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Home My WebLink About2025-12-08 SB Packet - ReleasedSELECT BOARD MEETING Monday, December 8, 2025 Select Board Meeting Room, 1625 Massachusetts Avenue, Lexington, MA 02420 - Hybrid Participation* 6:30 PM AGENDA PUBLIC COMMENTS Public comments are allowed for up to 10 minutes at the beginning of each meeting. Each speaker is limited to 2 minutes for comment. Members of the Board will neither comment nor respond, other than to ask questions of clarification. Speakers are encouraged to notify the Select Board's Office at 781-698- 4580 if they wish to speak during public comment to assist the Chair in managing meeting times. SELECT BOARD MEMBER CONCERNS AND LIAISON REPORTS 1.Select Board Member Announcements and Liaison Reports 2.Lexington High School Project Update to Board TOWN MANAGER REPORT 1.Town Manager Weekly Update CONSENT AGENDA 1.Approve: Battle Green Use Request - Lexington History Museums Historical Reenactment of Lexington Tea Party - Saturday, December 13, 2025 2.Accept: Select Board Committee Resignation Housing Partnership Board - Charles Hornig Transportation Advisory Committee - Nisahnth Veeragandham Vision for Lexington - Daniel Joyner 3.Approve: Select Board Committee Appointments Housing Partnership Board - Sandra Hackman Housing Partnership Board - Michael Schanbacher 4.Approve: Town Manager Committee Appointment Conservation Commission - Thomas Oliver 5.Approve: 2026 Common Victualler License Renewals Akame Nigiri and Sake - 1707 Massachusetts Avenue #2 Alexander's Pizza - 180 Bedford Street Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Ave Bruegger's Bagels - 413 Waltham Street Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Coco Fresh Tea and Juice - 1764 Massachusetts Avenue Craft Food Hall - 10 Maguire Road Dunkin Donuts -10 Woburn Street Dunkin Donuts - 141 Massachusetts Avenue Dunkin Donuts - 277 Bedford Street Element Hotel - 727 Marrett Road Fiorella's Trattoria - 25 Waltham Street il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Inspire Bowl n Tea - 1686 Massachusetts Avenue Fruitee Yogurt - 1707 Massachusetts Avenue Lexington Golf Club - 55 Hill Street Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Mario's Italian Restaurant - 1733 Massachusetts Avenue McDonald's - 690 Marrett Road Pine Meadows Golf Club - 255 Cedar Street Post 1917 - 27 Waltham Street Qdoba Mexican Eats - 46 Bedford Street Rancatore's Ice Cream and Yogurt - 1752 Massachusetts Avenue Revival Café + Kitchen - 1729 Massachusetts Avenue Revolution Hall - 3 Maguire Road Royal India Bistro - 7 Meriam Street Starbucks #7553 - 60 Bedford Street Taipei Gourmet - 211 Massachusetts Avenue Tatte Bakery & Cake - 1777 Massachusetts Avenue The Hangar (Chef Louie's) - 103 Hartwell Ave The Upper Crust - 41 Waltham Street The Vintage Tea and Cake Company - 21 Muzzey Street Wicked Bagel - 171 Massachusetts Avenue 6.Approve: 2026 Entertainment License Renewals Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Avenue Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Element Hotel - 727 Marrett Road Il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Spirit of India - 321 Marrett Road Starbucks #7553 - 60 Bedford Street Thai Room - 182 Bedford Street The Upper Crust - 41 Waltham Street 7.Approve: 2026 Class I/II/III License Renewals Class I: Lexington Toyota - 409 Massachusetts Avenue Class II: A to Z Auto Wholesale - 20 Vine Street Auto and Diesel Sales - 75 Westview Street Auto Engineering - 436 Marrett Road Lexington Auto Center, Inc. - 1095 Massachusetts Avenue Lexington Auto Service, Inc. - 39 Bedford Street Mabuchi Motorcars - 401 Lowell Street Minutemen Auto Haus - 6 Fulton Road Class III: John P. Carroll Company Inc. - 700 Waltham Street 8.Approve: 2026 Common Carrier License Renewal Boston Hidden Gems, Inc - 21 Cawfield Street, Boston MA 9.Approve: 2026 Innholder License Renewals Aloft Lexington - 727 Marrett Road A Element Lexington - 727 Marrett Road B Inn at Hastings Park - 2013-2027 Massachusetts Avenue 10.Approve: 2026 Liquor License Renewals All Alcohol Restaurants Beijing Cuisine - 1709 Massachusetts Avenue Clay Oven - 1666 Massachusetts Avenue Il Casale - 1727 Massachusetts Avenue Ixtapa Cantina - 177 Massachusetts Avenue Love at First Bite - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Royal India - 7 Meriam Street All Alcohol Innholder Aloft Hotel - 727 Marrett Road - A Element Hotel - 727 Marrett Road - B Inn at Hastings Park - 2013-2027 Massachusetts Avenue Wine/Malt Restaurants Akame Nigiri & Sake - 1707 Mass Ave Unit 2 Daikanyama - 43 Waltham Street Fiorellas - 25 Waltham Street Marios 1733 Mass Ave Taipei Gourmet - 211 Mass Ave Upper Crust - 41 Waltham Street The Vintage Tea and Cake Company - 21 Muzzey Street Package Stores Berman’s - 55 Massachusetts Ave Lexington Wine & Spirits - 186 Bedford Street, unit Liberty Wine and Spirits - 335 Woburn Street Vinebrook Bottle - 131 Massachusetts Ave Neillio's - 55 Bedford Street Clubs Lexington Golf Club - 55 Hill Street Lexington Elks - 959 Waltham Street Knights of Columbus - 177 Bedford Street 11.Approve: Tax Bill Insert - Senior Tax Deferral Program ITEMS FOR INDIVIDUAL CONSIDERATION 1.Presentation: Nexus Study Non-Residential Development Surcharge for Affordable Housing 6:45pm 2.Application: Liquor License Change of Manager Amendment - Fiorella's Lexington LLC 8:05pm 3.Status: Article 97 Filing for Lexington High School Project 8:10pm ADJOURN 1.Anticipated Adjournment 8:15pm Meeting Packet: https://lexington.novusagenda.com/agendapublic/ *Members of the public can attend the meeting from their computer or tablet by clicking on the following link at the time of the meeting: https://lexingtonma.zoom.us/j/82013535294? pwd=mGvKYC9PHOT8ByUHHa0a18jNRhRXpf.1 Phone +1 646 876 9923 Meeting ID: 820 1353 5294 Passcode: 848540 An Act Relative to Extending Certain State of Emergency Accommodations: https://www.mass.gov/the-open-meeting-law The next Select Board will be held on Monday, December 15, 2025 at 6:30pm via hybrid participation. Hearing Assistance Devices Available on Request All agenda time and the order of items are approximate and subject to change. AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Select Board Member Announcements and Liaison Reports PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: LR.1 SUMMARY: Under this item, Select Board Members can provide verbal updates, make announcements, as well as comment on any additional points or concerns. SUGGESTED MOTION: FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type 12082025_Select Board Announcements and Liaison Reports Backup Material Select Board Announcements and Liaison Reports – December 8, 2025 Jill Hai, Chair The sustainable Lexington committee sent an email requesting that we submit a letter of support regarding three sustainability-related bills that are currently pending in the legislature. Maggie Peard, our Sustainability Director, has reviewed the bills and is also in support. In order to expedite the letter, Mr. Bartha will draft and send it on behalf of the Town. (request letter attached) Nov 5, 2025 Dear members of the Select Board, There are a handful of complementary bills being proposed in this session of the Massachusetts legislature that together would strengthen local control over utility work, save money by improving coordination with municipal infrastructure projects, and prepare communities for a cleaner, more affordable energy future. The Sustainable Lexington Committee recommends that the Select Board support these measures and help ensure that our town has a clear voice in how utilities operate within our streets, can plan more efficiently across departments, and can potentially participate in new clean-thermal initiatives in the future without taking on new administrative burdens or forming a municipal light plant. The bills are summarized as follows: ● S.2248 / H.3446 – “An Act Relative to Municipal Voices in Gas Utility Work” ○ Strengthens local authority over gas-utility street work by requiring utilities to share detailed project data, align schedules with municipal infrastructure plans, and restore streets promptly. Gives towns the right to condition consent and petition the Department of Public Utilities (DPU) if utilities fail to comply. ● H.3564 – “An Act Relative to Infrastructure Replacement Projects” ○ Expands coordination between municipalities and utilities on gas and related infrastructure replacement projects. Aims to reduce redundant excavation, improve safety, and ensure replacement work aligns with local paving, sewer, and broadband efforts. ● S.2249 / H.3539 – “An Act Relative to a Tactical Transition to Affordable, Clean Thermal Energy” ○ Establishes a pathway for communities to transition from fossil-gas systems to clean, non-emitting thermal networks (e.g., networked geothermal). Encourages municipal participation in pilot projects and partnerships with utilities to lower heating costs and emissions. Supporting S.2448/H.3446, H.3564, and S.2249/H.3539, gives municipalities a practical toolkit to manage the state’s energy transition on their own terms. Together, these bills empower towns to better coordinate infrastructure work, protect local roads and trees, and participate in the shift toward cleaner, more efficient heating. S.2448/H.3446 ensures that when gas companies open streets or replace aging pipes, towns receive detailed project information and have the authority to align that work with local paving, sewer, or broadband schedules. H.3564 builds on that by requiring utilities to coordinate broader infrastructure replacement projects with municipalities, reducing redundant excavation and saving taxpayer money. These two bills alone create a level of transparency and planning control that simply doesn’t exist today. S.2249/H.3539, co-sponsored by Lexington’s House delegation, extends those same benefits into the future by preparing the groundwork for clean, non-emitting thermal networks — neighborhood-scale systems that provide heating and cooling through shared underground loops. While Lexington has already participated in one feasibility study for thermal networks, this bill would allow Lexington to build on that and more easily partner with utilities, developers, or regional energy cooperatives to host pilot projects, attract state funding, and reduce dependence on fossil gas infrastructure. By supporting this bill, Lexington can better position our town to participate in the transition to affordable, clean heating options — lowering energy costs and making residents eligible for emerging incentives tied to the Commonwealth’s decarbonization goals. Taken together, these bills shift energy planning from something done to municipalities to something done with them. They give towns a seat at the table, stronger tools for coordination, and new opportunities to pilot sustainable infrastructure without creating new administrative burdens. Enacting S.2448/H.3446, H.3564, and S.2249/H.3539 means gaining leverage to protect local assets, reducing wasteful utility disruptions, and ensuring that as Massachusetts transitions its energy systems, our town and residents can benefit can help shape the path — not simply react to it. The Sustainable Lexington Committee feels that this is an important opportunity for the Town of Lexington to advocate for municipal empowerment that is especially in support of our climate goals. The Committee advises the Select Board to provide a brief letter of support for these bills to the Joint Committee on Telecommunications, Utilities and Energy (TUE) via email to Senate TUE staff Benjamin Minerva at ben.minerva@masenate.gov and House TUE staff at HC194onTelecommunicationsUtilitiesandEnergy@mahouse.gov. Respectfully, Cindy Arens Chair, Sustainable Lexington Committee AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Lexington High School Project Update to Board PRESENTER: Joe Pato ITEM NUMBER: LR.2 SUMMARY: Under this standing item, the Select Board will share general updates on the Lexington High School Project, including progress reports, key milestones, and upcoming actions. This item is intended to provide regular updates to the community on the project’s status and next steps. Public comment will not be taken on this item. For additional information and live updates, visit the project website: www.lhsproject.lexingtonma.org SUGGESTED MOTION: FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Town Manager Weekly Update PRESENTER: Steve Bartha, Town Manager ITEM NUMBER: TM.1 SUMMARY: Under this item, the Town Manager can provide verbal updates, make announcements, as well as comment on any additional points or concerns. SUGGESTED MOTION: FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: Battle Green Use Request - Lexington History Museums PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.1 SUMMARY: Category: Decision-Making The Lexington History Museums, in collaboration with Lexington Minute Men, have requested permission from the Select Board for use of the Battle Green on Saturday, December 13, 2025 from 12:00pm to 1:30pm as part of a Reenactment of Lexington's historic 1773 Tea Burning as follows: Lexington Minute Men (LMM) Members march from the Visitors Center Lawn to the Common to conduct a musket drill of marching and aiming weapons (weapons will not be fired during this drill) and complete the manual of arms between approximately 12:00pm and 12:30pm; LMM parade around the Common, re-form ranks, conduct memorial and honor salute for "Lexington's Ten", following a roll call of names; LMM parades back to the Visitors Center Lawn for Tea Burning Reenactment. A Special Event Permit application has been submitted to the Town Manager's Office by the Lexington History Museums for the use of the Visitors Center Lawn on Saturday, December 13, 2025. The Town Manager's Office, Police Department, Department of Public Works, and the Fire Department have no objections to this request. SUGGESTED MOTION: To approve the request of the Lexington History Museums, in collaboration with Lexington Minute Men, to use the Battle Green on Saturday, December 13, 2025 from 12:00pm to 1:30pm for the Lexington Minute Men to perform a musket drill, as well as perform marching and other demonstrations on the Common. Move to approve the consent. FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type Tea Burning Diagram Backup Material AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Accept: Select Board Committee Resignation PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.2 SUMMARY: Category: Decision-Making Resignation: Hanscom Area Town Committee (HATS) The Select Board is being asked to accept the resignation of Charles Hornig from the Hanscom Area Town Committee effective immediately. Housing Partnership Board The Select Board is being asked to accept the resignation of Charles Hornig from the Housing Partnership Board effective immediately. Transportation Advisory Committee The Select Board is being asked to accept the resignation of Nisahnth Veeragandham from the Transportation Advisory Committee effective immediately. Vision for Lexington The Select Board is being asked to accept the resignation of Daniel Joyner from the Vision for Lexington Committee effective immediately. SUGGESTED MOTION: To accept the resignation of Charles Hornig from the Hanscom Area Town Committee & the Housing P artnership Board, effective immediately. To accept the resignation of Nisahnth Veeragandham from the Transportation Advisory Committee & Daniel Joyner from the Vision for Lexington Committee, effective immediately. Move to approve the consent. FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type 2025.11.21 Charles Hornig - Hanscom Area Towns Committee Backup Material 2025.11.21 Charles Hornig - Housing Partnership Board Backup Material 2025.11.13 Nisahnth Veeragandham - Transportation Advidory Committee Backup Material 2025.12.02 Daniel Joyner - Vision for Lexington Backup Material Dear Select Board, I am writing to formally resign from the Transportation Advisory Committee, effective immediately. Unfortunately, I am not attending college within a reasonable proximity to be involved in town affairs as I’m attending college in San Luis Obispo California. It has been my privilege for the past three years to contribute to meaningful discussions and initiatives addressing transportation challenges at the school district, town, and regional levels. The opportunity to collaborate with such thoughtful, dedicated members has deepened my understanding of civic engagement and strengthened my appreciation for the important role that transportation plays in shaping an inclusive and accessible community. Even though I am stepping away from this role, my commitment to supporting safe, reliable, and equitable public transportation remains strong regardless of the area I live in. For years to come, I will continue to be an advocate for equitable, sustainable, and community-driven transportation solutions within Lexington and beyond. I am deeply grateful to have been given the chance to work on this committee, and I look forward to seeing what's next for transportation within the town of Lexington. Sincerely, Nishanth Veergandham AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: Select Board Committee Appointments PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.3 SUMMARY: Category: Decision-Making Appointment: Housing Partnership Board In accordance with the HPB Charge, the Council on Aging has recommended Sandra Hackman for consideration of appointment to the HPB. The HPB has reviewed Ms. Hackman's application and feels she would be a welcome asset to the committee. The Select Board is being asked to appoint Sandra Hackman to the Housing Partnership Board to fill an unexpired term ending on September 30, 2028. Housing Partnership Board The Planning Board has recommended Michael Schanbacher to fill the Planning Board member seat on the Housing Partnership Board. The Select Board is being asked to appoint Michael Schanbacher to the Housing Partnership Board to fill the unexpired term ending on September 30, 2027, previously held by Charles Hornig. SUGGESTED MOTION: To appoint Sandra Hackman to the Housing Partnership Board to fill a term ending on September 30, 2028, effective immediately. To appoint Michael Schanbacher to the Housing Partnership Board to fill the term ending on September 30, 2027, effective immediately. Move to approve the consent. FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type HPB Feedback - Hackman Backup Material COA Nomination - Hackman Backup Material Planning Board Recommendation - M. Schanbacher Backup Material AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: Town Manager Committee Appointment PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.4 SUMMARY: Category: Decision-Making The Town Manager, at the suggestion of the Conservation Administrator and Chair of the Commission, would like the Select Board to approve the appointment of Thomas Oliver to the Conservation Commission. Mr. Oliver's term is effective immediately and will expire March 31, 2028. SUGGESTED MOTION: To confirm the Town Manager's appointment of Thomas Oliver to the Conservation Commission with a term set to expire March 31, 2028. FOLLOW-UP: Town Manager's Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type T. Oliver Backup Material Submit Date: Oct 29, 2025 First Name Middle Initial Last Name Email Address Home Address Suite or Apt City State Postal Code Primary Phone Alternate Phone Lexington MA Boards & Committees Application Form Profile Attendance to a regularly scheduled meeting of the board or committee of interest is strongly encouraged when considering applying for membership. All committee meetings are open to the public and are posted at least 48 hours in advance of the meeting in our www.lexingtonma.gov/calendar. If you are appointed to the board or committee for which you have applied, information from this application will be used to contact you regarding your appointment from the appointing authority as well as the Town Clerk’s Office. Please do not offer information on this application you would prefer we not use. Applications will be kept on file and considered as vacancies occur for up to six months unless otherwise noted. If you have any questions or need more information regarding the completion of the application, please contact either the Select Board Office at 781-698-4580 or the Town Manager’s Office at 781-698-4540. Nickname Tom Preferred Title (i.e. Mr., Ms., Mx., Dr., Rev .....) Mr. Alternate Email Address (Optional) Length of Residence in Lexington (Note: ZBA requirement is a minimum of 8 years) 28 years What Precinct do you live in? Precinct 1 Thomas T Olivier Lexington MA 02420 Mobile: Thomas T Olivier Employer Job Title Upload a Resume Work Address Which Boards would you like to apply for? Conservation Commission: Submitted Interests & Experiences Please tell us about yourself and why you want to serve. Special Training and/or Qualifications Over 30 years as environmental attorney at US Environmental Protection Agency, enforcing environmental statutes and regulations. Four years as law firm associate in land use, real estate, and town counsel practice. Why are you interested in serving on a board or commission? Lexington’s open space and wetlands are invaluable resources that need management and protection. I think the Conservation Commission’s work is essential, and I would like to be of