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HomeMy WebLinkAbout2025-06-12-AC-min-att.pdfGrowth in Lexington in the Coming Decade Appropriation Committee, Town of Lexington June 12, 2025 Preface this memorandum is addressed to Lexington’s Town Meeting Members, Select Board, and Planning Board and it represents the consensus view of the Appropriation Committee. The goal of this memorandum is to extend and deepen the discussion of the financial impact of expected increases in housing and population in Lexington during the coming decade following the adoption of the MBTA Communities Act. We attempt to establish reasonable expectations on the timing and magnitude of population growth, and we highlight some decision points that we expect to encounter. We do not advocate for any specific policy changes at this time, but we expect that budgetary and other changes will be necessary and believe that it will be helpful to explore the possibilities in advance. Background To comply with the MBTA Communities Act, Town Meeting approved Article 34 at the 2023 Annual Town Meeting. Article 34 created ten new zoning overlay districts and added a new section 7.5 to the Town’s Zoning Bylaw. These zoning changes allowed by-right development of multifamily housing in the overlay districts with significantly relaxed dimensional controls and no direct limitations on density. Over the next eighteen months, the rate and number of applications for high-density MBTA projects submitted to the Planning Board significantly exceeded expectations, with approximately 1,100 new units proposed by the end of 2024. Other recently adopted zoning provisions and projects, including special residential developments and the all-affordable project on Lowell Street, also allow for higher density and will contribute to an increase in the number of dwelling units and population over time. In December 2024, a petition for a Special Town Meeting (STM) was submitted seeking to amend Section 7.5 of the Zoning Bylaw, reducing the capacity of the MBTA Communities Act overlay districts. The STM was scheduled for March 17, 2025 to allow the Planning Board to conduct public hearings. On February 14, 2025, the Appropriation Committee issued a memorandum, MBTA Community Zoning— Financial Considerations, which examined the potential impact on the Town’s finances of Section 7.5. The memorandum projected unprecedented population growth and cautioned that the Town budget would have difficulty accommodating the increase in school enrollment and the rising demand for other services. A month later, o n March 13, 2025, the Committee published a report on Article 2 of the 2025-1 STM. The final motion was a compromise that was developed with the support of the Planning Board. It proposed changes that would reduce the number of MBTA Act overlay districts and add dimensional controls and density limits, reducing the new housing unit capacity created under Section 7.5 by approximately half. Our report included projections of potential growth and related financial impacts, both with and without the proposed changes. The 2025-1 STM approved Article 2 on March 17, 2025. On March 19, 2025, the Select Board received a draft report commissioned by the Town Manager, Impact Analysis of Multi-Family Housing Development on Lexington, Massachusetts, from Fougere Planning + Development in association with Jeffery Donohoe Associates (Fougere Report). The Fougere Report addressed the financial impact of the approximately 1,100 new units already submitted to the Planning Board (in the “pipeline”) but it did not consider additional growth beyond those units. Appropriation Committee: Growth in Lexington in the Coming Decade 2 Observations on the Fougere Report In regard to projections for near-term growth of population and school enrollment, the Fougere Report is largely in agreement with the analysis presented in our February 14 memorandum and in our Report to the 2025-1 STM. In addition, the Fougere Report contains useful information about the financial impact of housing and population growth based on an in-depth review of information provided by municipal and school departments, including: • Summaries of interviews with department heads about potential financial impacts. • Estimates of the number of school children likely to reside in new multifamily developments currently in the pipeline, based on data from existing apartment buildings and condominiums, and taking into account bedroom counts and distinctions between affordable and non-affordable units. • Projections of increases in Chapter 70 state aid and circuit-breaker reimbursements based on changes in school enrollment. • Estimates of possible additional hiring needs in public safety and municipal services based on projections from current demand. • Estimated incremental revenue from property taxes, local fees for EMS calls, and motor vehicle excise taxes generated by additional dwelling units However, we believe that other aspects of The Fougere Report, including its restricted scope and some of its methodology and conclusions, limit its usefulness. In particular: • The 1,117 new units considered in the Fougere Report represent less than half of the total growth