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HomeMy WebLinkAboutEDTF Final Reportlir LEXINGTQN �011I.1 VISION Lexington 2020 Vision Economic Development Task Force Final Report August 22, 2008 Table of Contents Section 1.: Introduction, Taskforce Charge and Process Explanation 3 Economic Development Taskforce Charge 3 Taskforce Subgroups 4 Section 2: Inventory and Highlights of Existing Commercial Areas 6 Section 3: Economic Development Recommendations 8 Key Recommendation 8 1. Enhance Revenue through Commercial Development with Appropriate Infrastructure Improvements and Mitigation 8 Supporting Recommendations 9 2. Revise Zoning and Permitting 9 3. Create an Economic Development Advisory Committee 10 4. Develop Transportation Management Strategies 10 5. Consider Sustainability and Energy Conservation Measures 10 Section 4: Recommendation Discussion 11 Section 5: Summary 18 Section 6: Participants 18 List of Appendices A. Paul Hamburger Analysis B. Cecil Group and GLC Development Resources Commercial Zone Analysis and Build Out Study C. Economic Development Advisory Committee Charter D. Green Communities Act Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 2 of 19 Section 1; Introduction, Taskforce Charge and Process Explanation Should Lexington's reliance on residential property taxes for town and school services be balanced by more growth in commercial property and businesses? What kind of commercial growth would work more effectively in Lexington, and how can we integrate that growth into our community ,and neighborhoods? What economic factors determine the kinds of companies and jobs that will locate in Lexington, and the business success of our town center and other retail areas? How can we remove obstacles to successful commercial, office, or retail growth in town and how can processes be improved? Questions like these lend themselves to public discussion, debate, and consensus building through our Lexington 2020 Vision process. 2020 encourages community involvement and participation in government and 2020 created the Economic Development Taskforce (EDTF) to further our understanding of this area. The 2020 Vision committee created the Taskforce following a Scoping Group that defined the Taskforce charter. Economic Development Taskforce Charge The Economic Development Taskforce charge included: • engage the community in education about Lexington's existing businesses and potential for further commercial development, and elicit community opinion on these issues, broadly defined; • conduct a modeling exercise to explicitly examine the tradeoffs associated with various commercial -development choices; • examine with the public various regulatory issues affecting prospects for the current business sector in town and for future commercial development, and how Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 3 of.19 the structure of Lexington's complex regulatory and advisory system may impact development decisions; • coordinate its work with that of the 2020 Vision Task Force on sustainability, and incorporate Considerations of sustainable development in Its own work and recommendations; and • work with town officials to arrive at an effective, workable mission for an economic -development officer. To achieve these goals, the Taskforce formed four subgroups: Taskforce Subgroups Financial Impact and Modeling Subgroup Paul Hamburger, of the subgroup, performed an initial financial analysis projecting what town finances would look like if we simply continued doing what we are doing — a no -change scenario. In the analysis, the subgroup discovered that even with revenue growth at 4-5% per year, expenses would exceed that by 2-3%. This finding directed the EDTF to address the need for additional revenue sources such as planned, appropriate commercial development. His work is included in Appendix A. The subgroup, through the expertise of Larry Smith of Cranberry Hill Associates, evaluated the potential of three key commercial areas. The analysis evaluated all parcels in the existing commercially zoned areas — Rte 2A/Forbes, Bedford Street/Hartwell Ave and Hayden Ave/Spring Street. It incorporated data from the Planning Department and Co -Star as well as on-site evaluation of wetlands with an assessment of practical build- out potential, considering site and zoning constraints as well as the age of building and building systems. Mr. Smith's analysis identified significant square footage development potential. Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 4 of 19 1 Based on Mr. Smith's findings and analyses, the EDTF sought Town funding to obtain the services of a consultant team to further examine existing conditions and the potential for development in these same commercial districts. The Cecil Group and GLC Development Resources were selected based on the team's extensive experience in the preparation of commercial landuse, buildout and impact and market analysis. Their final report entitled the Commercial Zone Analysis and Build Out Study is broadly referenced in this document and is Appendix B. The full report is available online at the Town of Lexington's website. (http://ci.lexineton. ma.us/nublicdocs/CommZoneStudy071508smal I. pdf) Permitting and Regulatory Subgroup The Permitting and Regulatory Subgroup assessed the Town's regulations and procedures relative to those of surrounding communities to determine whether we are inadvertently discouraging desired economic development. The Subgroup took into consideration whether Town regulations and procedures are appropriate relative to competing options available to the commercial enterprises that the Town would like to attract. Economic Development Officer Subgroup The Economic Development Officer (EDO) Subgroup was formed to help shape the current job description for the then open position. As one could imagine, the roles of this position include diverse skills such as management and administration, marketing, market research, regulatory intervention, policymaking, and information -gathering, just to name. a few. In order to accomplish this, the Subgroup met with EDOs from towns such as Westwood and Belmont among others. In those meetings, we learned that most Metro West communities are actively pursuing economic and commercial development. This Subgroup assisted the Town Manager in creating a workable mission for the position and in collecting candidate resumes. The Subgroup provided support, research, and guidance during the hiring process. Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 5 of 19 Communications Subgroup In order to engage the community on topics associated with economic development, the Task Force issued press releases and articles as appropriate to keep the community engaged and informed of the EDTF's progress. The subgroup at varying times received feature coverage in The Colonial Times and The Lexington Minuteman. Internally, the EDTF reported its progress and general topic substance to the Board of Selectmen and Planning Board. The face -to face interaction with the public included a public meeting regarding the Cecil Report and participation in the League of Women Voters and the Chamber of Commerce programs on taxes, commercial development, and the process and progress of our work. In addition, the reports and updates of the EDTF were made available on the 2020 link on the Town website. Section 2: Inventory and Hiahliahts of Existing Commercial Areas The following section presents a brief understanding of Lexington's large commercial areas and their contributions and development prospects and the recent histories of these areas. The Cecil Report goes into greater detail. The Economic Development Task Force undertook an analysis of the potential fiscal implications of the three larger commercial areas of Hartwell Avenue, Spring Street/Hayden Avenue and Forbes Road. These areas have similar characteristics and are distinct from the local business districts in town by nature of their uses, tax base and large -lot campus settings. The three areas encompass 30,951,594 million square feet of land or approximately 759 acres. Wetlands amount to 14,897,591 square feet, leaving 16,054,033 square feet of developable land. [Cecil Group and GLC Development Resources Commercial Zone Analysis and Build Out Study, Tables 3-1 and 3-2, Pg. 3-2] The Hayden Avenue District is a well -diversified business community; the area is characterized by its cluster of life sciences companies. Identified by its wide lawns, treed Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 6 of 19 vistas and average density of .18 Floor Area Ratio (FAR)', the area hosts leading companies such as Shire HGT, Cubist Pharmaceuticals and Vista Print. The land area has a developable square footage of 7.6 million square feet adjacent to the intersection of Route 128 and Route 2. This area has seen the recent development of Shire HGT and Cubist Pharmaceuticals. The Hartwell Avenue district is bordered by Hanscom Air Force base and is home to MIT Lincoln Laboratory. This district is one of the most prominent defense industry and life sciences related hubs in the Boston area. The district has almost 6 million square feet of developable land area. Other prominent businesses in the area include BAB, Synta Pharmaceuticals, EPIX Pharmaceuticals, Instrumentation Laboratory and Varian, Inc. Directly adjacent to Route 128/195 is the Forbes Road/Route 2A district which has a little over 2 million square feet of developable land. This is the location of Lexington's newest hotels and globally connected high-tech businesses. Both lab/biotech and suburban office users are located in this corporate area with an average density of .19 FAR. The area is at the gateway to the National Park. The largest business is Antigenics, a biotechnology company that focuses on cancer vaccines and other disease treatments. Most of the site was developed in 1979. Significant development in these areas, for example development over 10,000 sq. ft., has been exclusively through Commercial District (CD) rezoning of parcels. The Cecil Report states that these areas are