assistance now that I am retired from EPA. How did you hear about the board or commission for which you are applying? As part of my work as an attorney, I am aware of the role and functions of town conservation commissions, and have represented clients before conservation commissions and other town bodies. Have you recently attended any meetings of the board or committee for which you are applying? Yes No Have you confirmed your availability to attend the board or committee's meetings? (i.e. can attend at the time the committee regularly meets) Yes No Do you currently serve on another board or committee? Yes No If yes, please list date of most recent Conflict of Interest Law Training. Retired Thomas T Olivier Conflict of Interest Law Training Certificate Thomas T Olivier AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Common Victualler License Renewals PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.6 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Common Victualler License renewals. The Select Board Office is in receipt of all of the required documentation and departmental reviews with sign-offs for the renewals of the following businesses holding a Common Victualler License: Akame Nigiri and Sake - 1707 Massachusetts Avenue #2 Alexander's Pizza - 180 Bedford Street Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Ave Bruegger's Bagels - 413 Waltham Street Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Coco Fresh Tea and Juice - 1764 Massachusetts Avenue Craft Food Hall - 10 Maguire Road Dunkin Donuts -10 Woburn Street Dunkin Donuts - 141 Massachusetts Avenue Dunkin Donuts - 277 Bedford Street Element Hotel - 727 Marrett Road Fiorella's Trattoria - 25 Waltham Street il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Inspire Bowl n Tea - 1686 Massachusetts Avenue Fruitee Yogurt - 1707 Massachusetts Avenue Lexington Golf Club - 55 Hill Street Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Mario's Italian Restaurant - 1733 Massachusetts Avenue McDonald's - 690 Marrett Road Pine Meadows Golf Club - 255 Cedar Street Post 1917 - 27 Waltham Street Qdoba Mexican Eats - 46 Bedford Street Rancatore's Ice Cream and Yogurt - 1752 Massachusetts Avenue Revival Café + Kitchen - 1729 Massachusetts Avenue Revolution Hall - 3 Maguire Road Royal India Bistro - 7 Meriam Street Starbucks #7553 - 60 Bedford Street Taipei Gourmet - 211 Massachusetts Avenue Tatte Bakery & Cake - 1777 Massachusetts Avenue The Hangar (Chef Louie's) - 103 Hartwell Ave The Upper Crust - 41 Waltham Street The Vintage Tea and Cake Company - 21 Muzzey Street Wicked Bagel - 171 Massachusetts Avenue SUGGESTED MOTION: To approve the 2026 Annual Common Victualler License Renewals for the following businesses: Akame Nigiri and Sake - 1707 Massachusetts Avenue #2 Alexander's Pizza - 180 Bedford Street Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Ave Bruegger's Bagels - 413 Waltham Street Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Coco Fresh Tea and Juice - 1764 Massachusetts Avenue Craft Food Hall - 10 Maguire Road Dunkin Donuts -10 Woburn Street Dunkin Donuts - 141 Massachusetts Avenue Dunkin Donuts - 277 Bedford Street Element Hotel - 727 Marrett Road Fiorella's Trattoria - 25 Waltham Street il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Inspire Bowl n Tea - 1686 Massachusetts Avenue Fruitee Yogurt - 1707 Massachusetts Avenue Lexington Golf Club - 55 Hill Street Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Mario's Italian Restaurant - 1733 Massachusetts Avenue McDonald's - 690 Marrett Road Pine Meadows Golf Club - 255 Cedar Street Post 1917 - 27 Waltham Street Qdoba Mexican Eats - 46 Bedford Street Rancatore's Ice Cream and Yogurt - 1752 Massachusetts Avenue Revival Café + Kitchen - 1729 Massachusetts Avenue Revolution Hall - 3 Maguire Road Royal India Bistro - 7 Meriam Street Starbucks #7553 - 60 Bedford Street Taipei Gourmet - 211 Massachusetts Avenue Tatte Bakery & Cake - 1777 Massachusetts Avenue The Hangar (Chef Louie's) - 103 Hartwell Ave The Upper Crust - 41 Waltham Street The Vintage Tea and Cake Company - 21 Muzzey Street Wicked Bagel - 171 Massachusetts Avenue FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Entertainment License Renewals PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.6 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Entertainment License renewals. The Select Board Office is in receipt of all of the required documentation for the renewals of the following businesses holding an Entertainment License: Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Avenue Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Element Hotel - 727 Marrett Road Il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Spirit of India - 321 Marrett Road Starbucks #7553 - 60 Bedford Street Thai Room - 182 Bedford Street The Upper Crust - 41 Waltham Street SUGGESTED MOTION: To approve the 2026 Annual Entertainment License Renewals for the following businesses: Aloft Hotel - 727 Marrett Road Beijing Chinese Dining - 1709 Massachusetts Avenue Clay Oven Indian Restaurant - 1666 Massachusetts Avenue Element Hotel - 727 Marrett Road Il Casale - 1727 Massachusetts Avenue Inn at Hastings Park - 2013-2027 Massachusetts Avenue Love at First Bite Thai Kitchen - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Spirit of India - 321 Marrett Road Starbucks #7553 - 60 Bedford Street Thai Room - 182 Bedford Street The Upper Crust - 41 Waltham Street FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Class I/II/III License Renewals PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.7 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Class I/I/III License renewals. The Select Board Office is in receipt of all of the required documentation and departmental reviews with sign-offs for the renewals of the following businesses holding a Class I/II/III License: Class I: Lexington Toyota - 409 Massachusetts Avenue Class II: A to Z Auto Wholesale - 20 Vine Street Auto and Diesel Sales - 75 Westview Street Auto Engineering - 436 Marrett Road Lexington Auto Center, Inc. - 1095 Massachusetts Avenue Lexington Auto Service, Inc. - 39 Bedford Street Mabuchi Motorcars - 401 Lowell Street Minutemen Auto Haus - 6 Fulton Road Class III: John P. Carroll Company Inc. - 700 Waltham Street SUGGESTED MOTION: To approve the 2026 Annual Class I/II/III License Renewals for the following businesses: Class I: Lexington Toyota - 409 Massachusetts Avenue Class II: A to Z Auto Wholesale - 20 Vine Street Auto and Diesel Sales - 75 Westview Street Auto Engineering - 436 Marrett Road Lexington Auto Center, Inc. - 1095 Massachusetts Avenue Lexington Auto Service, Inc. - 39 Bedford Street Mabuchi Motorcars - 401 Lowell Street Minutemen Auto Haus - 6 Fulton Road Class III: John P. Carroll Company Inc. - 700 Waltham Street FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Common Carrier License Renewal PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.8 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Common Carrier License renewal of Boston Hidden Gems, Inc. The Select Board Office is in receipt of all of the required documentation and departmental reviews with sign-offs for the renewal of Boston Hidden Gems, Inc Common Carrier License for the purpose of operating their tours through Lexington. SUGGESTED MOTION: To approve the 2026 Annual Common Carrier License Renewals for Boston Hidden Gems, Inc to provide bus tours through Lexington. FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Innholder License Renewals PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.9 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Innholder License Renewals. The Select Board Office is in receipt of all of the required documentation and departmental reviews with sign-offs for the renewal of the following businesses holding an Innholder License: INNHOLDER Aloft Lexington - 727 Marrett Road A Element Lexington - 727 Marrett Road B Inn at Hastings Park - 2013-2027 Massachusetts Avenue SUGGESTED MOTION: To approve the 2025 Annual Innholder License Renewals for the following businesses: INNHOLDER Aloft Lexington - 727 Marrett Road A Element Lexington - 727 Marrett Road B Inn at Hastings Park - 2013-2027 Massachusetts Avenue Move to approve the consent FOLLOW-UP: Select Board Office. DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: 2026 Liquor License Renewals PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: C.10 SUMMARY: Category: Decision-Making The Select Board is being asked to approve the 2026 Annual Liquor License renewals. The Select Board Office is in receipt of all of the required documentation for the renewals of the following businesses: ALL ALCOHOL/ RESTAURANTS Beijing Cuisine - 1709 Massachusetts Avenue Clay Oven - 1666 Massachusetts Avenue Il Casale - 1727 Massachusetts Avenue Ixtapa Cantina - 177 Massachusetts Avenue Love at First Bite - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Royal India - 7 Meriam Street ALL ALCOHOL/ INNHOLDER Aloft Hotel - 727 Marrett Road - A Element Hotel - 727 Marrett Road - B Inn @Hastings Park - 2013-2027 Massachusetts Avenue WINE/MALT RESTAURANTS Akame Nigiri & Sake - 1707 Mass Ave Unit 2 Daikanyama - 43 Waltham Street Fiorellas - 25 Waltham Street Marios 1733 Mass Ave Taipei Gourmet - 211 Mass Ave Upper Crust - 41 Waltham Street Vintage Tea and Cake - 21 Muzzey Street PACKAGE STORES Berman’s - 55 Massachusetts Ave Lexington Wine & Spirits - 186 Bedford Street, unit Liberty Wine and Spirits - 335 Woburn Street Vinebrook Bottle - 131 Massachusetts Ave Neillio's - 55 Bedford Street CLUBS Lex. Golf Club - 55 Hill Street Lexington Elks Knights of Col. - 177 Bedford Street SUGGESTED MOTION: to approve 2026 Liquor License Renewals for the following: ALL ALCOHOL/ RESTAURANTS Beijing Cuisine - 1709 Massachusetts Avenue Clay Oven - 1666 Massachusetts Avenue Il Casale - 1727 Massachusetts Avenue Ixtapa Cantina - 177 Massachusetts Avenue Love at First Bite - 1710 Massachusetts Avenue Post 1917 - 27 Waltham Street Revolution Hall - 3 Maguire Road Royal India - 7 Meriam Street ALL ALCOHOL/ INNHOLDER Aloft Hotel - 727 Marrett Road - A Element Hotel - 727 Marrett Road - B Inn @Hastings Park - 2013-2027 Massachusetts Avenue WINE/MALT RESTAURANTS Akame Nigiri & Sake - 1707 Massachusetts Ave Unit 2 Daikanyama - 43 Waltham Street Fiorellas - 25 Waltham Street Marios 1733 Massachusetts Ave Taipei Gourmet - 211 Massachusetts Ave Upper Crust - 41 Waltham Street Vintage Tea and Cake - 21 Muzzey Street PACKAGE STORES Berman’s - 55 Massachusetts Ave Lexington Wine & Spirits - 186 Bedford Street Liberty Wine and Spirits - 335 Woburn Street Vinebrook Bottle - 131 Massachusetts Ave Neillio's - 55 Bedford Street CLUBS Lex. Golf Club - 55 Hill Street Lexington Elks - 959 Waltham Street Knights of Col. - 177 Bedford Street FOLLOW-UP: Select Board Office DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Approve: Tax Bill Insert - Senior Tax Deferral Program PRESENTER: Carolyn Kosnoff, Assistant Town Manager for Finance ITEM NUMBER: C.10 SUMMARY: This is an annual request to approve a tax bill insert to promote the Senior Tax Deferral Program to Lexington taxpayers. If approved, this insert will be included the the FY2026 third quarter tax bills which will be mailed at the end of December 2025. SUGGESTED MOTION: Move to approve the attached Senior Tax Deferral information slip and add to the FY2026 third quarter tax bill mailing. FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 ATTACHMENTS: Description Type FY2026 Tax Deferral Insert Exhibit Attention Seniors!Lexington Property Tax Deferrals are Safe and AffordableIf you are a Lexington Senior aged 65 or older with a 204 gross household income of $9,000 or less, you can postpone paying all or any part of your property tax bill and let the value of your house pay the tax bill later.xFiscal Year 2026 deferrals will enjoy a low simple interest rate of 1%xEach year’s deferral is like an individual loan that doesn’t have to be repaid during your lifetime or yourspouse’s lifetime unless home ownership is transferred or you choose to pay it off.xFor detailed qualifying information on the Property Tax Deferral Program and other State and local taxprograms call the 7RZQAssessor’s Office at 781-698-4578.xA brochure describing all property tax exemptions and deferrals is available at the Assessor’s Office, theLexington Community Center and on-line atZZZOH[LQJWRQPDJRY(OGHUO\2WKHU7D[5HOLHIx)RUJHQHUDOLQTXLULHVRQILQDQFLDODVVLVWDQFHSURJUDPVSOHDVHFRQWDFW+XPDQ6HUYLFHVDW AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Presentation: Nexus Study Non-Residential Development Surcharge for Affordable Housing PRESENTER: Karl Seidman, Seidman Consulting ITEM NUMBER: I.1 SUMMARY: "Lexington Town Meeting adopted Article 36 of Annual Town Meeting 2021, to Authorize Special Legislation- Development Surcharge for Affordable Housing. On December 30, 2024, the state legislature enacted the Town’s petition to impose a surcharge on commercial development activities over 30,000 square feet for the purpose of funding community housing, pursuant to the 2021 Annual Town Meeting vote. A report, or “nexus study” is required of the Town within 12 months in order to set a surcharge fee." (page 3) "Recommendations. Given current market conditions and the difficult development environment, Lexington is unlikely to see new non-residential development and revenue from a new housing contribution for some time. Consequently, it should consider deferring implementation of a housing contribution, either by approving the fee and deferring its application or taking no action and reconsidering establishing a fee when market conditions improve. If and when Lexington established a housing contribution, a rate between $4.50 and $9.50 is recommended, which is unlikely to deter new non-residential development. Other policy and administrative recommendations for a housing contribution are: Set the project size threshold at 30,000 SF; Apply the housing contribution to all non-residential uses without an exemption; Establish a uniform fee across uses and for all areas within Lexington; Require payment of the one-time fee collected in two installments with the first (50%) payment at the time of the certificate of occupancy and the balance paid at its one-year anniversary; Adjust the fee annually based on either the Boston CPI or a construction cost index; and Review and reset the fee every 5 to 7 years based on changes in market conditions and the expected level and type of non-residential development." (pages 4-5) SUGGESTED MOTION: Based on the recommendations included in the report, the Board may wish to consider one of the following actions: 1. Take no action. 2. Set the contribution at $0 per square foot (PSF) and revisit the topic when the non-residential development market conditions improve. 3. Set the contribution at [a rate between $4.50 and $9.50] PSF and delaying implementation until [future fiscal year]. 4. Set the contribution at [a rate between $4.50 and $9.50] PSF and implement effective [near term date]. FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 6:45pm ATTACHMENTS: Description Type Nexus Study Presentation Presentation Nexus Study Report Backup Material Lexington Nexus Study Select Board Presentation December 8, 2025 •Forecast 10-year development subject to linkage, tenant industries and jobs •Estimate impact of new jobs on affordable housing demand •Calculate funding gap to build housing to meet demand –Maximum and alternative linkage fees to fill funding gap •Assess impact of fee options on Lexington’s economic competitiveness •Recommend linkage fees and policies Nexus Study Scope and Analysis 2 •Office: declining demand with historic levels of available space & negative absorption –44.8 million SF available (23.6%) as March 2025 –Negative absorption of 1.8 million SF in 2024 & 444,000 in 2025, Q1 –128/Mass Pike area: 5.3 million available SF (26.3%); +158,000 net absorption in 2025 Q1 •Lab: Weakening demand and extensive overbuilding has generated large oversupply –28.8% available space (16.3 million SF) in 2025, Q1; increase of 1.1 million in quarter –Negative absorption of 599,000 SF in 2025 Q1 vs. -311,000 in all of 2024 –Suburban market: 8.1 million SF available (29.5%) with 1.6 million in 128-Mass Pike area 128-Mass Pike available space = 5 to 6 years of peak period absorption •Federal policy shift and actions risk further decline in life sciences industry and lab demand Boston Metro Office & Lan Market Conditions Source: Colliers Office and Lab Market Viewpoints, 2025, Quarter 1 and 2024, Q4 3 •Office: Colliers lists 2.27 million SF of office space—decline of 419,000 SF since 2015 –14% is vacant/available space (325,000 SF) –Annual net absorption averaged 21,500 from 2015 to 2024 •Lab: Inventory of 2.78 million SF of lab & GMP manufacturing space in 2025 Q1 –1.2 million SF increase in supply since 2015 –22.9% is available space (638,000 SF); large increase (390,000 SF) in 2024 –Net absorption was positive in 8 of 10 years, averaging 115,000 SF –Highest annual absorption from 2017 to 2020, averaging 187,000 SF •Absorption of existing available lab space likely to take at least 5 years Lexington Market Data 4 Source: Colliers Market Data Lexington Recent Non-residential Development & Pipeline 5 SF PercentSF AmountUse 17.2%366,500Lab 43.5%929,852Lab/office 39.0%832,095Assisted Living 0.4%7,500Retail 100%2,135,947Total Non-residential Development, 2015-2025 by Use Non-Residential Development Pipeline May 2025 StatusSFUseAddress Approved/Pre-construction280,800Lab/Office/Retail12-18 Hartwell Ave Approved/Pre-construction757,262Lab/Office95/99 Hayden Ave Approved/Pre-construction93,250Lab/Office1-3-5 Hartwell 1,131,312Total •Difficult development market with oversupply of office and lab space, limited demand for new office space and weakened lab demand •Life science/lab development is viewed as strongest market with long-term growth and demand –New development will follow substantial absorption of regional over supply, likely 5+ years •Lexington is an established life science industry cluster with locational strengths –Recent & current non-residential pipeline dominated by life science projects –Future new life science development likely after market stabilizes Summary 6 10 Year Development & Employment Projection 7 Potential Project Use Estimated SF Occuppied SF (90%) 95/99 Hayden - phase 1 Lab/office 159,634 143,671 95/99 Hayden - phase 2 Lab/office 193,232 173,909 1-3-5 Hartwell Place Lab/office 93,250 83,925 Lincoln Labs "Lincubator" Maker/incubator space 40,000 36,000 Total 486,116 437,505 Industry Occupied SF SF/Employee Estimated Number of Employees Life Science 401,505 450 892 Scientific Research &Development 36,000 400 90 Total 437,505 982 Methodology for Affordable Housing Demand Estimate 8 Estimated Number of Single & Multi-worker Households Demanding Housing in Lexington by Very Low, Low and Middle-income Levels and Household Size MSA Data on Households Estimated No. of Workers Demanding Housing in Lexington by Annual Earnings Industry Occupational Distribution and Earnings Estimated Number of Workers Demanding Housing in Lexington by Industry 10 Year Projected Development & Employment by Use and Industry Employee Survey Affordable Housing Household Income Levels 9 AMI is Area Median Income Source: Town of Lexington Restricted Rents, Sales Prices and Income Limits (2025) Income Level 1 2 3 4 Very Low-income (< 50% AMI)$57,900 $66,200 $74,450 $82,700 Low-Income (50% to 80% AMI $92,650 $105,850 $119,100 $132,300 Middle-Income (80% to 120% AMI)$135,156 $154,464 $173,772 $193,080 Household Size Estimated Housing Demand by Income and Household Size. All Industries Percent by IncomeTotal 4 or More HHD 3 Person HHD 2 Person HHD 1 person HHDIncome Category 2.3%31011Very Low- Income 18.3%246747Low-Income 79.4%1041893047Middle-Income 100.0%13125163555Total 100.0%19.1%12.2%26.7%42.0%% by Household Size 10 Middle Income Low-IncomeVery-Low IncomeTenure 50%70%100%Percent Rental Units 50%30%0%Percent Ownership Units Methodology for Calculating Maximum Warranted Linkage Fee Rental Units Net Cash Flow (Rent @ 30% of HHD Income Less Operating Costs) Unsubsidized Debt and Equity Supported by Net Cash Flow Rental Units Subsidy = TDC – Supportable Debt & Equity Ownership Units Buyer pays 30% of HHD Income for Principal, Interest, Taxes, Insurance, Condo Fees Unit Affordable Price Per Supportable Mortgage Amount & Down Payment Ownership Units Subsidy = TDC – Total Sales Maximum Warranted Linkage Fee = Total Subsidy/Projected SF of Non-Residential Development Units of Affordable Housing Demand By Tenure, HHD Size & Income Total Subsidy/Funding Gap Needed to Address Affordable Housing Demand 11 Subsidy Required per SF of Commercial Development Renter and Ownership Units Units 131 Unit TDC $652,855 TDC $85,524,000 Subsidy Required $44,766,000 Percent Subsidy 52.3% Non-Residential SF 486,116 Max Fee $92.09 Note: TDC = Total Development Costs. Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. 1212 Illustrative Linkage Fee Scenarios for the Town of Lexington Linkage Fee Scenarios - Lexington Per Foot Share of Subsidy Scenario Fee Lexington Percentage Share of TDC 5% $4.60 2.6% 10% $9.21 5.2% 15% $13.81 7.9% 25% $23.02 13.1% 35% $32.23 18.3% Note: TDC = Total Development Costs. Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. 