that may be anticipated under Section 7.5, even as modified by STM Article 2. In our Report to the 2025-1 STM, we projected an additional 2,610 to 4,126 new units over the next ten years. As we discuss below, growth at this scale could exceed critical population and school enrollment thresholds, triggering demands for major new capital projects. • Our understanding is that the per-pupil cost the Fougere report uses to project growth in the general education school budget was based on the DESE “foundation budget” for Lexington. This budget, primarily used to calculate Chapter 70 state aid, reflects only the state’s minimum requirement for town spending on public education and is not relevant here. Lexington’s school budget currently exceeds the foundation budget by about 86%. We believe that the estimated per-pupil costs for general education in the Fougere report of $10,000–12,000 materially underestimate the future impact of enrollment growth on the School budget. • The School budget has increased by about 4% per year over the last five years, even as enrollments decreased by about 1.5% per year. The budgetary impacts of school enrollment increases will be compounded by the increasing costs-per-student. Our planning must consider the potential effects of both budget drivers. • It is not clear if “shared expenses”, including the cost of employee health benefits for school staff, are incorporated in the Fougere report’s expense growth projections. • There is no consideration of the possible need for new capital investments in school and municipal infrastructure. • We note a lack of formal uncertainty analysis in the Fougere Report , and a general lack of detailed explanation behind key estimates. In some cases, estimates based on limited sample data will have unavoidably large uncertainty. Quantifying the statistical uncertainties in key cost and enrollment estimates would provide important context when evaluating those figures. Appropriation Committee: Growth in Lexington in the Coming Decade 3 Some critical intangibles are not considered. For example, the report assumes that a recent trend of decreasing enrollment in the lower grades will work its way through to the higher grades and offset the costs of new students from MBTA Act developments. However, it is not clear whether, and to what extent, the recent reduction in primary school enrolment is a long-term trend resulting from declining birth rates or a temporary phenomenon resulting from the difficulty for young families of buying a home in Lexington in a high-interest rate environment. In addition, a new high school building will almost certainly attract more families with high school students to Lexington, in both new and existing housing. this will affect the grade level distribution of incoming students and the types of school staffing that will be needed. • We believe that these issues limit the utility of the Fougere Report for the kind of planning the Town should undertake in anticipation of a significant increase in population. We urge Town staff to revisit these projections and to refine the expectations for future revenue and expenses. Ideally, this should result in an open and transparent model of cost projections that can be updated as conditions change. What Will Need to Change? The Boston metropolitan region has experienced a serious regional housing shortage for decades, creating a situation where many families are overly burdened by the cost of housing (and forcing other families to relocate beyond the region). As a part of this metropolitan region, Lexington has seen continued increases in local prices of housing and in the rents charged by landlords. New housing construction in the region and in Lexington is coming and will help to address those price increases. As a result of intense new housing construction, Lexington will enter a phase of growth that will continue for at least five to ten years. We have a rough idea of the scale of that growth, but uncertainties remain due to political, social, and economic factors. We have projected an overall population growth of 6,500 to 10,000 people, including an influx of 1,200 to 1,900 students entering LPS. The amount of housing that will be added above the projected minimum of 2,610 units will be determined by whether developers proceed with new large-scale housing developments in the Hartwell Ave overlay districts. New housing in the Hartwell Ave. districts would also result in the conversion of commercially zoned land to residential use, thus lowering the long-term tax revenue potential of the land. The loss of that revenue potential would be difficult to recover, as there are no large plots of land in Lexington that could be rezoned for commercial use. New housing developments will increase revenue to the Town through property taxes and other local fees; however, the addition of dwelling units valued at less than the town average will, by definition, produce less than average “new growth” tax revenue per new resident. Under our current budgeting model, we do not expect the new revenue to cover the full costs of providing the education and other town services to which new residents will be entitled. This will force an unavoidable