwelling units when developed. Furthermore, we estimate that only 80% of the available parcels will eventually be developed. Many factors can influence the final design and density of any particular project, so these estimates must be considered in the aggregate. All our projections are summarized in the table at the end of the next section on future residential construction. The new residents from this first set of projects will lead to about an 8% increase in the Town's population, which would approach 37,000 after three to five years. In the short term, the average annual rate of population growth will increase to somewhere in the range of 2.5% to 3% per year. This would be four to five times the current 50 -year average for Lexington. The Town has not experienced a comparable rate of growth since the 1950s when the average annual growth accelerated from 3% to almost 6%. Meanwhile, owners of some of the other properties in the Section 7.5 overlay districts have submitted preliminary subdivision plans (PSPs) to the Planning Board. Under current state law, the submission of a PSP, followed by the timely submittal of a proper definitive subdivision plan, is deemed to "freeze" for eight years the zoning bylaws applicable to that property, even in the case of a later project having nothing to do with the PSP. As of March 10, 2025, fifteen PSPs have been submitted for properties not in the site plan review pipeline, preserving the owner's option to develop these properties under the current Section 7.5 zoning bylaw. The relevant parcels comprise about 60 acres of land with a total model capacity of about 4,600 units. It is likely that at least some of these PSPs will lead to new residential developments. Four of the PSP properties that comprise 28 acres are located in the CM zoning district along Hartwell Ave. and Maguire Rd. This district was modified in 2020 to allow much more intensive commercial development. If the commercial real estate market recovers from its present slump within a few years, then the owners of these three Hartwell CM properties may decide to pursue commercial rather than multifamily housing development . The volatile nature of the commercial real estate market makes the likelihood of such a recovery difficult to predict. Because of this uncertainty and because the decision to proceed with housing construction would be at the sole discretion of the owners, we omit the potential impacts of these four properties from our discussion. Residential development at these sites would create additional growth beyond our projections. The other eleven PSP properties are located in zoning districts that do not allow intense commercial development, and it is reasonable to assume that construction of high-density multifamily housing developments at these sites will commence within eight years. The total EOHLC model capacity for these sites is about 1,640 units, so we estimate around 840 housing units will be built on them. In summary, the site plan review pipeline developments combined with the non -CM -zone PSP properties are projected to add a total of about 1,937 new units over 10-12 years. That would increase the population by about 4,840 people, including about 911 LPS students. The total population would then be around 39,000 residents, 14% above the 2022 census estimate. These numbers represent the scale of change that the Town must prepare to accommodate, at a minimum, no matter how this article is decided. Future Residential Construction What could happen with the properties in the zoning overlay districts that have not yet submitted any plans to the Planning Board? We start with the EOHLC model capacity of about 13,420 for all zoning districts combined. Subtracting the model capacities for the two groups discussed above yields 13,420 — 1,720 — 4,600 = 7,100 remaining model capacity. Taking 64% of that model capacity and reducing the result by 20% to account for parcels that are left undeveloped, yields a projection of an additional 3,635 dwelling units, in addition to the 1,937 discussed above. As a reminder, this omits potential multifamily developments on four large PSP properties in the Hartwell CM zone. In round numbers, the remaining properties could eventually house another 9,090 new residents, including another 1,708 LPS students. If the current motion under Article 2 is adopted, the model capacity of the remaining properties would be reduced from 7,100 to 1,314 units, which we estimate may lead to the construction of 673 units that could house about 3 This is based on an average occupancy of 2.5 persons per unit. 2025-1 STM APPROPRIATION CONMTTEE 13 MARCH 2025 1,680 new residents including 316 LPS students. Residential development of any of the Hartwell area PSP properties would increase these population estimates. Project Group Model Dwelling Projected Projected Projected LPS Capacity Dwelling Units Population Students (rounded) Site Plans Submitted 1,721 1,097 * 2,740 516 PSPs ** 1,640 840 2,100 395 Expected Construction (Sub -Total) 3,361 1,937 4,840 911 Hartwell CM PSPs 2,960 1,516 3,790 713 If Section 7.5 is Unchanged Future Construction ** 7,100 3,635 9,090 1,708 Expected + Future Total 10,461 5,572 13,930 2,619 If Article 2 is Approved Future Construction ** 1,314 673 1,680 316 Expected + Future Total 4,675 2,610 6,520 1,227 **omits Hartwell CM PSPs *actual Financial Impacts Over the last 30 years, Lexington has experienced a moderate and relatively stable rate of population growth. This stability has allowed the Town to manage robust budgets for capital and operating expenses, and to plan for future spending while accommodating a modest growth in demand. In contrast, the Committee's memorandum predicts that a sudden population increase as described above will create unavoidable budget challenges in both the operating and capital budgets. The most obvious challenge will arise from increased enrollment in the Lexington Public Schools (LPS). We project an additional 1,227 students (or more if this article is not adopted), meaning that LPS will need to hire additional teachers, classroom aides, and specialists, and incur additional expenses for out -of -district tuition and transportation for students with special needs. At present the elementary schools have some room for growth, while the middle schools are near design capacity, and the high school is severely overcrowded. If the enrollments at any of these three tiers cross critical thresholds, then building projects may be required to alleviate overcrowding. As we know, the high school has already crossed that critical threshold with our current population. A growing population will also increase the demand on the Town's fire, police, municipal services, facilities and public works. This will add pressure on the existing staff, which may lead to requests for additional staffing in some areas. It is difficult to predict how and when any service will be impacted, and the Town may need to draw on its Reserve Fund more frequently. As new dwelling units are added we expect school expenses will grow faster than the property tax revenue from those units, creating a budget gap that the Town will have to resolve. The budget gap is projected at $3.6 million to $12 million per 1,000 units. This assumes an average of 0.3 to 0.7 students per unit, and depends on the mix of unit sizes (categorized by the number of bedrooms). If this article is passed, then the resulting annual budget gap is projected to reach $9.4 to $31.3 million after 10-12 years. This budget gap represents a growing need for additional funding in the school operating budget relative to other budget items. Whenever a large budget item grows faster than overall revenue, it puts pressure on other areas of the operating budget. Since our operating budget must be balanced, resolving the gap may involve reductions in service, deferring program upgrades and/or capital investments, or the application of unexpected new revenue. This gap only accounts for school operating expenses, omitting increased expenses for additional municipal services and capital projects that might be required. If Section 7.5 remains unchanged, the cumulative budget impact would be roughly doubled. 4 2025-1 STM Conclusion APPROPRIATION CONMTTEE 13 MARCH 2025 An unexpectedly large number of housing developments proposed under Section 7.5 are already heading towards construction, and several more development proposals are likely to proceed soon. This new housing will likely increase the Town's population by 14% over the next eight to ten years. As a result, we expect to experience acute pressure on the Town's operating budget, primarily due to increases in the school budget that are not fully offset by increased property tax revenue. Much of the anticipated growth in population is now unavoidable, but even larger increases could result under the current zoning bylaws. At this point in time, we believe it would be prudent for the Town to limit the scope of future development currently allowed under Section 7.5. The proposed motion would accomplish that.