13 Potential Fee Impact on Rents Linkage Fee Level Potential Impact on Annual Per Square Foot Rent* Percent of Lexington Lab Rent ($75) $4.60 per square foot $0.46 0.6% $9.21 per square foot $0.92 1.2% $13.81 per square foot $1.38 1.8% $23.02 per square foot $2.30 3.1% 92.09 per square foot $9.21 12.3% *Fee cost amortized over a 10 year lease Location Lab Asking Rent Differential from Lexington Lexington $75 128-MassPike $75 $0.00 Inner Suburbs $75 $0.00 West Cambridge $88 $13.00 Boston-Seaport $100 $25.00 East Cambridge $110 $35.00 Boston-Fenway $108 $33.00 Source: CBRE. LPC, CREDA Boston Metro Lab Reports 1Q25 14 Developer Returns •150,000 SF project under 2 total PSF cost scenarios ($1000 & $1600) •10% vacancy and $75/sf annual rent used to estimate net rental income •Developer return on cost = net rental income/total development costs (TDC) •Fee increases TDC but not income, reducing developer return on cost Equity Investor Returns •Same project cost scenarios with equity investment at 40% of TDC –Analysis for 17% and 20% equity return threshold •Fee fully funded by investor, increasing the required equity investment •Investor return amount does not change, lowering % return on investment Analysis of Impact on Developer and Equity Returns 15 Potential Fee Impact on Developer Returns Developer return on cost thresholds ranged from 7% to 12% Development at $1600 PSF No Fee $92.09 Fee $4.60 Fee $9.21 Fee $13.81 fee $23.02 Fee Total Development Costs $240,000,000 $253,813,500 $240,690,000 $241,381,500 $242,071,500 $243,453,000 Estimated Gross Rental income $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 Vacancy (10%) $1,125,000 $1,125,000 $1,125,000 $1,125,000 $1,125,000 $1,125,000 Net Rental Income $10,125,000 $10,125,000 $10,125,000 $10,125,000 $10,125,000 $10,125,000 Return on Cost 4.22% 3.99% 4.21% 4.19% 4.18% 4.16% Differential -0.23% -0.01% -0.02% -0.04% -0.06% Development at $1000 PSF No Fee $92.09 Fee $4.60 Fee $9.21 Fee $13.81 fee $23.02 Fee Total Development Costs $150,000,000 $163,813,500 $150,690,000 $151,381,500 $152,071,500 $153,453,000 Estimated Gross Rental income $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 Vacancy (5%) $562,500 $562,500 $562,500 $562,500 $562,500 $562,500 Net Rental Income $10,687,500 $10,687,500 $10,687,500 $10,687,500 $10,687,500 $10,687,500 Return on Cost 7.13% 6.52% 7.09% 7.06% 7.03% 6.96% Differential -0.60% -0.03% -0.07% -0.10% -0.16% 16 Potential Fee Impact on Equity Investor Returns $1000 PSF Cost Project No Fee $92.09 Fee $4.60 Fee $9.21 Fee $13.81 fee $23.02 Fee Equity Investment $60,000,000 $73,813,500 $60,690,000 $61,381,500 $62,071,500 $63,453,000 Initial Equity Return @17% $10,200,000 $10,200,000 $10,200,000 $10,200,000 $10,200,000 $10,200,000 Adjusted Return with Fee 13.82% 16.81% 16.62% 16.43% 16.07% Differential -3.18% -0.19% -0.38% -0.57% -0.93% Initial Equity Return @ 20% $12,000,000 $12,000,000 $12,000,000 $12,000,000 $12,000,000 $12,000,000 Adjusted Return with Fee 16.26% 19.77% 19.55% 19.33% 18.91% Differential -3.74% -0.23% -0.45% -0.67% -1.09% $1600 PSF Cost Project No Fee $92.09 Fee $4.60 Fee $9.21 Fee $13.81 fee $23.02 Fee Equity Investment $96,000,000 $109,813,500 $96,690,000 $97,381,500 $98,071,500 $99,750,000 Initial Equity Return @17% $16,320,000 $16,320,000 $16,320,000 $16,320,000 $16,320,000 $16,320,000 Adjusted Return with Fee 14.86% 16.88% 16.76% 16.64% 16.36% Differential -2.14% -0.12% -0.24% -0.36% -0.64% Initial Equity Return @ 20% $19,200,000 $19,200,000 $19,200,000 $19,200,000 $19,200,000 $19,200,000 Adjusted Return with Fee 17.48% 19.86% 19.72% 19.58% 19.25% Differential -2.52% -0.14% -0.28% -0.42% -0.75% Equity estimated at 40% of TDS; Equity return threshold ranges from 17% to 20% 17 Linkage Policies in Other Communities City Year Established Exaction/Linkage Fee Rate (per SF) Project Size Threshold (SF)Exemption (SF) 1983 Housing: $26.00 for labs & $19.33 fr other uses 1986 Jobs: $4.78 for labs and $3.76 Cambridge 1988 Housing: $36.36 30,000 30,000 for projects less than 60,000 SF Everett 2021 $1,000 per dwelling unit; Non- residential: $2.00 for first 30,000 SF; $3.00 for 30,001- 60,000 SF; $4.00 above 60,000 SF All residential projects 15,000 - non-residential 1990 Housing: $23.79; 50% of fee paid for project between 15,000 and 30,000 SF 15,000 for housing 15,000 for housing 2017 Jobs: $3.10; 50% of fee paid for project between 15,000 and 30,000 SF 15,000 for jobs 15,000 for jobs Watertown 2023 Housing: $11.50 30,000 0 Boston 50,000 50,000 Somerville 18 •New non-residential development is unlikely in the next 5 years •First wave of projects may already be approved and not subject to fee –Housing contribution unlikely to generate funding for some time •Concern about adding to development costs during a difficult investment environment •Should action on establishing a housing contribution be deferred? –Pro: wait until environment is better and new development likely –Con: Fee is already in place for when market conditions improve •Avoid risk that developers will seek approval early to avoid fee Timing to Establish Fee Given Development Environment 19 Linkage Policy/Administration Recommendations* •Project Size Threshold: 30,000 SF •Exemption: no exemption •Exempt Uses- none: given predominance of lab development •Fee Variation by Use: no need given limited type of new development •Fee Payment Timing: two payments at CoO and one year anniversary •Rate Adjustment: Annual CPI or construction cost index adjustment; review/reset fee every 5 to 7 years * If/when Lexington proceeds to establish housing contribution fee 20 93 Wright Road Concord MA 01742 978-760-3760 www.kfsconsulting.com Lexington Non-Residential Development Nexus Study Final Report to Town of Lexington Submitted by: Karl F. Seidman Consulting Services ConsultEcon, Inc. October 7, 2025 Lexington Linkage Nexus Study 2 Karl F. Seidman Consulting Services Table of Contents Executive Summary page 3 Glossary page 6 Introduction page 8 I. Lexington Development Potential and Future Development page 9 II. Impact of New Development on Affordable Housing Demand page 16 III. Subsidy Required to Address Housing Demand page 20 IV. Review of Policy Options page 41 V. Recommended Housing Contribution Fee Policies page 50 Appendix A: Employee Survey Summary page 51 Appendix B: Tables Detailing Housing Subsidy Analysis page 52 Lexington Linkage Nexus Study 3 Karl F. Seidman Consulting Services Executive Summary Lexington Town Meeting adopted Article 36 of Annual Town Meeting 2021, to Authorize Special Legislation-Development Surcharge for Affordable Housing. On December 30, 2024, the state legislature enacted the Town’s petition to impose a surcharge on commercial development activities over 30,000 square feet for the purpose of funding community housing, pursuant to the 2021 Annual Town Meeting vote. A report, or “nexus study” is required of the Town within 12 months in order to set a surcharge fee. The Town of Lexington commissioned this study to assess the impact of future non-residential development on affordable housing demand and the potential for a housing contribution fee1 to be paid by development projects to mitigate the cost to develop this housing. This report provides a nexus study to assist Lexington in deciding whether to establish a housing contribution fee and, if established, the appropriate fee level and policies. The report quantifies the impact of future non- residential development on the demand for affordable very low-income, low-income, and middle- income housing in Lexington. It then analyzes the proportionate housing contribution to mitigate these impacts. The report considers the impact of different fee levels on future non-residential development and Lexington’s competitiveness in attracting such development. Finally, it reviews linkage fees in other Massachusetts communities, discusses fee policy options and recommends fee options and policies for implementation of a new linkage fee. Housing Demand. Based on projected new non-residential development of 486,000 square feet (SF) over the next ten years, all of which is expected to be lab/office space for life science firms, 982 new jobs are estimated to be generated in Lexington. Information on the occupations and earnings of these new employees, in combination with data on the distribution of households by size and number of workers and survey results on the share of employees who moved to or sought housing in Lexington when they obtained a job in Lexington, was used to estimate the demand for new affordable housing units from the projected new development and employment. This analysis projected the need for 131 new affordable housing units to address this demand, including 3 very low-income units, 24 low-income units and 104 middle- income units2. Development Costs and Needed Subsidy. A separate analysis of the development costs and needed subsidy for rental and homeownership units was conducted based on 60 ownership units and 71 rental units3. Development costs were estimated based on the costs for recent comparable affordable housing developments built in Lexington and other Boston area communities. For rental projects, the needed subsidy was calculated as the difference between total development costs and the amount of debt and equity that could be supported by the housing cash flow using affordable rents at 30% of household income and comparable operating costs. For ownership projects, the needed subsidy was calculated as the difference between total development costs and the 1 Housing contribution is used in this report and is often referred to as an affordable housing linkage fee in other communities. 2 For this study, a very low-income unit is for a household with income at or less than 50% of the Boston area median income (AMI) as calculated by the U.S. Department of Housing and Urban Development, a low-income unit is for a household between 50% and 80% of Boston AMI and a middle-income unit is for a household between 80% and 120% of Boston AMI. 3 This mix is based on all the low-income units developed as rental units, 70% of moderate-income units built as rental and 30% as ownership, and 50% of the middle-income units built as rental and 50% as ownership. Lexington Linkage Nexus Study 4 Karl F. Seidman Consulting Services affordable purchase price based on home mortgage payments, insurance and property taxes at 30% of household income and a 5% down payment. The results of this analysis are:  Total development costs of $85.5 million; and  Total needed subsidy of $44.8 million with $2 million for the very low-income units, $11 million for the low-income units and $31.8 million for the middle-income units. The housing contribution needed to provide the full $44.8 million in subsidy is $92.09 per square foot on new non-residential development. However, very low-income and low-income housing development leverages public subsidies from federal and state sources in addition to those provided by local government. The local funding share to produce affordable rental housing in other communities varies from 6% in Somerville to 39% for rental projects in Cambridge. On average, local funds have represented 11% of the total project costs for rental projects in the Massachusetts Housing Partnership (MHP) portfolio built from FY2016 to FY2020. Middle- income ownership units do not qualify for these subsidies so Lexington would have to cover the full subsidy for these units. Impact on Competitiveness. An important consideration for Lexington in establishing a housing contribution is its potential impact on attracting new non-residential development and tenants. A new housing contribution will increase development costs, which can impact project economics in several ways depending on a variety of factors. Consequently, housing contribution options were analyzed for their potential impact on tenant rents, developer returns and equity investor returns. Housing contribution rates between $4.60 and $9.21 PSF had a modest impact on developer and investor returns, reducing developer returns by no more than 7 basis points4 and lowering the return on investment for equity investors by 45 basis points or less. Recommendations. Given current market conditions and the difficult development environment, Lexington is unlikely to see new non-residential development and revenue from a new housing contribution for some time. Consequently, it should consider deferring implementation of a housing contribution, either by approving the fee and deferring its application or taking no action and reconsidering establishing a fee when market conditions improve. If and when Lexington established a housing contribution, a rate between $4.50 and $9.50 is recommended, which is unlikely to deter new non-residential development. Other policy and administrative recommendations for a housing contribution are:  Set the project size threshold at 30,000 SF;  Apply the housing contribution to all non-residential uses without an exemption;  Establish a uniform fee across uses and for all areas within Lexington;  Require payment of the one-time fee collected in two installments with the first (50%) payment at the time of the certificate of occupancy and the balance paid at its one-year anniversary;  Adjust the fee annually based on either the Boston CPI or a construction cost index; and 4 A basis point is one-hundredth of a percentage point (.01%). Lexington Linkage Nexus Study 5 Karl F. Seidman Consulting Services  Review and reset the fee every 5 to 7 years based on changes in market conditions and the expected level and type of non-residential development. Lexington Linkage Nexus Study 6 Karl F. Seidman Consulting Services Glossary The following are definitions of terms used in the report. Availability rate (real estate) – the percentage of spaces in buildings of a particular type (e.g., industrial, lab, office) that is available for lease either as vacant space or offered for sub-lease by a tenant that is no longer using it. Basis point – 1/100th of a percentage point (.01%) Debt coverage ratio (DCR) – the ratio of a property’s annual net income or cash flow to its annual debt principal and interest payments Developer return – the annual financial receipts that a developer receives from a property expressed as a percentage of their investment in the property. Exemption – the amount of space in a development project that is not subject to the housing contribution Gross annual rent – total annual rent revenue that a housing project generates for leasing all its dwelling units before deductions for vacant units and annual operating costs Gross square footage – the total building space in a project measured in square feet Inventory (real estate) – the total amount of developed building space of a particular type (e.g. industrial, lab, office, etc.) in a specific geographic area. Investor return – the annual financial receipts that an equity (i.e., non-lender) investor receives from a property expressed as a percentage of their investment in the property. Housing contribution or linkage fee – an impact fee charged by a local government on certain developments to raise funds to offset the impacts of that development. For this study, the impacts are the demand for affordable housing due to new non-residential development. Housing contribution or linkage fee rate – the dollar amount of a housing contribution charged per square foot of non-residential space. Very low-income household – a household with annual income less than or equal to 50% of the Boston metropolitan area median household income. Low income household – a household with annual income more than 50% and less than or equal to 80% of the Boston metropolitan area median household income. Middle income household – a household with annual income more than 80% and less than or equal to 120% of the Boston metropolitan area median household income. Mortgage constant – a figure used to determine annual debt service payments for a mortgage based on the amount financial terms of a mortgage loan. Lexington Linkage Nexus Study 7 Karl F. Seidman Consulting Services Net absorption (real estate) – the net increase in the amount of leased space for a particular property type (e.g. industrial, lab, office, etc.) during a specific period, typically a quarter or year. It equals the total amount of newly leased space less the amount of space that has become newly vacant during the period. Net operating income – the income that a property generates after subtracting lost income from vacancies and operating expenses but before any debt service costs. Project size threshold – the minimum size of a development project that is subject to payment of a linkage fee. Return on cost – an annual financial return measure that developers use to assess project feasibility that is the ratio of a project’s net income to its total development costs. Return on equity – the annual financial receipts that an investor providing equity capital (i.e., non-debt capital provided in exchange for a share of ownership) to a project receives from the property expressed as a percentage of their equity investment in the property. Total development costs – the total costs to develop a project, inclusive of land acquisition, site and building construction and non-construction soft costs (e.g., legal, design, government fees, and borrowing/interest costs during the development period). Lexington Linkage Nexus Study 8 Karl F. Seidman Consulting Services Introduction Lexington Town Meeting adopted Article 36 of Annual Town Meeting 2021, to Authorize Special Legislation-Development Surcharge for Affordable Housing. On December 30, 2024, the state legislature enacted the Town’s petition to impose a surcharge on commercial development activities over 30,000 square feet for the purpose of funding community housing, pursuant to the 2021 Annual Town Meeting vote. A report, or “nexus study” is required of the Town within 12 months in order to set a surcharge fee. The Town of Lexington commissioned a study to assess the impact of future non-residential development on affordable housing demand and the potential for a housing contribution to be paid by development projects to mitigate the cost to develop this housing. This report provides a nexus study to assist Lexington in deciding whether to establish a housing contribution fee and, if established, the appropriate fee level and policies. The report quantifies the impact of future non- residential development on the demand for affordable very low-income, low-income, and middle- income housing in Lexington. It then analyzes the proportionate housing contribution fee rate to mitigate these impacts. The report considers the impact of different fee levels on future non- residential development and Lexington’s competitiveness in attracting such development in comparison to competing cities and towns. Finally, it reviews linkage fees in other Massachusetts communities, discusses fee policy options and recommends housing contribution fee options and policies for implementation of a new housing contribution fee. Lexington Linkage Nexus Study 9 Karl F. Seidman Consulting Services I. Lexington Development Potential and Future Development Lexington is a suburban community that has attracted significant office and lab development due to its good highway access to I-95 and Route 2 and the presence of Hanscom Airforce Base and MIT’s Lincoln Lab research center. Lexington’s non-residential development is concentrated in three areas: (1) the Hayden Avenue corridor which runs parallel to Route 2 near its intersection with I-95; (2) the Hartwell Avenue area near Lincoln Lab and the I-95/Route 225 intersection; and (3) Lexington Center. Most recent and larger scale development has occurred in the Hayden and Hartwell Avenue areas while Lexington Center is the Town’s “Main Street” commercial center with retail, restaurant and service businesses in smaller and older mixed-use buildings. Ten non-residential projects with at least 30,000 square feet (SF) were completed from 2015 to mid-2025 with a combined size of 2.1 million SF5. All ten projects are listed in Table 1-1 with development by use summarized in Table 1-2. Over the past decade, new non-residential development was concentrated in two uses: assisted living facilities (39%) and lab or lab/office buildings for life science firms (60.7%). Table 1-1. Lexington Completed Non-residential Development Projects, 2013-2023 Address Project Square Feet Date Completed Description 10 Maguire Road 292,142 5/14/2024 Biotech/Lab 4 Maguire Road 50,544 1/11/2022 KSQ Therapeutics, Inc. 1050 Waltham Street 157,000 9/13/2023 Lab/Life Science 53-55 Watertown Street 331,200 10/20/2022 Residential/Healthcare/Assisted Living 440 Bedford Street 336,000 5/12/2025 Lab 1010 Waltham Street 455,895 4/6/2022 Residential/Healthcare/Assisted Living 400 Shire Way 215,166 6/6/2022 Biotech/Lab 300 Shire Way 38,000 9/7/2021 Pharmaceutical 75 Hayden Avenue 215,000 11/2/2020 Biotech/Lab 56 Watertown Street 45,000 4/25/2022 Residential/Healthcare/Assisted Living Total 2,135,947 Source: Lexington Land Use, Housing & Development Department Table 1-2. Lexington New Non-residential Development, 2015 -2025 by Use Use Size in Square Feet Square Feet Percentage Lab 366,500 17.2% Lab/office 929,852 43.5% Assisted Living 832,095 39.0% Retail 7,500 0.4% Total 2,135,947 100% Source: Lexington Land Use, Housing & Development Department 5 For this study, projects were included in the development pipeline if they were at least 30,000 SF in size and were either: (1) new construction; (2) renovation of a property for a new non-residential use; or (3) an addition to an existing building. Lexington Linkage Nexus Study 10 Karl F. Seidman Consulting Services Lexington has a pipeline of three non-residential projects over 30,000 SF that have been approved for development. These projects, listed in Table 1-3, are all lab/office buildings intended for the life science industry, with one project including ground floor retail space. Table 1-3. Lexington Pipeline of Non-residential Development Projects Over 30,000 SF June 2025 Address Use Square Feet Status 12-18 Hartwell Ave Lab/Office/Retail 280,800 SPR Approved/ Pre-construction 95/99 Hayden Ave Lab/Office 757,262 SPR Approved/ Pre-construction 1-3-5 Hartwell Place (previously 91 Hartwell) Lab/Office 93,250 SPR Approved/ Pre-construction Total 1,131,312 Source: Lexington Land Use, Housing & Development Department Regional Real Estate Market Conditions New development in Lexington over the next decade, and the resulting employment and demand for affordable housing, will depend on market demand and absorption of new real estate space by employers in the Greater Boston region and Lexington’s success in attracting this business growth. This section reviews market conditions in the regional office, lab and industrial real estate markets and their implications for Lexington’s future non-residential development outlook. Office and Lab Markets Market conditions have changed significantly in recent years with the pandemic’s impact on work from home and the slowdown in the regional life science cluster. Rapid growth in the life science cluster from 2020 to 2022 was a major driver of new non-residential development in the region, leading to a 16.4 million SF increase in the region’s supply of new lab space from 2023 through the first quarter of 20256. This scale of new lab development outpaced demand, as life science industry growth has slowed with reduced venture capital investment and fewer firms raising capital through initial public offerings of stock7. These trends have reduced the demand for office and lab space and increased the availability of vacant space and sub-leased space. Changes in federal policy and medical research funding risk further reductions in the demand for lab space. These conditions will likely slow new development activity over the next several years, including in Lexington. The regional office market has been especially hard hit, resulting in historic levels of available space and negative absorption8. Over 44.8 million SF was available for lease (23.6%) as of March, 2025. Net absorption of space was negative 1.8 million SF during 2024 and negative 444,000 SF in the first quarter of 2025, meaning there was a net reduction in occupied space by 2.24 million SF over this 15-month period. This followed negative absorption of almost 6.4 million SF for 6 Colliers. Greater Boston Life Science Report, 2022, Q4 and 2025, Q1. 