realignment in the operating budget. The net burden on the Town budget will be even more pronounced if significant growth in new dwelling units results in the need for capital improvements, including new school construction, road improvements, traffic signaling and other infrastructure improvements, and the acquisition and improvement of additional recreational space. The expected growth in school enrollment due to the construction of new housing may be partially offset by future declines in enrollment in currently existing housing; the net growth or decline will be relevant for school budgets. However, if and when the net new school enrollment surpasses some threshold, new capital investments will be needed for the addition or expansion of school buildings and facilities. If that threshold is equivalent to, for example, about 1,500 students with an age distribution similar to the current age distribution, it would correspond to about 100 more students on average at each of the six elementary schools, 200 more students at each middle school, and 500 more students at the high school. Appropriation Committee: Growth in Lexington in the Coming Decade 4 Capital investment for our school system has been part of the Town’s long-term capital plan for many years, particularly the new high school project. Renovations to the Bridge and Bowman Elementary Schools are also on the horizon. Responding to new enrollment needs could require new capital projects, such as adding modular classrooms, building additions to one or more existing buildings, or even constructing an entirely new school. It is too soon to say whether the Town will need to pursue any of these options, but they would present a significant financial hurdle for the Town and could result in deferring some existing plans. Lexington has invested in many systems that support government services, including information technology, networking, communications, voting, and emergency preparedness. These systems should all be scalable to serve a larger population with limited cost. The Town’s public infrastructure will need to grow in areas that relate directly to population size. This includes Water and sewer systems, roads, traffic controls, public transit, recreation areas and parks, bike lanes, and sidewalks. The Town will see increased demands on public safety departments (police, fire, ambulance), as well as other outward-facing departments, particularly Human Services and the Cary Memorial Library. How Can We Prepare for Change? Schools The Town needs a more reliable estimate of the marginal cost per student based on relevant data, and a pro- active plan to gather data about new enrollment in advance of each school year. The Town would also benefit from a clear policy governing the hiring of new teaching and administrative staff due to enrollment increases. This policy should cover several tiers of growth in enrollment, including points where new administrative staffing would be desirable. The addition of dwelling units with school children that are not evenly distributed across the town may require new approaches to districting and redistricting, particularly at the elementary school level. Water and Sewer Systems Assuming 100 gallons per person daily, 6,500 new residents would require another 650,000 gallons per day. We recommend that the Town perform an analysis of the capacity to accommodate growth in the current water and sewer infrastructure. Roads, Traffic Controls, and Sidewalks As traffic near new housing developments increases, the Town should anticipate increases in congestion and the need to implement changes to facilitate flow of traffic, including: • Traffic signal timing optimization and potential new signals • Turn lane additions at major intersections • Road widening on key arterials • Intersection redesigns to handle increased volumes • Additional police staffing to handle traffic control during busy hours • Pedestrian and cycling infrastructure to reduce vehicular traffic Public Safety The Fougere Report suggests that staffing needs for Police and Ambulance services scale linearly with the population. Police: Likely need 6-12 additional officers over 5-10 years. Fire/EMS: 2-4 additional firefighters per shift, possible new ambulance Appropriation Committee: Growth in Lexington in the Coming Decade 5 Police service impacts: • Call volume typically increases proportionally with population (roughly 300-400 additional calls per 1,000 residents annually) Fire and EMS demands: • We might need to add an ambulance, which would involve additional capital for the hardware and operating expenses for staffing. • The need for a satellite fire station will become more urgent to maintain good response times. Conclusions First, it will be essential to continue monitoring the development of new housing and to make timely updates of estimates for the timing and magnitude of financial impacts. Second, we recommend that the Town begin to address the issues listed above. Third, the Town needs to try to find ways to deliver services, ideally of the same or better quality, at lower cost. This will not be easy or straightforward, and may, at times, be controversial, but nonetheless it is essential.