7 CBRE, The Life Science Market Reset: Boston Metro Lab Report, Q3, 2023. 8 Data in this paragraph in from Colliers Office Market Viewpoint, 2025 Quarter 3. Lexington Linkage Nexus Study 11 Karl F. Seidman Consulting Services 2023. The suburbs had a 23.6% availability rate (25.2 million SF) in 2025 Quarter 1 (Q1), the highest in 20 years and accounted for most of the negative absorption in 2024 and 2025 Q1. The 128-MassPike market area, which includes Lexington, fared better with 158,000 positive net absorption in 2025 Q1 following positive absorption of 86,000 SF in 2024. However, overall available space for lease was still very high at 5.3 million SF, or 26.3%. Lexington’s supply of office space declined during the past decade and trended toward negative net absorption in recent years. For-lease office space in Lexington declined by 419,000 SF since 2015 to 2.27 million SF at year end 2024 (see Table1- 4), according to data from the real estate firm Colliers. Overall vacant/available space in 2024 was 228,815 SF, or 14.3%, well below the rates for the Boston Suburbs and the 128/MassPike market area. However, the on-line commercial real estate site LoopNet lists a larger level of available space (308,000 SF) in 15 buildings. Net annual absorption of office space in Lexington over the past ten years varied considerably with positive absorption in four years and negative absorption in six years, including the last five. Table 1-4. Lexington Office Space Supply, Availability and Net Absorption, 2015 to 2024 Year Supply Occupied SF Available SF Available Rate Net Annual Absorption 2015 2,688,934 2,146,374 509,687 20.2% 416,168 2016 2,730,034 2,216,870 505,503 18.8% 70,496 2017 2,566,156 2,062,800 428,729 19.6% -154,070 2018 2,566,156 2,084,815 423,465 18.8% 22,015 2019 2,384,160 2,151,850 201,272 9.7% 67,035 2020 2,339,160 2,144,865 153,644 8.3% -6,985 2021 2,278,928 2,090,164 124,792 8.3% -54,701 2022 2,278,928 2,058,549 142,109 9.7% -31,615 2023 2,269,928 2,043,973 142,280 10.0% -14,576 2024 2,269,928 1,945,248 228,815 14.3% -98,725 Average 2,437,231 2,094,551 286,030 13.8% 21,504 Source: Colliers New multi-tenant leased general office development is unlikely in Lexington over the next decade given recent trends in demand and the large amount of available space in Lexington and the 128- MassPike market area. The absence of any new development of non-life science office projects during the past decade also indicates that Lexington is not attracting such development. Lab market conditions have weakened considerably since 2022 with a large increase in supply, high space availability rates and reduced absorption. Table 1-5 presents the supply and availability rates for lab space in Boston, Cambridge and the region’s suburbs and the Route 128/MassPike market area while Table 1-6 shows net annual absorption of lab space during this same period. The Boston region’s inventory of lab space grew by 26.5 million SF, or 88%, from year end 2019 to the end of 2024. Lab space in the 128/MassPike market area grew at a faster rate (134%) adding over 2.6 million SF. Boston and Cambridge outpaced this growth, both adding over 5 million SF between 2019 and 2024, with Boston reaching a rate of 32.4% of its lab space unoccupied and available for lease. Lexington Linkage Nexus Study 12 Karl F. Seidman Consulting Services Table 1-5. Lab Market Supply, Boston Region, Boston, Cambridge, and Rt 128/MassPike Market Area, 2019 to 2024 Source: Colliers Lab Market Viewpoint, 2019 to 2024, Q4 Through 2021, lab demand absorbed all the new space, resulting in almost no available space for lease in Boston, Cambridge, and the 128/MassPike market area. Annual net absorption of lab space increased almost fourfold from 611,000 SF in 2019 to over 2.3 million SF in 2021. Extremely high rents and limited space availability in Cambridge and Boston generated increased demand for suburban lab space with the suburbs accounting for 73% of net absorption in 2022 and 57% in 2023. However, the growth in the supply of new lab space in the past three years far outpaced demand, resulting in the current high availability rates across the region. Furthermore, net absorption of lab space turned negative in 2024 to negative 312,000 SF across the region with the 128/MassPike area accounting for almost half of this amount at negative 157,000 SF. Table 1-6. Net Absorption of Lab Space, Boston, Cambridge and Suburbs, 2019 to 2024 Source: Colliers Lab Market Viewpoint As evident from development activity, Lexington’s supply and absorption of space for life science firms increased over the past decade. Colliers reports an inventory of 2.78 million SF of lab and Good Manufacturing Practice (GMP) manufacturing space in 2024, an 1.2 million increase since 2015. Annual net absorption averaged positive 67,000 SF over the decade, and was positive for eight years, with an average of 115,000 SF. Lexington established itself as a desirable life science industry location before the post-pandemic boom in lab space demand during 2017 to 2020, when its net annual absorption of lab space averaged 187,000 SF. Year Total Inventory (SF) Total Availability Rate Boston Inventory (SF) Boston Availability Rate Cambridge Inventory (SF) Cambridge Availability Rate Rte 128/Mass pike Inventory (SF) Rte 128/Mass pike Availability Rate 2019 30,190,652 7.1% 5,430,355 4.8% 12,740,504 2.4% 1,979,298 24.5% 2020 31,095,177 5.9% 5,617,522 8.3% 12,773,504 1.6% 2,055,283 9.7% 2021 32,204,367 0.9% 5,842,522 0.3% 12,887,249 0.0% 2,265,782 1.3% 2022 40,401,282 8.0% 7,378,444 3.8% 13,942,410 7.5% 3,327,729 6.3% 2023 50,421,981 16.9% 9,535,251 19.0% 15,995,263 13.6% 4,658,682 21.8% 2024 56,661,979 26.90% 11,188,182 32.40% 17,926,036 21.60% 4,631,962 25.30% Year Total Boston Cambridge Suburbs Rte 128/Mass pike 2019 610,972 178,433 222,184 210,355 31,098 2020 1,242,691 98,762 384,183 759,746 361,486 2021 2,037,676 609,966 316,011 1,111,699 350,621 2022 2,326,141 773,140 -136,427 1,689,428 647,222 2023 3,906,345 616,082 1,087,620 2,202,643 41,685 2024 -311,792 -38,911 223,094 -495,975 -156,895 Total 9,812,033 2,237,472 2,096,665 5,477,896 1,275,217 Average, 6 years 1,635,339 372,912 349,444 912,983 212,536 Lexington Linkage Nexus Study 13 Karl F. Seidman Consulting Services However, Lexington has a large oversupply of vacant lab space found elsewhere in the region. Almost one-quarter (22.9%) of lab space was vacant at year end 2024, totaling 638,000 SF. One property, Tramell Crow’s lab building at 440 Bedford Street, accounts for 53% of the vacant space. Table 1-7. Lexington Lab Space Supply, Availability and Net Absorption, 2015 to 2024 Year Supply Occupied SF Available SF Available Rate Net Annual Absorption 2015 1,608,159 1,458,801 84,209 9.3% 35,486 2016 1,608,159 1,361,149 247,010 15.4% -97,652 2017 1,833,038 1,617,751 196,428 11.7% 256,602 2018 1,833,038 1,695,849 107,813 7.5% 78,098 2019 2,015,034 1,818,344 167,314 9.8% 122,495 2020 2,228,924 2,108,314 120,610 5.4% 289,970 2021 2,234,510 2,162,010 13,500 3.2% 53,696 2022 2,288,924 2,015,840 160,000 11.9% -146,170 2023 2,471,624 2,076,599 186,352 16.0% 60,759 2024 2,781,819 2,096,652 488,200 24.6% 20,053 Average 2,090,323 1,841,131 177,144 11.5% 67,334 Source: Colliers The imbalance between supply and demand in the lab market will defer the development of new lab projects for several years or longer, regionally and in Lexington. New suburban lab development9 is unlikely to occur until most of the available space is absorbed and occupied, which will take at least 5 years. Based on the region’s average net annual absorption from 2019 to 2024, the 16.3 million SF of available lab space in the Greater Boston region will take seven to eight years to absorb. For the 128/Mass pike market area, five to six years is needed to absorb the 1.6 million SF of available lab space, based on the market area’s average net annual absorption from 2019 to 2025. Consequently, Lexington is unlikely to see new lab development within the next 4 to 5 years. Regional Industrial Market In contrast to the office and lab market, the region’s industrial real estate market is healthy with balanced supply and demand. The region’s availability rate was 11.8% in the 1st quarter of 2025, below historical averages, with the rate for the 128-MassPike market area lower at 8.9%. Regional annual net absorption of industrial space peaked at 4.7 million SF in 2021 and slowed to 3.6 million SF in 2024. Very large build to suit projects dominate recent development (e.g., large distribution centers for Home Depot and UPS). Demand for small flex space, needed by smaller manufacturing firms, is growing but there is less new construction being built to serve this market10. Lexington does not have an active industrial space market and is unlikely to see new industrial development over the next decade. According to Colliers, Lexington has 202,500 SF of for-lease 9 New projects may occur in Cambridge and Boston for buildings that can be substantially pre-leased, likely by large pharmaceutical firms. 10 Colliers Industrial Market Viewpoint, 2024, Q4. Lexington Linkage Nexus Study 14 Karl F. Seidman Consulting Services industrial space with no change in its supply since 2015. While 69,000 SF became available in 2022 and is still on the market, Lexington had no available industrial space for lease (and thus no absorption) in 7 of the last 10 years. Future Development and Employment Projection With an established Lexington life science cluster, recent development focused on life science projects, and several new lab projects permitted for development, Lexington’s non-residential development over the next decade is expected to continue be lab/office projects for life science firms. However, given current market conditions, this new development is not likely to occur until the later years of the decade. Based on Lexington’s existing development pipeline, real estate market conditions and interviews with developers, property owners and brokers, 486,116 SF of new non-residential development in four projects over 30,000 SF is projected to be built over the next ten years (see Table 1-8). These projects include three lab/office buildings for the life sciences industry and an “Lincubator” project at Lincoln Lab11 to foster new enterprises seeking to commercialize innovative research and inventions at the labs:  Phase 1 and Phase 2 buildings at 95/99 Hayden Avenue that are already approved for development with combined SF of 352,866 SF;  the permitted 93,250 lab/office building at 1-3-5 Hartwell Place; and  the Lincubator project, projected at 40,000 SF. Table 1-8. Projected Non-residential Development by Use, 2025-203412 Source: Karl F. Seidman Consulting Services All the projected development projects are expected to serve firms undertaking research and development. To determine the expected number of jobs from this new development, the typical square feet per employee for this was applied to the projected SF of development. The life science lab/office projects are assumed to have one employee per 450 SF13 with 400 SF used for the Lincubator project, as it will likely require less extensive lab space and thus a higher employee 11 This project is included based on a June interview with Lincoln Lab on their development plans. The timing and ultimate implementation of this project may change based on available funding, including federal research priorities. 12 Projects included in this list are based on estimated absorption of 440,000 to 450,000 SF of new lab space and the likelihood that smaller scale developments will be more viable given the market and financing environment. For these reasons the 12-18 Hartwell Avenue development at 280,800 SF is not included. 13 This figure is based on data from transportation planning surveys. Projected Project Use Estimated SF Occuppied SF (90%) 95/99 Hayden - phase 1 Lab/office 159,634 143,671 95/99 Hayden - phase 2 Lab/office 193,232 173,909 1-3-5 Hartwell Place Lab/office 93,250 83,925 Lincoln Labs "Lincubator" Maker/incubator space 40,000 36,000 Total 486,116 437,505 Lexington Linkage Nexus Study 15 Karl F. Seidman Consulting Services density. Applying these ratios results in an estimated total employment impact from the new development of 982 jobs, with 892 jobs from the three lab/office projects and 90 jobs at the Lincoln Lab Lincubator. Lexington Linkage Nexus Study 16 Karl F. Seidman Consulting Services II. Impact of Large-Scale Development on Affordable Housing Demand Using the 10-year development scenario and employment projections summarized in Table 9, this section forecasts the demand for affordable housing in Lexington that will result from this development. Since this analysis utilizes several data sources and assumptions to prepare the forecast, a full explanation of the methodology used is provided along with the results. Figure 2- 1 provides an overview of the analytical steps and data sources for the housing demand projections. Figure 2-1. Methodology and Data Sources for Housing Demand Analysis Number of Single Worker & Multiple Worker Households Demanding Housing in Lexington by Very Low, Low & Middle-income level and Household Size Final Demand for Housing in Lexington from New Development among Very Low-, Low-& Middle-income Households and Household Size Metro Area Distribution of Households by Size & Number of Workers Number of Workers Demanding Housing in Lexington by Annual Earnings Industry/Occupational Distribution and Earnings (Massachusetts) Number of Workers Demanding Housing in Lexington by Industry Share of Workers Demanding Housing in Lexington (employee survey ) 10-Year Employment Projection by Industry Lexington Linkage Nexus Study 17 Karl F. Seidman Consulting Services Since demand for affordable housing is tied to household income, the distribution of new jobs by occupation and earnings was estimated. The number of new jobs in 15 occupational categories was calculated using Bureau of Labor Statistics 2024 data on the occupational distribution of jobs in Massachusetts’ Biological & Physical Sciences Research and Development industry.14 Earnings for these occupations were based on Massachusetts’ 2024 median annual earnings for the respective occupation in this industry adjusted for inflation by the Boston region Consumer Price Index to estimate earnings as of May 2025—corresponding to the year of income figures used to define the annual levels for very low, low and middle-income households. These calculations yielded the projected number of jobs at different annual earning levels by occupation and industry. Since new employees will live in a variety of communities, it is necessary to determine the share that are expected to demand housing in Lexington. The percentage of new employees who will demand housing within the Town was estimated from a survey of employees in large commercial and lab buildings conducted from June through late July 2025. This survey measured demand by asking employees whether, because of obtaining a job in Lexington, they either moved to the town or sought housing in Lexington but did not move there due to housing costs. Based on the survey results15, the percentage of new employees who are expected to demand housing in Lexington is 30 percent. This percentage was multiplied by the gross number of new jobs (983) to estimate the number of new workers who will demand housing in Lexington which equals 295. The occupations and earnings for these 295 workers were then estimated using data from the Bureau of Labor Statistics. Due to the rounding of calculation for each occupation, the estimate for the number of workers demanding housing increased slightly to 297. Table 2-1 shows the distribution of these projected 297 new workers by occupation and earnings. Table 2-1. Estimated Occupations and Earnings for Workers in New Developments Demanding Housing in Lexington Source: BLS Occupational Employment and Wage Statistics and Karl F. Seidman Consulting Services 14 North American Industry Classification Code(NAICS( 541710 15 Summary data from this survey is provided in Appendix A. Occupations by Major Group MA Median Wage for Bio/Phy Science R & D Industry, May 2025 Jobs in New Development Number Demanding Housing in Lexington Management $229,540 226 68 Business & Finance Operations $132,434 98 30 Computer & Mathematics $136,039 98 30 Architecture & Engineering $132,764 108 32 Life, Physical & Social Science $106,675 295 89 Legal $134,368 10 3 Art. Design, Media $104,028 10 3 Health Care Practitioner & Technical $102,153 29 9 Health Care Support $60,357 10 3 Protective Services $48,162 10 3 Buildings & Grounds $53,734 0 0 Sales & Related $132,537 10 3 Office & Administrative $77,166 49 15 Installation, Maintainance & Repair $101,762 10 3 Production $83,088 20 6 Total 983 297 Lexington Linkage Nexus Study 18 Karl F. Seidman Consulting Services The next step to project demand for affordable housing units among the 297 employees who are expected to seek housing in Lexington requires estimating the distribution of households for these workers by both the number of wage-earners and size. Since the employees in Lexington’s new developments will be drawn primarily from the greater Boston area, data for the distribution of households by number of earners and household size in the Boston metropolitan area were used to estimate the type of households for these employees16. Workers in each occupation expected to demand housing in Lexington were first divided into one-, two-, three- and four-or-more-person households based on the metro area distribution17. Then each household size group was divided into one-, two- and three-worker households, using the American Community Survey metro area percentages (see Table 2-2). Table 2-2. Household Size by Number of Wage-Earners, Boston-Cambridge-Nashua MA-NH NECTA Number of Workers One Worker Two Workers Three Workers Total One-person households 100.0% 0.0% 0.0% 100.0% Two-person households 39.8% 60.2% 0.0% 100.0% Three-person households 30.0% 48.7% 21.3% 100.0% Four-person or larger households 22.5% 48.1% 29.4% 100.0% Source: US Census 2019-2023 Five-Year American Community Survey For single-earner households, the median wage for the occupation was used to estimate their household income and determine if they fell below the very low-income, low-income, or middle- income thresholds for their respective household size. Among the single earner households who are expected to demand Lexington housing, three are estimated to be very low-income (less than 50% of area median income), 24 are projected to be low-income (between 50% and 80% of area median income) and 82 are estimated as middle-income (80% to 120% of area median income) for a total demand of 109 affordable housing units. Projecting affordable housing demand among multiple-earner households required estimating the earnings for the additional wage earners. To simplify this analysis, it was assumed that the second or third worker’s earnings equaled the median annual wage for all workers in the Metro Southwest Workforce Area, which was $67,645 adjusted for inflation to May 2025. This resulted in an additional 22 dual worker households from new development that will demand housing in Lexington, all in the middle-income category. All three-worker households exceed the maximum income for the very low- income, low-income and middle-income ranges. Across all household sizes and income groups, the total number of affordable housing units needed to meet the demand generated by new lab, office, institutional and retail development is 131 units. Table 2-3 summarizes the total projected demand for new housing by household size and among very-low income, low-income, and middle-income households. 16 This data was from the 2021 five-year American Community Survey for the Boston-Cambridge-Newton MA-NH Metropolitan Area. 17 From the 2021 five-year ACS, the ratios are: 27.6% one-person, 33.1% two-person 16.6% three-person and 22.7% four or more. Lexington Linkage Nexus Study 19 Karl F. Seidman Consulting Services Table 2-3. Estimated Affordable Housing Demand in Lexington from New Large Non- Residential Developments by Income Type and Household Size, 2020 to 2029 Income Group One-person Households Two-person Households Three-person Households Four-person Households Total Very low-income 1 1 0 1 3 Low-income 7 4 7 6 24 Middle-income 47 30 9 18 104 Total 55 35 16 25 131 Lexington Linkage Nexus Study 20 Karl F. Seidman Consulting Services III. Subsidy Required to Address Impact of Large-Scale Development This section builds upon the framework established in the earlier sections to project the total subsidy required to address the projected increased demand for affordable housing generated by large-scale developments in Lexington. Housing affordability is a function of household income and the cost of available rental and for-sale housing units in each real estate market. The Town of Lexington and the entire Boston region suffer from a well-known and demonstrated lack of sufficient affordable housing. This section reviews housing conditions in Lexington and calculates subsidy needed to create new affordable housing that satisfies the demand generated by new workers in new non-residential development by comparing the total development cost of new affordable housing units to the housing prices that can be supported by very low-income, low- income, and middle-income households. Before calculating the projected subsidy required, current housing conditions in Lexington are reviewed to provide background and context. Housing Conditions in Lexington Recent legislation like the MBTA Communities Act has opened doors to new multi-family development. One thousand units have been permitted, with many development proposals for smaller units, particularly one-bedroom units. Lexington is in the midst of determining occupancy needs of residents and if certain types of housing should be prioritized (i.e., senior housing). The Town of Lexington is experiencing an affordable housing shortage because the demand for affordable units is outstripping the supply of housing affordable to very low-, low-, and middle- income households. The demand for affordable housing is high, particularly for renters with limited inventory and high prices. Potential homebuyers are challenged by the limited inventory of smaller homes amenable for young families and downsizing empty nesters along with the currently high interest rates. Housing Stock Key Drivers Important drivers of housing demand in Lexington are employment and household composition as households continue to grow smaller, and families are looking for housing for their elderly relatives. In 2023, Lexington had 34,000 residents. According to the American Community Survey, there were 13,000 residential units in the town in 2023, and 97 percent of the units were occupied. The split between renter- and owner-occupied units is predominately owner-occupied units at 81 percent and renter-occupied units at 19 percent. Lexington Buyer and Household Demographics Lexington benefits from the amenities of urban living, its proximity to Boston and the suburban benefits of quality schools. It attracts affluent residents and professionals due to its proximity to several schools, major universities like Harvard University and MIT, and major biotech and pharmaceutical companies (the median age of Lexington residents is 46.6 years old). The Town has a high percentage of immigrants or first-generation Americans with higher levels of educational attainment in comparison to the larger Boston region. The largest age group in the Lexington Linkage Nexus Study 21 Karl F. Seidman Consulting Services population of Lexington are Gen Xers in their mid-40s to early 50s. In addition, Lexington has a high senior population as residents seek housing for their elderly relatives or merge households to become eligible for affordable housing. Household compositions are changing as household sizes continue to decrease, causing a demand for one and two-bedroom units. The median household income for households in Lexington was $219,400 (2023 ACS 5-Year Estimate), which is significantly higher than Middlesex County and the Commonwealth of Massachusetts. Lexington’s renters and owners are generally affluent, with the median renter income of $96,000 and median owner income of $250,000 or more in 2023. Lexington Home and Condominium Sales The median price for single-family homes in Lexington increased substantially by 16.9 percent compared to Middlesex County and the Commonwealth that had smaller increases of 4.4 and 3.2 percent, respectively, between July 2024 and July 2025 year to date (YTD). The Town’s median single-home price was $1.9 million by July 2025 YTD, double the median of the County, and nearly triple the median cost in Massachusetts. Lexington’s median condominium prices are 37.6 percent higher in July 2025 YTD than the median price for Middlesex County and 66.3 percent higher than for Massachusetts, demonstrating that median condo prices grew faster at the Town level than for the County or Commonwealth. The July 2025 YTD median price for a condo in Lexington was $915,000, which was higher than Middlesex’s median price for a single-family home at $875,000. Data in Table 3-1 illustrate the median prices for single-family homes and condominiums in July 2024 and July 2025 YTD. Table 3-1 Median Prices for Single-Family Homes and Condominiums Lexington For-Sale Market Data on recently sold and currently on sale condominiums in the town of Lexington are shown in Table 3-2. Recently sold condominiums ranged from $348,000 on July 9, 2025 to $2.2 million on May 23, 2025. The sold units’ size ranged from 655 to 3,956 SF. Current listings (as of August 28, 2025) ranged from 988 to 3,492 SF with list prices between $730,000 and $2.4 million. Single-Family Condo Single-Family Condo Single-Family Condo July 2024 YTD $1,600,000 $839,000 $838,000 $650,000 $619,900 $545,000 July 2025 YTD $1,870,000 $915,000 $875,000 $665,000 $640,000 $549,900 % Increase 16.9%9.1%4.4%2.3%3.2%0.9% Note: Complete FY25 data was not available so both data sets reflect YTD in July for consistent comparison. Source: Warren Group Lexington Middlesex County Massachusetts Lexington Linkage Nexus Study 22 Karl F. Seidman Consulting Services Table 3-2 Listed for Sale and Recently Sold Condominiums in Lexington Lexington Rental Market Housing Like homeowners and homebuyers, Lexington is also highly desirable to renters. Lexington and surrounding areas have had low rental vacancy rates in recent years. As reported by the U.S. Census Bureau, the American Community Survey estimates that in 2023, Lexington had a rental vacancy rate of 3.2 percent. A low vacancy rate in rental housing continues to be a factor in the availability and cost of housing in Lexington. According to Rent.com, the average rent for a one-bedroom is $2,893, and a two-bedroom is $3,946. Ninety-four percent of listings are over $2,100. It should be noted that the rents from Rent.com are skewed high by ~20 percent because Rent.com’s listings tend to be for newer or professionally managed units, as opposed to the wide swath of naturally occurring affordable apartment units. Developers are projecting the rents for future development will be between $3,000 and $4,000 for market-rate rental units. Figure 3-1 shows the current rental prices as of August 2025 with the highest nearby asking rent at approximately $9,800. Address Sales Date List Price Beds Baths Square Feet Year Built HOA Fees Price per SF Current Listings 9 Lisbeth St Unit 9, Lexington, MA 02420 NA $730,000 2 1.5 988 2013 $200 $739 22 Common Ct Unit 22, Lexington, MA 02421 NA $2,295,000 5 5 3,432 2025 $500 $669 26 Common Ct Unit 26, Lexington, MA 02421 NA $2,350,000 5 5 3,492 2025 $500 $673 Recently Sold 87 Fifer Ln Unit 87, Lexington, MA 02421 Aug 5, 2025 $800,000 3 2 1,145 1978 $744 $699 30 Bow St Unit 1, Lexington, MA 02420 Aug 1, 2025 $440,000 1 1 687 1925 $0 1/$640 837 Massachusetts Ave Unit 1, Lexington, MA 02420 Jul 31, 2025 $660,000 2 2 1,044 1770 NA $632 108 Emerson Gardens Rd Unit 108, Lexington, MA 02420 Jul 18, 2025 $410,000 1 1 655 1965 $417 $626 4 Emerson Gardens Rd Unit 4, Lexington, MA 02420 Jul 15, 2025 $695,000 2 1.5 1,428 1965 $540 $487 1475 Massachusetts Ave Apt 342, Lexington, MA 02420 Jul 9, 2025 $347,575 1 1 680 1985 $268 $511 1505 Massachusetts Ave Unit 6, Lexington, MA 02420 Jun 9, 2025 $960,000 2 2.5 1,400 1975 $756 $686 28 Courtyard Pl, Lexington, MA 02420 May 30, 2025 $1,610,000 3 2.5 2,875 2011 NA $560 510 Waltham St Unit 1, Lexington, MA 02421 May 23, 2025 $2,200,000 5 5.5 3,956 2025 $215 $556 2 Muster Ct Unit 2, Lexington, MA 02420 May 2, 2025 $1,000,000 3 2.5 1,582 1978 $598 $632 1/ No formal condo fee. Unit owners split costs for water/sewer, master insurance & landscaping. Source: Realtor.com as of August 28, 2025. Lexington Linkage Nexus Study 23 Karl F. Seidman Consulting Services Figure 3-1 Current Apartment Rental Prices, August 2025 Lexington, MA Source: Rent.com Lexington Housing Costs as a Percent of Household Income Lexington may have a high median household income in comparison to the County or the Commonwealth, but that does not mean that some residents are not struggling to balance the cost of their housing with other expenses. The U.S. Department of Housing and Urban Development (HUD) defines extremely low-income as below 30 percent of the Area Median Income (AMI) for the region. Over 1,000 Lexington households or 8 percent of total households fall into this category. More than one-quarter of renters are considered extremely low-income. Six percent of total households have very low-income between 30 and 50 percent AMI. An additional 6 percent or 725 households are low-income, with incomes between 51 and 80 percent of the AMI. These Lexington Linkage Nexus Study 24 Karl F. Seidman Consulting Services numbers show the relative unaffordability of the region that is particularly onerous on renters. Data in Table 3-3 shows Lexington households by income level and a breakdown for owners, renters, and total households by percentage. Table 3-3 Lexington Households by Income Level National Housing Market Trends Lexington’s market experience can be evaluated in the context of national and regional trends. According to The State of the Nation’s Housing, 202518, households and housing markets face a challenging environment. High home prices and elevated interest rates reduced homebuying to its lowest level since the mid-1990s. Increases in both insurance premiums and property taxes have heightened financial stress on homeowners and landlords. And, despite an abundance of new apartments, high rents have left more people more than ever cost burdened and have contributed to a rise in homelessness. Meanwhile, unprecedented destruction from wildfires has further highlighted the threat to the housing stock from climate-related disasters. At the same time, federal housing support is lessening, creating uncertainty regarding the availability of crucial assistance programs. The possibility of an economic downturn is exacerbating the nation’s current housing challenges. Home prices grew modestly in 2024 despite elevated interest rates, homebuyer affordability challenges, and rising inventories. Persistent demand and lingering supply shortages continue to pressure for-sale markets. New single-family construction has grown in response, though only modestly. In the rental market, a wave of multifamily completions is moderating rent growth and maintaining vacancies well above pandemic-era lows. But markets vary, with rent levels increasing in those with minimal new supply and declining in those with higher deliveries. However, the surge in new rental units is ending amid strong rental demand, signaling future tightening for rental markets. After many years of underbuilding, stock shortages persist. Unlocking new housing supply remains critical for alleviating affordability pressures and stimulating economic growth. 18 Joint Center for Housing Studies of Harvard University, The State of the Nation’s Housing 2025. 1 2 3 4 30% AMI Extremely Low $34,750 $39,700 $44,650 $48,600 4% 26% 8% 50% AMI Very Low $57,900 $66,200 $74,450 $82,700 6% 8% 6% 80% AMI Low $92,650 $105,850 $119,100 $132,300 5% 10% 6% 100% AMI Moderate $112,630 $128,720 $144,810 $160,900 5% 10% 6% Over 100% AMI 80% 45% 74% Note: AMI, or "Area Median Income" is defined as the midpoint of a specific area’s income distribution and is calculated on an annual basis by the Department of Housing and Urban Development (HUD). Source: 2025 HUD Income Units for the Boston-Cambridge-Quincy Area and HUD CHAS Data 2016-2020 Household Size Owners Renters TotalUpper Limit of Income Level Lexington Linkage Nexus Study 25 Karl F. Seidman Consulting Services As the number of renters facing affordability challenges climbs, cost burdens hit another record high in 2023. Lower-income renters have less money to pay for non-housing essentials. Nevertheless, rental demand remained strong last year, particularly among higher-income households unable to transition to homeownership. Still, the decreasing supply of low-rent units limits more affordable options. Some relief could come from the recent wave of multifamily completions. However, persistent operating challenges and high interest rates are slowing multifamily starts. Regional Housing Market The Greater Boston Housing Report Card, 202419, reinforces many of the national trends. After a brief lull in 2023, the for-sale market has seen renewed price increases through most of 2024. However, with interest rates beginning to decline, the dynamics of the housing market could shift in the future. Median rents increased alongside home prices for several years, although they have leveled off, or even dipped slightly, during the first three quarters of 2024. The continued rise in prices has increased the strain on households’ capacity to afford housing in Greater Boston. High home prices and high interest rates have increased the amount of cash needed for a down payment, while unrelentingly high rents have made it increasingly tough for would-be first-time homebuyers to save. Estimate of Required Affordable Housing Subsidy Contribution The previous section projected the demand for affordable housing from new non-residential development as 131 units for very low-, low-, and middle-income households ranging in size from one person to four persons. This section determines the projected subsidy required to construct housing that is affordable for those households. Analytical Approach Following is a summary of data and analyses used in calculating the total per square foot subsidy from new non-residential development required to support development of new affordable housing for workers. The subsidies would be for very low-, low-, and middle-income households whose jobs would be in Lexington’s new non-residential buildings over the next 10 years. The analyses establish that affordable rents and affordable sales prices do not currently support development of new housing production due to high development costs. Therefore, to stimulate affordable housing development, subsidies or other incentives must be provided. This analysis estimates the amount of subsidy required to meet new affordable housing demand created by employees in the new non-residential development. The total required subsidy is the estimated difference between the total development costs of producing new affordable housing units and the capitalized value of net operating income from affordable rents and unit sale proceeds. The required subsidy is presented as a per square foot housing contribution for projected non- residential development over a 10-year period. 19 This is the most recent edition of The Greater Boston Housing Report Card available as of August 2025. Lexington Linkage Nexus Study 26 Karl F. Seidman Consulting Services Methodology The following methodology was used to calculate the subsidy required to produce sufficient housing to satisfy projected ten-year affordable housing demand generated by new development non-residential buildings.  Estimate the number of very low-income, low-income, and middle-income households moving to or seeking to live in Lexington that would be generated by new nonresidential development.  Specify demand by number of persons in the household, number of bedrooms, and by tenure (i.e., renter-occupied units and owner-occupied units).  Estimate the total development costs of affordable units to satisfy the demand generated based on recent unit costs of a new affordable housing development project in Lexington and informed by costs compiled by ConsultEcon for other studies and one-on-one interviews with housing developers active in Lexington and the Boston area.  Estimate the potential capitalized revenue due to annual rents and sales proceeds of affordable units segmented by very low-income, low-income, and middle-income households.  Calculate the difference between the total development costs and the capitalized revenue that is internally generated by renters and owners. This amount is the total subsidy required to produce the targeted new affordable units created by demand from new workers in new non-residential developments.  Divide the total subsidy required by the total non-residential square feet subject to the housing contribution. This amount is the per square foot subsidy projected to be required to produce the new affordable units created by demand from new workers in new non- residential developments. This methodology is laid out in a diagram in Figure 3-2. Lexington Linkage Nexus Study 27 Karl F. Seidman Consulting Services Figure 3-2. Methodology for Calculating Maximum Warranted Housing Contribution Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. Targeted Income Levels for Housing Subsidies Most state and federal funding programs for affordable housing are targeted at very low-income and low-income households. The state has a workforce housing initiative that funds middle-income housing as well. Nonetheless, federal and state tax credits are the largest subsidy source for new affordable housing developments, and they prioritize creation of units for households below 50 Lexington Linkage Nexus Study 28 Karl F. Seidman Consulting Services percent AMI and 60 percent AMI. Therefore, because of the targeting of available subsidy sources, it is likely that much of the new affordable housing created in Lexington will be targeted at these income levels. As the following analysis shows, the subsidy required to create housing for very low-income households is substantial. Yet low-income and middle-income households are also increasingly finding housing to be unaffordable in Lexington’s housing market. The following outlines the key assumptions and analysis used to calculate the required housing subsidy. Distribution of Housing Unit Types for New Affordable Housing Table 3-4 shows the distribution of housing units by income group and by size of unit and by size of household.  76 one-bedroom units  27 two-bedroom units  28 three-bedroom units Mix of Rental and Ownership Units Table 3-5 shows the distribution of rental and ownership units based on information provided by the Town of Lexington for the mix of each household income level.  Very Low-income – 100% rental housing  Low-income – 70% rental housing, 30% homeownership  Middle-income – 50% rental housing, 50% homeownership Lexington Linkage Nexus Study 29 Karl F. Seidman Consulting Services Table 3-4. Distribution of New Affordable Housing Demand in Lexington by Number of Bedrooms due to Projected Non-residential Development One Person Two Person Three Person Four Person Total Distribution of Units by Number of Bedrooms One Bedroom 100% 60% 0% 0% 58% Two Bedrooms 0% 40% 80% 0% 21% Three Bedrooms 0% 0% 20% 100% 21% Total 100% 100% 100% 100% 100% Units by Number of Bedrooms Very Low Income One Bedroom 1 1 0 0 2 Two Bedrooms 0 0 0 0 0 Three Bedrooms 0 0 0 1 1 Low Income One Bedroom 7 2 0 0 9 Two Bedrooms 0 2 6 0 8 Three Bedrooms 0 0 1 6 7 Middle Income One Bedroom 47 18 0 0 65 Two Bedrooms 0 12 7 0 19 Three Bedrooms 0 0 2 18 20 Units by Size, Number of Bedrooms One Bedroom 55 21 0 0 76 Two Bedrooms 0 14 13 0 27 Three Bedrooms 0 0 3 25 28 Total Units 55 35 16 25 131 NOTE: ROUNDING MAY AFFECT TOTALS. Households by Size Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. Lexington Linkage Nexus Study 30 Karl F. Seidman Consulting Services Table 3-5. New Affordable Housing Demand in Lexington by Renter- and Owner-Occupied Units One Person Two Person Three Person Four Person Total Percent of Households Occupying Ownership Housing Very Low Income 0% 0% 0% 0% Low Income 30% 30% 30% 30% Middle Income 50% 50% 50% 50% Percent of Households Occupying Rental Housing Very Low Income 100% 100% 100% 100% Low Income 70% 70% 70% 70% Middle Income 50% 50% 50% 50% Number of Ownership Units Very Low Income 0 0 0 0 0 Low Income 2 1 2 2 7 Middle Income 24 15 5 9 53 Total 26 16 7 11 60 Number of Rental Units Very Low Income 1 1 0 1 3 Low Income 5 3 5 4 17 Middle Income 23 15 4 9 51 Total 29 19 9 14 71 Units by Tenure (rounded) Ownership 26 16 7 11 60 Rental 29 19 9 14 71 Total 55 35 16 25 131 Rental Units by Number of Bedrooms One Bedroom 29 11 0 0 40 Two Bedrooms 0 8 7 0 15 Three Bedrooms 0 0 2 14 16 Total Rental 29 19 9 14 71 Ownership Units by Number of Bedrooms One Bedroom 26 10 0 0 36 Two Bedrooms 0 6 6 0 12 Three Bedrooms 0 0 1 11 12 Total Ownership 26 16 7 11 60 Total Housing 55 35 16 25 131 Households by Size Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Lexington Linkage Nexus Study 31 Karl F. Seidman Consulting Services Calculation of Needed Subsidy The following presents the analysis of estimated total development costs, supportable financing, and needed subsidy for affordable housing units that must be created to satisfy the new demand generated by workers in new non-residential developments in Lexington over the next 10 years. The analysis only presents selected tables that summarize the calculation of the needed subsidy. Additional tables in Appendix B include all assumptions and intermediate calculations that underlie the required subsidy calculation. Development Project Costs An analysis of the development costs and needed subsidy for rental and homeownership units was conducted based on 60 ownership units and 71 rental units. Development costs were estimated based on the costs for recent comparable affordable housing developments built in Lexington and other area communities and reported costs for projects provided by real estate professionals in one- on-one interviews. These data were used as the basis for calculations in Table 3-6 of total affordable housing development costs. Lexington Linkage Nexus Study 32 Karl F. Seidman Consulting Services Table 3-6. Calculation of Total Development Costs of Affordable Rental and Ownership Housing Units in Lexington Housing Development Project Revenue An important step in calculating the subsidy required to create new affordable housing units is to define the rental housing and ownership housing development projects’ revenue that will be used to support the development of the housing and in the case of rental housing, its operating costs. Project Assumptions Rental Units Owner Units Number of Units 71 60 Average Unit Size GSF 1/972 967 Total Project GSF 69,000 58,000 Cost Assumptions 2/ Land/Acquisition per Unit Costs 3/$100,000 $100,000 Construction per GSF Costs, includes Contingency, Site Work 4/$416 $416 Soft Costs, including Design, Permitting, Overhead, Profit, and Contingency, as a Percent of Construction Cost 4/ 37% 37% Development Costs Amount Percent to Total Amount Percent to Total Land/Acquisition $7,100,000 15.3%$6,000,000 15.4% Construction, incl. Contingency $28,721,000 61.8%$24,143,000 61.8% Soft Costs, including Design, Permitting, Overhead, Developer's Fee, and Contingency $10,627,000 22.9%$8,933,000 22.9% Total Development Costs (TDC)$46,448,000 100.0%$39,076,000 100.0% TDC per Unit (rounded to nearest $1000)$654,000 $651,000 TDC per GSF (rounded to nearest $1)$673 $674 Note: Rounding may affect totals. Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. 4/ Based on planned Lowell St. housing development project cost estimates. 3/ Current and comparable land sale data not available. A proxy average per unit is based on half of affordable housing having no land costs (as an example units on Lowell St.) and half at $200,000 a reasonable estimate for this community. 2/ Project costs are based on development pro formas for selected planned and recent affordable housing development projects in Lexington and other MA municipalities and interviews with affordable and market rate housing developers familiar with the Lexington / Boston regional marketplace. Soft costs are typical for affordable housing development projects. Soft costs are comparable to the ratio of soft costs to construction costs of affordable housing development projects in Lexington and other cities and towns in the Boston metropolitan area, MA. 1/ See Appendix Tables B-1 and B-2. Lexington Linkage Nexus Study 33 Karl F. Seidman Consulting Services This analysis assumes that the new rental housing will be solely supported by rental income from tenant households and ownership housing will be supported by the sales of affordable units. Project revenue generation and the underlying development economics are different for rental and ownership housing. For rental projects, the needed subsidy was calculated as the difference between total development costs and the amount of debt and equity that could be supported by the housing cash flow using affordable rents at 30% of household income and comparable operating costs. For ownership projects, the needed subsidy was calculated as the difference between total development costs and the affordable purchase price based on home mortgage payments, insurance, and property taxes at 30% of household income and a 5% down payment. Very Low, Low and Middle Household Incomes Affordable rents and sales prices, which in turn drive the housing development project revenue, are derived based on household income. In prior sections of this report, annual occupational wages were the input for establishing the demand for affordable housing among very low-, low-, and middle-income households of new workers in new non-residential development in Lexington. These wages are the basis for weighted average annual household income for each income level (very low-, low- and middle-income)20, as shown in Table 3-7. Table 3-7. Weighted Average Income for Households in New Affordable Housing 20 This average is based on the weighted average for annual household earnings based on median annual earnings for the occupations projected for very low-, low-, and middle-income households as discussed in section two on the Impact of Large Scale Development on Affordable Housing Demand. One Person Two Person Three Person Four Person Distribution of Weighted Average Income Very Low Income 1/$48,162 $54,259 $48,162 $72,963 Low Income $76,457 $85,846 $101,078 $105,067 Middle Income $115,606 $125,091 $144,609 $159,722 Households by Number of Persons Source: U.S. Bureau of Labor Statistics; Karl F. Seidman Consulting Services; and, ConsultEcon, Inc. 1/ The Very Low Income average incomes for one person and three person households are the same based on the occupations and their salaries for the estimated number of workers demanding housing in Lexington with these size households. Lexington Linkage Nexus Study 34 Karl F. Seidman Consulting Services Affordable Rent Levels by Household Size and Income The income levels defined in Table 3-7 are the basis for calculating affordable rents and sales prices that in turn support the development of affordable housing. The needed subsidy for new affordable rental housing is calculated first, followed by the calculation of the needed subsidy for affordable ownership housing. The affordable rents for rental units are based on the estimated annual income of workers in the new non-residential developments in Lexington. Table 3-8 shows the calculation of total rent based on average worker earnings based on the occupational data derived for the employment projection in the prior section. Rental Affordability Gap / Needed Subsidy Table 3-9 calculates the needed subsidy based on the total development costs and the net operating income based on affordable rents calculated from tenant income levels. The total development cost for 71 rental units is estimated to be $46.4 million, an average unit cost of $654,000. The total subsidy required to support the development of this affordable housing is $27.8 million, or 60 percent of the total development cost. Very low-income housing requires 100% of development cost to be subsidized because affordable rents do not cover the operating cost per unit, estimated at $14,000 annually. Therefore, like many 100% affordable projects, other forms of operating subsidies, not accounted for in this analysis to maintain simplicity of unencumbered project operations, would be required, such as Section 8 housing vouchers. Lexington Linkage Nexus Study 35 Karl F. Seidman Consulting Services Table 3-8. Annual Rental Income by Household Income and Size of Household Household Size Annual Income 1/ Applicable Monthly Rent 2/Number of Households Total Annual Rent Very Low Income Households 1 Person $48,162 $1,204 1 $14,449 2 Persons $54,259 $1,356 1 $16,278 3 Persons $48,162 $1,204 0 $0 4 Persons $72,963 $1,824 1 $21,889 Low Income Households 1 Person $76,457 $1,911 5 $114,686 2 Persons $85,846 $2,146 3 $77,261 3 Persons $101,078 $2,527 5 $151,617 4 Persons $105,067 $2,627 4 $126,080 Middle Income Households 1 Person $115,606 $2,890 23 $797,681 2 Persons $125,091 $3,127 15 $562,910 3 Persons $144,609 $3,615 4 $173,531 4 Persons $159,722 $3,993 9 $431,249 Total Households / Housing Units 71 Total Annual Rent $2,487,631 Total Annual Rent (Rounded) $2,488,000 Aggregate Annual Rent by Income Level Number of Units Total Annual Rent (Rounded) Percent of Total Rent Average Monthly Rent Very Low Income 3 $53,000 2.1% $1,472 Low Income 17 $470,000 18.9% $2,304 Middle Income 51 $1,965,000 79.0% $3,211 Total 71 $2,488,000 100.0% $2,920 2/ Assumed at 30% of monthly income. Note: Rounding may affect totals. 1/ Weighted average annual earnings based on anticipated mix of occupations and wages in new non- residential development in Lexington. Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Lexington Linkage Nexus Study 36 Karl F. Seidman Consulting Services Table 3-9. Summary of Required Affordable Housing Subsidy Rental Units All Units Low Income Low Income Middle Income Potential Development Costs Number of Units 71 3 17 51 Percent to Total 100.0%4.2%23.9%71.8% TDC per Unit $654,000 $654,000 $654,000 $654,000 TDC per GSF $673 $673 $673 $673 Total Gross Square Footage (GSF)69,000 2,915 16,521 49,563 Total Development Costs (TDC)$46,448,000 $1,962,592 $11,121,352 $33,364,056 Net Rental Income Unit Factor Amount Amount Amount Amount Gross Annual Rent $2,488,000 $53,000 $470,000 $1,965,000 Less Vacancies 5%of Gross Rent ($124,400)($2,650)($23,500)($98,250) Less Total Operating Costs 1/ 2/$14,000 per Unit ($994,000)($42,000)($238,000)($714,000) Net Operating Income (NOI) 2/$1,361,250 $0 $208,500 $1,152,750 Amount Amount Amount Amount Net Operating Income (NOI) 3/$1,361,250 $0 $208,500 $1,152,750 Debt Coverage Ratio 1.1 1.1 1.1 1.1 Available for Debt Service $1,237,500 $0 $189,500 $1,048,000 Mortgage Constant 4/6.980%6.980%6.980%6.980% Permanent Mortgage / Supportable Debt (Rounded)$17,730,000 $0 $2,715,000 $15,015,000 Supportable Equity Calculation Amount Amount Amount Amount Required Return on Equity 5/15.0%15.0%15.0%15.0% Revenue Available for Return to Equity $136,125 $0 $20,850 $115,275 Supportable Equity Investment $908,000 $0 $139,000 $769,000 Subsidy Required Calculation Amount Amount Amount Amount Total Development Costs $46,448,000 $1,962,592 $11,121,352 $33,364,056 Less Permanent Mortgage / Supportable Debt ($17,730,000)$0 ($2,715,000)($15,015,000) Less Supportable Equity ($908,000)$0 ($139,000)($769,000) Subsidy Required (TDC-Mortgage-Equity)$27,810,000 $1,962,592 $8,267,352 $17,580,056 Subsidy Required as a Percent of TDC 59.9%100.0%74.3%52.7% Subsidy Required per Unit $391,690 $654,197 $486,315 $344,707 Subsidy Required per Unit (Rounded)$392,000 $654,000 $486,000 $345,000 Note: Rounding may affect totals. 3/ Available debt service from Very Low Income units is assumed as $0. See footnote 2/. 4/ Source: ConsultEcon calculation of mortgage constant based on August 13, 2025 interest rates for MHP Direct Lending loan from the Massachusetts Housing Partnership. Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. By Household Type Derivation of Permanent Mortgage / Supportable Debt Calculation 1/ Based on estimated of operating expenses per unit for affordable multi-family developments in other similar Metro Boston communities and interviews. Costs are typical of CAM expenses--Administrative, Utilities, Maintenance, Insurance, Property Taxes--that would be charged to the renter or the building owner would absorb. 2/ The amount of money tenants pay in rent does not cover the operating costs of the units for Very Low Income households. Affordable housing operating costs are typically higher than market rate housing because of the space dedicated to and costs of delivering a higher level supportive services to tenants. In reality, affordable housing projects also require operating subsidies such as Section 8 housing vouchers. For analytic purposes, the financial analysis is focused on capital subsidies, the operating loss shown is not included in the financing analysis and the operating shortfall would be addressed seperately through other funding mechanisms. 5/ Estimated developer returns for market rate project based on Affordable Housing Finance 101 presentation available from: https://www.smartergrowth.net/wp-content/uploads/2024/05/Patrick-McAnaney-Webinar-Slides-May-2024.pdf. Lexington Linkage Nexus Study 37 Karl F. Seidman Consulting Services Ownership Housing Development Project Revenue Table 3-10 provides estimated sales prices for affordable units based on 30 percent of household incomes of homeowner households. Table 3-10. Aggregate Affordable Ownership Unit Sales by Household Income and Size of Unit Ownership Housing Needed Subsidy Table 3-11 derives estimates of the subsidy needed after accounting for the sales of the affordable units based on 30 percent of owner income. Household Size Average Annual Income 1/ Monthly Housing Costs 2/ Number of Households Supportable Sales Price 3/Total Sales Low Income Households One bedroom $68,141 $1,704 3 $193,286 $579,857 Two bedroom $98,032 $2,451 2 $278,018 $556,036 Three bedroom $125,283 $3,132 2 $355,264 $710,528 Middle Income Households One bedroom $118,193 $2,955 33 $351,815 $11,609,886 Two bedroom $132,898 $3,322 10 $395,509 $3,955,088 Three bedroom $158,211 $3,955 10 $470,872 $4,708,722 Total Households / Housing Units 60 Total Sales $22,120,116 Total Sales (Rounded) $22,120,000 Aggregate Sales by Income Level Number of Units Total Sales Percent of Total Average Sales Price Low Income 7 $1,846,000 8.3% $263,714 Middle Income 53 $20,274,000 91.7% $382,528 Total 60 $22,120,000 100.0% $368,667 1/ See Appendix Table B-3 for Weighted Average Annual Income Data 2/ Assumed at 30% of monthly income. 3/ See Appendix Table B-4 for Supportable Sale Price Analysis Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Lexington Linkage Nexus Study 38 Karl F. Seidman Consulting Services Table 3-11. Summary of Subsidy Required for Affordable Housing Ownership Units Summary of Subsidy Needed to Satisfy Ten-Year Affordable Housing Demand Table 3-12 summarizes the results of the analysis of renter and owner-occupied affordable unit total development costs, subsidy needed and the per square foot housing contribution for non- residential development that would be needed to fill the entire subsidy gap. All Units Low Income Middle Income Potential Development Costs Number of Units 60 7 53 Percent to Total 11.7%88.3% TDC per Unit $651,000 $651,000 $651,000 TDC per GSF $674 $674 $674 Total Gross Square Footage (GSF)58,000 6,767 51,233 Total Development Costs (TDC)$39,076,000 $4,558,867 $34,517,133 Aggregate Unit Sales Proceeds Units Average Price Sales Proceeds Sales Proceeds Sales Proceeds Low Income 7 $263,714 $1,846,000 $1,846,000 $0 Middle Income 53 $382,528 $20,274,000 $0 $20,274,000 Total Sales Proceeds 60 $368,667 $22,120,000 $1,846,000 $20,274,000 Subsidy Required Calculation Amount Amount Amount Total Development Costs $39,076,000 $4,558,867 $34,517,133 Less Sales Proceeds ($22,120,000)($1,846,000)($20,274,000) Subsidy Required (TDC-Sales Proceeds) $16,956,000 $2,712,867 $14,243,133 Subsidy Required as a Percent of TDC 43.4% 59.5% 41.3% Required Subsidy per Unit $387,552 $268,738 By Household Type Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Lexington Linkage Nexus Study 39 Karl F. Seidman Consulting Services Table 3-12. Calculation of Subsidy Required for New Affordable Rental and Ownership Units per Square Foot of Projected Non-residential Development in Lexington over a 10-Year Period The results of this analysis are:  Total development costs of $85.5 million; and  Total needed subsidy of $44.8 million. Modified Subsidy Required Based on Other Subsidy Sources The housing contribution fee needed to provide the full $44.8 million in subsidy is $92.09 per square foot on new non-residential development. However, very low-income, low-income and middle-income housing development leverages public subsidies from federal and state sources in addition to those provided by local government. Because the maximum housing contribution is so high, it is inadvisable to set the fee at this level to avoid stifling new non-residential development. Moreover, because of the availability of state and federal affordable housing development funding sources, the local share is typically only part of the mix of sources for projects. The local share to produce affordable rental housing in other communities varies from 6 percent in Somerville to 57 percent for one home ownership project in Cambridge. On average, local funds have represented 11 percent of the total project costs for projects financed by the Massachusetts Housing Partnership (MHP) portfolio from FY2016 to FY2022. All Units Very Low Income Low Income Middle Income Number of Units 131 3 24 104 Percent to Total 100% 2% 18% 79% Total Development Cost $85,524,000 $1,962,592 $15,680,219 $67,881,190 Total Subsidy Required $44,766,000 $1,962,592 $10,980,219 $31,823,190 Percent TDC that is Subsidy 52.3%100.0%70.0%46.9% Total Commercial Square Footage 486,116 486,116 486,116 486,116 Subsidy Required per Square Foot of New Commercial Development $92.09 $4.04 $22.59 $65.46 Percent to Total 100% 4% 25% 71% Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Derivation of Commercial Square Footage Subject to Housing Contribution Lexington Linkage Nexus Study 40 Karl F. Seidman Consulting Services Summary of Development Costs, Needed Subsidy and Local Share of Project Funding The local share of funding for the subsidy ranges widely and is often as much as 30 percent. Funding levels vary by municipality, depending on their affordable housing policies and the funds that are available. Table 3-13 summarizes potential housing contribution scenarios based on a range from 5 percent to 25 percent for Lexington’s share of the subsidy needed to produce the housing. This results in a fee range from $4.60 to $13.81. The table also shows the percentage of the total development costs represented by each of the housing contribution alternatives. Over the 10-year period, based on the per SF fee range below and the projected 486,116 SF of non-residential development projected, the housing contribution policy would generate between $2.2 million and $15.6 million for the affordable housing trust fund depending on the chosen housing contribution policy. Table 3-13. Summary of Housing Contribution Scenarios based on Total Development Costs and Subsidy Required to Build New Affordable Housing Units Lexington Per Square Foot Share of Subsidy Houshing Contribution Based on Share Lexington Percentage Share of TDC 5% $4.60 2.6% 10% $9.21 5.2% 15% $13.81 7.9% 25% $23.02 13.1% Note: TDC = Total Development Costs. Source: Karl F. Seidman Consulting Services and ConsultEcon, Inc. Lexington Linkage Nexus Study 41 Karl F. Seidman Consulting Services IV. Review of Housing Contribution Policy Options Cities across the country have implemented policies to generate funding to address the impact of commercial development on affordable housing demand for over three decades. Many California communities have enacted such programs, and they are also found in Washington, Colorado, Florida, and New Jersey. Locally, Boston, Cambridge, Everett, Somerville and Watertown have implemented linkage fees. This section reviews the linkage fees in nearby communities, considers key policy options for Lexington to address in establishing a housing contribution/linkage fee, and assesses the impact of the maximum warranted fee discussed in the prior section on Lexington’s competitiveness for attracting businesses and commercial development investment. Policies in Nearby Communities Current housing contribution/linkage fee rates and policies for Boston, Cambridge, Everett, Somerville and Watertown are summarized in Tables 4-1 and 4-2 . Housing contribution/linkage fees per SF range from $2 to $4 in Everett to a high of $36.36 in Cambridge. Boston, Cambridge and Somerville established their fees over 20 years ago, between 1983 and 1990, while Everett and Watertown established their fees recently, in 2021 and 2023, respectively. The three early adopters have increased their fee levels over time to reflect inflation and changes in both development impacts and the funding gap to build affordable housing. All five cities provide for annual fee adjustments for inflation. As discussed below, there are also variations across communities in specific policies and administrative issues beyond the fee rates. Table 4-1 . Housing Contribution/Linkage/ Fee Rates, Thresholds and Exemptions in Boston Area Communities City Year Established Exaction/Linkage Fee Rate (per SF) Project Size Threshold (SF)Exemption (SF) 1983 Housing: $26.00 for labs & $19.33 fr other uses 1986 Jobs: $4.78 for labs and $3.76 Cambridge 1988 Housing: $36.36 30,000 30,000 for projects less than 60,000 SF Everett 2021 $1,000 per dwelling unit; Non- residential: $2.00 for first 30,000 SF; $3.00 for 30,001- 60,000 SF; $4.00 above 60,000 SF All residential projects 15,000 - non-residential 1990 Housing: $23.79; 50% of fee paid for projects between 15,000 and 30,000 SF 15,000 for housing 15,000 for housing 2017 Jobs: $3.10; 50% of fee paid for projects between 15,000 and 30,000 SF 15,000 for jobs 15,000 for jobs Watertown 2023 Housing: $11.50 30,000 0 Boston 50,000 50,000 Somerville Lexington Linkage Nexus Study 42 Karl F. Seidman Consulting Services Table 4-2. Additional Housing contribution Policies in Boston Area Communities City Applicable Project Payment Schedule Rate Adjustments Other Policies 1, Erect a structure or structures with GFA above size threshold; 2. Enlarge or extend a structure or structures with GFA above size threshold; 3. Substantially rehabilitate a structure or structures having, or to have after rehabilitation GFA above size threshold. Housing: 2 payments at building permit date and COO date.Housing creation option allows a developer to make all or a portion of their linkage obligation via a financial contribution to a specific income restricted housing project. Jobs: two payments at building permit date & COO date. Job linkage obligation can be met through either cash payments or creation of a job training program with a cost at least equal to the required linkage fee contribution. Cambridge 1. New buildings or additions; 2. Substantial rehabilitation to accommodate uses subject to linkage fees; 3. Changes in use where the new use is subject to linkage fees. One payment at COO. Annual Adjustment (in October or November) based on Boston CPI Housing Index Recalculation after three years or longer. Everett 1. New building or addition; 2. Change in use in threshold amount subject to linkage fee. 10% of fee is paid at COO with 3 subsequent payments of 30% at anniversary date of the fee agrreement (close to COO date). Annual adjustment Jan. 1 based on the change in the RS Means Average City Cost Index for Boston. Reduced fee by 50% for projects with a building permit prior to fee passage. New buildings and modifications to existing buildings. New buildings and modifications to existing buildings. Watertown 1. Construction of new building or addition for non- residential use; 2. Substantial rehab or conversion for non- residential use. Two payments at COO and 1 year later. Annual adjustment based on change in CPI- U. Option to provide affordable housing units or land in lieu of cash payment. Boston Somerville Automatic annual adjustment beginning July 1, 2024 based on a "combined index" of the CPI for Urban Consumers and CPI Housing Component. At other times as recommended by the BRA based on a consideration of economic trends, housing trends and other factors. Housing fee made in three payments at COO & next two anniversary dates. Jobs fee made in two payments at building permit & COO. Reevaluation every five years. Annual adjustment March 1 based on Boston CPI. Lexington Linkage Nexus Study 43 Karl F. Seidman Consulting Services Administrative and Policy Issues Beyond setting the housing contribution rate, Lexington needs to address several administration and policy issues if it decides to establish a new affordable housing contribution/linkage fee. The primary issues, reviewed in this section, are:  What projects would be subject to the fee based on use, square footage, extent of rehabilitation, stage of development, etc.;  Exempting part of the development space from the fee;  Whether to set a single uniform fee or vary the fee rate by use and/or development district;  Payment timing and schedule; and  Fee adjustment over time. Size Threshold and Exemption. Communities vary in the size threshold that triggers the application of housing contributions or linkage fees. In Boston, their equivalent Development Impact Project (DIP) fee applies to developments over 50,000 SF, while in Cambridge and Watertown it applies to developments over 30,000 SF. Everett and Somerville have the lowest threshold, at 15,000 SF. Some communities have no minimum size threshold for the application of commercial linkage fees and collect them from projects independent of size. This is particularly true in California where most communities with such fees do not have a size threshold21. For redevelopment projects, these thresholds typically apply to the total size of the new redevelopment project not to the net increase in gross floor area. Most communities apply the threshold to building additions or modifications/substantial rehabilitations along with new construction. Boston and Somerville exempt part of the total floor area from paying the linkage fee—an amount equal to the project threshold. Cambridge does this only for projects with less than 60,000 SF. Everett and Watertown do not provide an exemption. An exemption benefits smaller projects by reducing the share of their floor area subject to the linkage fee. Therefore, providing an exemption for smaller projects, as is done in Cambridge, is a way to address concerns that a housing contribution is more likely to impact the financial viability of smaller projects. However, there is not a strong housing policy case for having an exemption since the exempted space still has an impact on the demand for affordable housing. Moreover, by exempting a portion of building space from paying the linkage fee, the fee needs to be higher to provide the revenue needed to fill the funding gap. Lexington’s recent and permitted non-residential projects have been fairly large, with four of the 13 projects under 100,000 SF and eight over 200,000 SF. Variation of Housing and Employment Impacts by Use. Two primary factors shape how different uses impact the demand for affordable housing: (1) the density of employees in the occupied space; and (2) the share of employees with earnings at the very low, low and middle-income levels. Since these factors vary by use there is a policy case for varying fees by use, e.g. restaurants have a high impact on affordable housing demand due to high employee density and low earnings while lab/life science uses will have a lower impact with a large share of employees with annual earnings above the middle-income level. Varying rates by use adds to fee administration, as the distribution of 21 Jobs Housing Nexus Study, prepared for the City of San Diego, Prepared by Keyser Marston Associates, Inc., October 2010. Lexington Linkage Nexus Study 44 Karl F. Seidman Consulting Services uses in each project needs to be calculated and the potential for changes in use and required fees between approval, completion/certificate of occupancy and actual occupancy needs to be addressed. Since Lexington’s non-residential development is heavily concentrated in lab/life science development, there is little need to vary fee rates by use and incur the added complexity. Variation of Contribution Rates by Geography. Some cities, such as San Francisco and Seattle, have different linkage fees for different neighborhoods or districts to reflect variations in rent levels and development densities. Since Lexington is a much smaller community with a limited amount of non-residential development, there are not large variations in rents and development density within the town that would warrant adopting this policy. Payment Timing Schedule. Lexington will need to decide when to first collect a housing contribution and whether to allow developers to pay the fee over time with multiple payments. The most common option is to commence fee payments when the certificate of occupancy is issued.22 Boston is the exception, requiring the first payment when the building permit is issued. Collection at the building permit date will allow Lexington to collect the fee sooner and have the capacity to deploy the funds sooner. However, this earlier date requires developers to finance and pay the funds well before any tenant revenue is received. Allowing for fee payment over time has the same trade-off—a single payment would allow Lexington to receive and deploy funds sooner but has a greater financial impact on developers. Cambridge requires one payment while the other four cities collect linkage fees over time. Boston and Watertown collect the fee in two payments, Somerville allows three payments and Everett has the longest period with four payments. Allowing multiple payments adds administrative complexity since additional record-keeping, invoicing and collection efforts are needed to track and collect payments over multiple years. Fee adjustment over time. A final policy issue concerns how to adjust linkages fee rates over time. Annual adjustments to fee levels based on inflation are used in all five communities to address increases in mitigation costs since inflation in construction and other development expenses raises the cost to build affordable housing. Most communities use the Consumer Price Index to make this inflation adjustment. Everett applies a construction cost index, which is a better indicator of housing development cost inflation than changes in consumer household expenses. A second aspect of fee adjustment is updating linkage fees based on changes in economic and development conditions that affect the affordable housing impacts of new developments and the funding gap to mitigate these impacts. Zoning codes in Boston, Cambridge and Somerville require this more comprehensive update every three or five years. Impact on Lexington’s Competitiveness for Attracting Development and Companies An important consideration in establishing the housing contribution rate is its potential impact on attracting new development and tenants. A housing contribution will increase development costs. Developers can offset this added cost by either paying less for their development site, reducing other development costs or collecting higher rents from tenants. When developers are unable to offset the added costs (e.g., they acquired their site before the fee was established or market conditions prevent them from increasing rents), the higher costs will reduce the return on 22 This is the time of collection. The fee obligation is typically established when a project first applies for development approval or when the final decision permitting the new development occurs. Lexington Linkage Nexus Study 45 Karl F. Seidman Consulting Services investment for the developer and its investment partners. Since the impact of a new housing contribution on the economics of development is not certain and can vary under different circumstances, this section analyzes three ways in which a housing contribution may affect Lexington’s competitive position for economic development: 1. The cost of the housing contribution is passed on to tenants as higher rents. If the rent increase is large, then it may affect Lexington’s competitiveness in attracting businesses to new development projects. 2. The housing contribution cost is fully paid by developers without any rent increase or offsetting reduction in acquisition or other development costs. With higher development costs and the same rental income, developers will experience a reduction in their financial return for the project. Many developers have a return threshold that a project must meet to be deemed financially feasible and to be undertaken. If the added cost of the housing contribution significantly reduces the financial return, developers may forego undertaking a project in Lexington and pursue opportunities in other communities. A developer’s return on cost23, a common financial return measure that developers use to assess project feasibility, is used for this analysis to assess the potential impact of housing contribution options. 3. The housing contribution cost is fully paid by the project’s equity investors without the cost passed on as a rent increase, offset by lower acquisition and/or other development costs, or an increase in project debt financing. Developers need to raise equity financing to cover the portion of project costs that cannot be financed with debt. If the full cost of the housing contribution must be financed by equity, it will reduce the equity investors’ return on investment since they will be providing more capital but the project’s income will not increase. If the cost of the housing contribution significantly reduces their investment return, then equity investors may choose not to invest in Lexington projects. The inability to raise sufficient equity investment might prevent some developers from being able to undertake projects and reduce future investment in Lexington. . Potential Impact on Rents. Table 4-3 shows the dollar impact and percentage increase of the $92.09 maximum housing contribution (and alternative rates based on different local funding shares) on the annual lab rent per square foot amortized over a ten-year lease. Lexington’s lab rent is estimated at $75 PSF, which is the current asking rent level for the MassPike/128 market area, based on reports from several real estate brokerage firms. The maximum fee, when fully passed on to tenants, would increase annual rent by $9.21, or 12.3%. The four lower fee options would generate increases of $.46 to $2.30, which equal percentage changes in rent ranging from a low of .6% to 3.1. 23 Return on cost is the ratio of a project’s net income to its total development costs. Lexington Linkage Nexus Study 46 Karl F. Seidman Consulting Services Table 4-3. Potential Impact of Housing Contribution Options on Lexington Lab Rents To assess the impact of these potential rent increases on competition for tenants, Table 4-4 compares Lexington’s estimated lab rent to lab rents on six potential competing locations. Lexington is an established and desirable location for life science firms but it competes for tenants with several locations as a lower cost alternative to Boston and East Cambridge. With the boom in lab development in the last several years, more locations now provide a lower cost lab space option and are potential competitors to Lexington, especially the inner suburban communities of Somerville and Watertown. Lexington currently has a large rent advantage over Boston and Cambridge locations, ranging from $13 for West Cambridge to $33 for Fenway and $35 for East Cambridge. The maximum housing contribution fee, if fully passed on to tenants, would increase Lexington’s estimated rents by $9.21. Despite this large impact, Lexington would still have a sizeable rent advantage with these Cambridge and Boston locations, varying from $3.79 to $25.79. However, the maximum fee would make Lexington more costly and impact its competitiveness with the inner suburbs and other MassPike/128 locations. Since lab rents in Lexington are comparable to those in the inner suburbs and MassPike/128 market area, any housing contribution fee, if passed on to tenants, will make Lexington more costly than these competing communities. However, the fee levels from $4.60 to $13.81 would have a modest rent impact of $.46 to $1.38 (.6 to 1.8%) and could allow Lexington to remain a competitive location based on the Town’s other assets. Table 4-4. Lab Rents in Lexington and Competing Locations Housing Contribution Level Potential Impact on Annual Per Square Foot Rent* Percent of Lexington Lab Rent ($75) $4.60 per square foot $0.46 0.6% $9.21 per square foot $0.92 1.2% $13.81 per square foot $1.38 1.8% $23.02 per square foot $2.30 3.1% 92.09 per square foot $9.21 12.3% *Housing Contribution cost amortized over a 10 year lease Location Lab Asking Rent Differential from Lexington Lexington $75 128-MassPike $75 $0.00 Inner Suburbs $75 $0.00 West Cambridge $88 $13.00 Boston-Seaport $100 $25.00 East Cambridge $110 $35.00 Boston-Fenway $108 $33.00 Source: CBRE. LPC, CREDA Boston Metro Lab Reports 1Q25 Lexington Linkage Nexus Study 47 Karl F. Seidman Consulting Services Impact of Developer Returns. Table 4-5 shows the impact of the additional housing contribution costs on developers’ financial returns, under five fee amounts, for a 150,000 SF lab project under high cost ($1600/SF) and low cost ($1000/SF) development scenarios24. The two scenarios are based on varied lab total development costs reported by developers. Return on cost, which divides the expected net rental income from a project (before debt payments) by the estimated total development costs, is a common measure that developers use to assess if a project will be profitable and worth undertaking financially. Many developers in the Boston region have a current required return on cost in the 7% to 8% range, although some have a higher return threshold. By increasing development costs, a housing contribution would reduce the developer’s return on cost. The fee impact on returns is greater for the low cost development scenario. The estimated return on cost without any fee is 7.13%- a level that is marginally feasible for developers with the lowest return threshold. Returns drop by 60 basis points25 under the $92.09 maximum fee, lowers the return on cost from 7.13% to 6.52%, which would make the project unfeasible. Under three lower alternative fee levels ($4.60 to $9.21), the reduction in a developer’s return on cost is small, ranging from four to ten basis points and the estimated return remains above 7%. Under a $23.02 fee, the return on costs drops 16 basis points to 6.96%, below 7%--the lowest return threshold. For the high development cost lab scenario, the estimated return on cost without any fee is 4.22 %, far below developers’ return thresholds and thus infeasible for development under current market conditions. Market rents will need to increase and interest decline for new development to be viable at this level of development costs. The potential fee levels further reduce estimated returns by a high of 23 basis points at $92.09 to a low of one basis point at $4.60. Table 4-5. Estimated Impact of Housing Contribution Options on Development Costs and Developer Returns 24 Other assumptions used in the financial analysis are 135,500 SF of lab space rented (10% vacancy) at $75/SF NNN. 25 A basis point is 1/100th of a percentage point (.01%). Development at $1600 PSF No Contribution $92.09 Contribution $4.60 Contribution $9.21 Contribution $13.81 Contribution $23.02 Contribution Total Development Costs $240,000,000 $253,813,500 $240,690,000 $241,381,500 $242,071,500 $243,453,000 Estimated Gross Rental income $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 Vacancy (10%) $1,125,000 $1,125,000 $1,125,000 $1,125,000 $1,125,000 $1,125,000 Net Rental Income $10,125,000 $10,125,000 $10,125,000 $10,125,000 $10,125,000 $10,125,000 Return on Cost 4.22% 3.99% 4.21% 4.19% 4.18% 4.16% Differential -0.23% -0.01% -0.02% -0.04% -0.06% Development at $1000 PSF No $92.09 $4.60 $9.21 $13.81 $23.02 Total Development Costs $150,000,000 $163,813,500 $150,690,000 $151,381,500 $152,071,500 $153,453,000 Estimated Gross Rental income $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 $11,250,000 Vacancy (5%) $562,500 $562,500 $562,500 $562,500 $562,500 $562,500 Net Rental Income $10,687,500 $10,687,500 $10,687,500 $10,687,500 $10,687,500 $10,687,500 Return on Cost 7.13% 6.52% 7.09% 7.06% 7.03% 6.96% Differential -0.60% -0.03% -0.07% -0.10% -0.16% Lexington Linkage Nexus Study 48 Karl F. Seidman Consulting Services Impact on Investor Returns. Linkage fees will also affect the financial returns for equity investors. These investors will need to increase their investment in a project to fund the linkage fee26 while receiving the same cash flow (since the project’s revenue will be the same), resulting in a lower return on investment. Table 4- 6 shows how the increased equity investment reduces financial returns under the five fee level options shown in the prior table for the low-cost and high-cost lab development scenarios. Since developers reported that required financial returns for equity investors range from the high teens to twenty percent, the impact was calculated for investors seeking returns of 17% and 20%. The maximum $92.09 housing contribution reduces investor returns by a sizeable amount, between 214 to 374 basis points, which would likely deter them from investing in projects. With a $4.60 contribution, the returns on equity drop from 12 to 23 basis points, which is unlikely to deter investors since their returns remain close to their target levels. Similarly, the $9.21 contribution rate reduces returns by less than 50 basis points which allows investors to maintain returns close to their target. The impact of the $13.81 and $23.02 contribution level is more problematic, as they reduce returns by over 50 basis points and close to a full percentage point, respectively, for the low-cost development scenarios. These lower investment returns are more likely to impair developers’ ability to raise capital from investors with a strict investment return hurdle and who have other options that could meet their return goals. Table 4-6. Estimated Impact of Housing Contribution Options on Equity Investor Returns Developers also face a transportation mitigation fee for development in the Hartwell Avenue Area Transportation Management Overlay District, based on the number of net new parking 26 Lenders are unlikely to increase their loan size to fund the housing contribution cost since there is no increase in project revenue and cash flow to repay a larger loan. $1000 PSF Cost Project No Contribution $92.09 Contribution $4.60 Contribution $9.21 Contribution $13.81 Contribution $23.02 Contribution Equity Investment $60,000,000 $73,813,500 $60,690,000 $61,381,500 $62,071,500 $63,453,000 Initial Equity Return @17% $10,200,000 $10,200,000 $10,200,000 $10,200,000 $10,200,000 $10,200,000 Adjusted Return with contribution 13.82% 16.81% 16.62% 16.43% 16.07% Differential -3.18% -0.19% -0.38% -0.57% -0.93% Initial Equity Return @ 20% $12,000,000 $12,000,000 $12,000,000 $12,000,000 $12,000,000 $12,000,000 Adjusted Return with contribution 16.26% 19.77% 19.55% 19.33% 18.91% Differential -3.74% -0.23% -0.45% -0.67% -1.09% $1600 PSF Cost Project No $92.09 $4.60 $9.21 $13.81 $23.02 Equity Investment $96,000,000 $109,813,500 $96,690,000 $97,381,500 $98,071,500 $99,750,000 Initial Equity Return @17% $16,320,000 $16,320,000 $16,320,000 $16,320,000 $16,320,000 $16,320,000 Adjusted Return with contribution 14.86% 16.88% 16.76% 16.64% 16.36% Differential -2.14% -0.12% -0.24% -0.36% -0.64% Initial Equity Return @ 20% $19,200,000 $19,200,000 $19,200,000 $19,200,000 $19,200,000 $19,200,000 Adjusted Return with contribution 17.48% 19.86% 19.72% 19.58% 19.25% Differential -2.52% -0.14% -0.28% -0.42% -0.75% Lexington Linkage Nexus Study 49 Karl F. Seidman Consulting Services spaces built27. These fees can add several dollars per square foot in additional development costs and should be considered when deciding on the amount of any new housing contribution fee level. It is important to note the substantial barriers to new lab development (and other commercial development) under the current market and financial environment. Most projects are not financially viable under current construction and financing costs, and with downward pressure on rents given the large oversupply of already built space. In this environment, a new housing contribution fee adds another cost and financial barrier to projects, and could be perceived as Lexington being less supportive of non-residential development. 27 The transportation mitigation fee is $2000 per parking space for each net new parking space built up to the minimum parking required by § 10.2.6;e f of the zoning by-law and $5,000 per space for each net new space above the minimum requirement. Lexington Linkage Nexus Study 50 Karl F. Seidman Consulting Services V. Recommended Housing Contribution Policies The analysis detailed in this report establishes the nexus and warranted fee level for an affordable housing contribution fee. Projected building of 486116 square feet of non-residential development over the next ten years is expected to generate 982 jobs in Lexington. This employment growth will create demand for 131 new units of housing for very low-income, low-income, and middle- income households. An estimated financing gap of $44.8 million must be filled to reach the $85.5 million in total development costs necessary to build the new affordable housing units. The maximum warranted housing contribution to fill this financing gap is $92.09 per square foot. Under current market conditions, Lexington is unlikely to see new development several years and the first new development projects may already be permitted and thus not subject to a new housing contribution fee. Consequently, the Town is unlikely to gain new revenue from a housing contribution fee for many years. Under these circumstances, and faced with a very challenging development environment, Lexington should consider delaying implementation of a housing contribution fee for several years. There are two options for deferred implementation: (1) establishing a new housing contribution fee but deferring its application to a specific future date; (2) taking no action now and reconsidering the establishment of the housing contribution in several years, when market conditions improve. If and when Lexington does decide to proceed with a housing contribution, we recommend the following policies for the fee level and its administration:  Set a fee level between $4.50 and $9.50. This level when combined with any applicable transportation mitigation fee, as reflected in the analysis in the prior section, has minimal impact on developer and investor returns and is unlikely to deter future non-residential development;  Apply one contribution rate to all non-residential uses;  Set the project size threshold for requiring the housing contribution at 30,000 SF;  Do not provide any exempted amount of space or exempt any non-residential uses from the contribution;  Allow the housing contribution to be paid in two installments with 50% paid at the Certificate of Occupancy (COO) and the second 50% paid at the one year anniversary date of the COO;  Adjust the housing contribution rate annually based on the change in the Consumer Price Indes or a construction cost index; and  Review and reset the rate every 5 to 7 years based on changed market conditions and development trends. Lexington Linkage Nexus Study 51 Karl F. Seidman Consulting Services Appendix A: Employee Survey Summary A brief online survey was used to survey employees working in Lexington’s large office and lab/life science buildings. The survey assessed potential housing demand stemming from either having moved to Lexington as a result of their job or having sought housing in Lexington due to their job. Employers were contacted by Town staff and the consultant team and asked to distribute a survey link to their employees. Several property owners also contacted their tenants to encourage participation in the survey. A total of 19328 Lexington employees completed surveys with the distribution by industry as follows: Business/Industry Type Number of Responses Percentage of Responses (%) Biotech/Health Sciences R & D 41 21.2% Education 1 0.5% Health Care 2 1.0% IT/Software/Other Technology 139 72.0% Professional or Business Services 7 3.6% Other 3 1.6% Total 193 100.0% 2Respondents who selected other indicated the following business/industry types: human services, consulting and government. Key survey results include:  6.7% of respondents (13) live in Lexington.  2 employees (1%) moved to Lexington as a result of obtaining their job in Lexington or its relocation to Lexington.  56 (29%) sought housing in Lexington are a result of being employed in Lexington but did not move due to high cost of housing.  Sum of both (30%) was used to estimated percent of employees at jobs from new development that would demand housing in Lexington. 28 One survey respondent was not employed in Lexington and was not include in the final data analysis. Lexington Linkage Nexus Study 52 Karl F. Seidman Consulting Services Appendix B: Tables Detailing Housing Subsidy Analysis Table B-1. Affordable Rental Housing Units by Number of Bedrooms and Building Area Table B-2. Affordable Ownership Housing Units by Number of Bedrooms and Building Area Number of Units Average Unit Size Total Living Area One Bedroom 40 600 24,240 Two Bedroom 15 800 11,840 Three Bedroom 16 1,000 15,800 Total Units 71 731 51,880 Net Square Feet as a Percent of Gross Square Feet 75.0% Total Gross Square Feet (GSF) (Rounded)69,000 Average Unit Size per GSF 972 Source: Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Number of Units Average Unit Size Total Living Area One Bedroom 36 600 21,360 Two Bedroom 12 800 9,600 Three Bedroom 12 1,000 12,400 Total Units 60 723 43,360 Net Square Feet as a Percent of Gross Square Feet 75.0% Total Gross Square Feet (GSF) (Rounded)58,000 Average Unit Size per GSF 967 Source: Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Lexington Linkage Nexus Study 53 Karl F. Seidman Consulting Services Table B-3. Conversion of Ownership Unit Household Income by Persons to Household Income by Bedrooms Household Size Annual Income 1/Number of Households Aggregate Income Calculation of Aggregate Income Low Income Households 1 Person $76,457 2 $152,914 2 Persons $85,846 1 $85,846 3 Persons $101,078 2 $202,156 4 Persons $105,067 2 $210,134 Total $93,007 7 $651,050 Middle Income Households 1 Person $115,606 24 $2,774,544 2 Persons $125,091 15 $1,876,365 3 Persons $144,609 5 $723,045 4 Persons $159,722 9 $1,437,498 Total $128,518 53 $6,811,452 One bedroom Two bedroom Three bedroom All Units Distribution of Units by Number of Bedrooms 1 Person 100% 0% 0% 100% 2 Persons 60% 40% 0% 100% 3 Persons 0% 80% 20% 100% 4 Persons 0% 0% 100% 100% Distribution of Low Income Aggregate Income by Unit Size 1 Person $152,914 $0 $0 $152,914 2 Persons $51,508 $34,338 $0 $85,846 3 Persons $0 $161,725 $40,431 $202,156 4 Persons $0 $0 $210,134 $210,134 Total $204,422 $196,063 $250,565 $651,050 Total Units by Size 3 2 2 7 Avg. Income per Unit by Size $68,141 $98,032 $125,283 $93,007 Distribution of Middle Income Aggregate Income by Number of Bedrooms 1 Person $2,774,544 $0 $0 $2,774,544 2 Persons $1,125,819 $750,546 $0 $1,876,365 3 Persons $0 $578,436 $144,609 $723,045 4 Persons $0 $0 $1,437,498 $1,437,498 Total $3,900,363 $1,328,982 $1,582,107 $6,811,452 Total Units by Size 33 10 10 53 Avg. Income per Unit by Size $118,193 $132,898 $158,211 $128,518 Source: Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Units by Number of Bedrooms 1/ Source: Karl F. Seidman Consulting Services. Weighted average annual household income based on anticipated mix of occupations and average occupational wages for based on projected commercial development in Lexington. Lexington Linkage Nexus Study 54 Karl F. Seidman Consulting Services Table B-4. Sales Price Analysis by Unit Size / Number of Bedrooms based on Estimated Monthly Housing Costs Set at 30% of Household Income Assumptions Mortgage 5% Assumed Down payment 95% Percent of Price covered by Mortgage 6.70%Mortgage interest rate 1/ 0.72%Private Mortgage Insurance (PMI) 2/ Real Estate Taxes $12.23 per 1,000 of assessed values/sales price 1.50% Middle Income unit 2.00% Low Income unit One Bedroom Two Bedroom Three Bedroom Very Low Income Households Low Income Households Sales Price $193,286 $278,018 $355,264 Down payment $9,664 $13,901 $17,763 Monthly Payment Calculation First Mortgage Payment $1,185 $1,704 $2,178 Real Estate Taxes $197 $283 $362 Condo Fees $322 $463 $592 Total Monthly Payment $1,704 $2,451 $3,132 Middle Income Household Sales Price $351,815 $395,509 $470,872 Down payment $17,591 $19,775 $23,544 Monthly Payment Calculation First Mortgage Payment $2,157 $2,425 $2,887 Real Estate Taxes $359 $403 $480 Condo Fees $440 $494 $589 Total Monthly Payment $2,955 $3,322 $3,955 Source: Massachusetts Housing Partnership; Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Condo Fees, as a Percent of Sales Price Unit Size / Number of Bedrooms Not applicable because Very Low Income housing units are assumed to be all rental units. 2/ Moderate and middle income households qualify for the One Mortgage Program (http://www.mhp.net/homeownership/homebuyer/one_mortgage.php) that waives Private Mortgage Insurance (PMI) for first time homeowners through participating lenders. 1/ As of Wednesday, August 13, 2025, current interest rates in Massachusetts are 6.70% for a 30-year fixed mortgage and 5.88% for a 15-year fixed mortgage. Lexington Linkage Nexus Study 55 Karl F. Seidman Consulting Services Table B-5. Calculation of Subsidy Required for New Affordable Rental Units per Square Foot of Projected Non-Residential Development Table B-6. Calculation of Subsidy Required for New Affordable Ownership Units per Square Foot of Projected Non-Residential Development All Rental Units Low Income Low Income Middle Income Number of Units 71 3 17 51 Total Development Cost $46,448,000 $1,962,592 $11,121,352 $33,364,056 Total Subsidy Required $27,810,000 $1,962,592 $8,267,352 $17,580,056 Percent TDC that is Subsidy 59.9%100.0%74.3%52.7% Total Commercial Square Footage 486,116 486,116 486,116 486,116 Subsidy Required per Square Foot of New Commercial Development $57.21 $4.04 $17.01 $36.16 Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Derivation of Commercial Square Footage Subject to Housing Contribution All Ownership Units Low Income Middle Income Number of Units 60 7 53 Total Development Cost $39,076,000 $4,558,867 $34,517,133 Total Subsidy Required $16,956,000 $2,712,867 $14,243,133 Percent TDC that is Subsidy 43.4%59.5%41.3% Total Commercial Square Footage 486,116 486,116 486,116 Subsidy Required per Square Foot of New Commercial Development $34.88 $5.58 $29.30 Source: Town of Lexington; Karl F. Seidman Consulting Services; and ConsultEcon, Inc. Derivation of Commercial Square Footage Subject to Housing Contribution AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Application: Liquor License Change of Manager Amendment - Fiorella's Lexington LLC PRESENTER: Jill Hai, Select Board Chair ITEM NUMBER: I.2 SUMMARY: Category: Decision-Making Fiorella’s Lexington LLC d/b/a Fiorella’s has submitted all the necessary paperwork needed to request a change of manager to be Donald Johnson on their Wine and Malt Common Victualler Liquor License. The proposed manager, Donald Johnson, has submitted a current Alcohol Awareness Training Certificate and the required CORI check has been completed. SUGGESTED MOTION: Move to approve the application from Fiorella’s Lexington LLC d/b/a Fiorella’s for a Change of Manager and, once approved by the ABCC, issue an updated Wine and Malt Common Victualler Liquor License to Fiorella’s Lexington LLC d/b/a Fiorella’s for a Change of Manager, with Donald Johnson named as Manager. FOLLOW-UP: Select Board Office DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 8:05pm ATTACHMENTS: Description Type Fiorellas Change of Manager Application Backup Material AGENDA ITEM SUMMARY LEXINGTON SELECT BOARD MEETING AGENDA ITEM TITLE: Status: Article 97 Filing for Lexington High School Project PRESENTER: Steve Bartha, Town Manager ITEM NUMBER: I.3 SUMMARY: On November 3, prior to STM 2025-2, the Select Board voted 5-0 in favor of Article 9 (home rule legislation for Article 97), which then passed with over 90% support from Town Meeting. Although it is arguable that the November 3 Select Board vote to authorize home rule legislation already satisfies the requirements laid out in Article 97 guidance issued by the Executive Office of Environmental Affairs (EOEA) in 1998, counsel is recommending that the November 3 vote be reaffirmed tonight to make clear the town's intent as the process moves forward. SUGGESTED MOTION: Move that the Board affirm its desire, as expressed at the November 3, 2025, Special Town Meeting, to petition the General Court to enact special legislation pursuant to Article 97 of the Massachusetts Constitution, in substantially the form authorized by Town Meeting, to authorize the transfer of the Center Athletic Field Parcels currently under the care, custody, management and control of the Select Board to the School Committee for school purposes and to authorize the Legislature to make changes to the text of such legislation as is consistent, subject to approval of such changes by the Town Manager; provided that the filing of such petition shall only occur if the Town votes in favor of the debt exclusion put before the voters today. FOLLOW-UP: DATE AND APPROXIMATE TIME ON AGENDA: 12/8/2025 8:10pm ATTACHMENTS: Description Type Memo on Status of Article 97 Cover Memo Select Board Statement at STM on Article 97 Backup Material 1625 MASSACHUSETTS AVENUE • LEXINGTON, MA • 02420 Town of Lexington Town Manager’s Office Steve Bartha, Town Manager Kelly Axtell, Deputy Town Manager Tel: (781) 698-4540 Fax: (781) 861-2921 Memorandum To: Lexington Select Board From: Steve Bartha, Town Manager Date: December 3, 2025 Subject: Status of Article 97 Filing for High School Project On November 3, prior to STM 2025-2, the Select Board voted 5-0 in favor of Article 9 (home rule legislation for Article 97), which then passed with over 90% support from Town Meeting. As (a) explained by town counsel prior to Town Meeting and (b) noted in the accompanying Select Board Statement (attached), Town Meeting was being asked, in part, to "confirm that it is still Town Meeting’s desire that these fields be used for school building purposes (as they were authorized in 1961), and avoid any legal uncertainty over the Town’s rights to build on these parcels as it embarks on this important project, the Select Board seeks the authority to file legislation pursuant to Article 97 reconfirming the 1961 release of any and all restrictions on the land that will be used for the new school..." The vote tonight should be viewed in a similar light. Although it is arguable that the 5-0 vote prior to STM 2025-2 to authorize home rule legislation already satisfies the requirements laid out in Article 97 guidance issued by the Executive Office of Environmental Affairs (EOEA) in 1998, counsel is recommending that the November 3 vote be reaffirmed tonight to make clear the town's intent as the process moves forward. The Town has been discussing and/or preparing for a potential Article 97 filing for many years. Provided the voters approve today's Debt Exclusion question, a Home Rule Petition will be presented to the Legislature for passage. The Town has received every indication from EOEA and members of our delegation that our Article 97 filing is straightforward. Our project is currently under review with the EOEA (which has viewed the project positively so far). Acting now allows our delegation to begin taking the steps necessary to file the legislation and preparing it for votes as soon as EOEA acts on the Article 97 submittal to maximize the chances for quick legislative action in the new year. That action, in turn, will allow us to stay on schedule with the project and minimize cost escalations. Recommended Motion: Move that the Board affirm its desire, as expressed at the November 3, 2025, Special Town Meeting, to petition the General Court to enact special legislation pursuant to Article 97 of the Massachusetts Constitution, in substantially the form authorized by Town Meeting, to authorize the transfer of the Center Athletic Field Parcels currently under the care, custody, management and control of the Select Board to the School Committee for school purposes and to authorize the Legislature to make changes to the text of such legislation as is consistent, subject to approval of such changes by the Town Manager; provided that the filing of such petition shall only occur if the Town votes in favor of the debt exclusion put before the voters today. 1 Town of Lexington Annual Town Meeting 2025-2 Article 9: Home Rule Legislation for New Lexington High School Presenter: Jill Hai This article requests that Town Meeting take three-related actions to allow for the construction of the new Lexington High School to move forward. The first action is to transfer custody and control of certain areas of the current high school campus that are used for playing fields from the Select Board to the School Committee for the site of the new High School building. The second action transfers from the School Committee to the Select Board the care and custody of land currently being used for the High School building for the new athletic fields. This action formally dedicates these lands to playing fields and related recreational uses pursuant to Article 97 of the Amendments to the Massachusetts Constitution. The last action is related to the first. The areas of the current playing fields that will be used for the new High School building were acquired by the Town in 1914 and 1915 for park and recreation purposes by grants from August B. Scott, a park commissioner and former High School Principal in Lexington. In 1961, the state legislature formally permitted the Town to use these fields for school building purposes. To confirm that it is still Town Meeting’s desire that these fields be used for school building purposes (as they were authorized in 1961), and avoid any legal uncertainty over the Town’s rights to build on these parcels as it embarks on this important project, the Select Board seeks the authority to file legislation pursuant to Article 97 reconfirming the 1961 release of any and all restrictions on the land that will be used for the new school, subject to adequate mitigation being provided in the form of new playing fields as stated in the second part of this motion. 2 The Town has already taken steps to begin the Article 97 process, including making the necessary filings with the Executive Office of Energy and Environmental Affairs to begin review of the proposed land swap to ensure that the Town is providing adequate recreational facilities for those that would be used for the new building. Overall, the Town is achieving “no net loss” of fields as all eight acres of existing fields to be used will be replaced with new fields, most on the same High School campus. The Select Board unanimously supports the passage of Article 9.