substantially underdeveloped relative to their potential. Some new value has arisen from minor facade changes and small Footnote: The Floor Area Ratio (FAR) is a commonly calculated ratio of the gross floor area of all buildings to the land area. Lexington's definition of FAR uses the net building area, or 80% of the gross, in lieu of using the gross building area; and, the delineated wetland area is excluded from the total site area. Throughout this document FAR denotes Lexington's unique calculation method. Lexington 2020 Vision -• Economic Development Task Force - August 22, 2008 7 of 19 additions but significant commercial development has been limited. New value would be created through a building addition or by demolition and replacement. Neither option is likely, in part because the loss of income from the property during the construction process cannot be offset by the gains in income from the upgrade. In short, density incentives to allow an adequate return on investment under the current conditions would require a CD rezoning. For the Town to capture new value, and therefore new revenue, landowners must be able to build onto existing buildings or tear down and redevelop the sites(s) and do so at densities that allow them to make the investment. The quality of commercial and industrial properties is lacking in Lexington, and this is an area of opportunity for the Town. In the last several years the value of commercial and industrial property has not risen at nearly the same rate as residential values. As a result, Lexington residential tax levy share has gone from 70% to 80% of the total levy, shifting more of the tax burden onto residential taxpayers. Section 3: Economic Development Recommendations Key Recommendation 1. Enhance Revenue through Commercial Development with Appropriate Infrastructure Improvements and Mitigation Given the current constrictive fiscal climate in Massachusetts, it is important that Lexington continue to actively revitalize and improve its existing commercial areas to strengthen its tax base. Additional revenue contributions from the commercial sector would lessen the town's increasing dependence on residential taxation and Proposition 2 1/2 override measures. In addition, vibrant commercial areas help to improve and maintain local infrastructure and services while offering a direct benefit of increased job opportunities for Lexington,and nearby residents. Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 8 of 19 1 The EDTF recommends: The Town should put in place policies to encourage the growth of its commercial tax base by approximately $1 million per year over 10 years, which would reduce the need for periodic overrides in Lexington. Values per square foot of new• construction would reflect an assessment close to $170/sq. ft. [Source: Economic Development Office] In .this valuation scenario, $10 million in tax revenue over ten years might be achieved by utilizing 66% of the land development potential already zoned for this purpose. A midpoint revenue target .in this scenario, of $5 million2, would be possible with development of 43% of that potential. In tandem with this recommendation, proper mitigation should be pursued with any move toward further development. Supporting Recommendations 2. Revise Zoning and Permitting The Town, through the work of the Planning Board, should consider policies and implementation tools, such as rezoning, which facilitate economic development. The Cecil Group Report (Appendix B) provides d wealth of information and Outlines the ramifications of various scenarios of increased commercial density. The Planning Board should weigh the merits of density scenarios versus impacts, considering incentives that encourage higher value developments and recommend zoning revisions to that end. The Planning Board should further evaluate the reliance on the CD rezoning process and consider employing methods to make commercial development approvals predictable and equitable. With clear regulations in place, the Economic Development Office should initiate public relations programs to communicate the regulatory revisions that promote Lexington as a business friendly community. 2 Assumes current valuations of $170/sq ft. and taxes of $23/1000 sq. ft. yielding approximately $4 tax revenue per sq ft and requires approximately 1.28 million sq. ft. to be developed. Lexington 2020 Vision_- Economic Development Task Force - August 22, 2008 9 of 19 • 3. Create an Economic Development Advisory Committee The EDTF recommends the creation of an Economic Development Advisory Committee (EDAC), which will support the Town's Economic Development Officer and develop and recommend programs to the Board of Selectmen pertaining to economic development, be a proponent for the current and prospective businesses in Lexington, and educate Lexington taxpayers about economic development issues. This committee would help inform and advise Lexington leadership and citizenry to optimize this important economic element of the community's well being. The charter for this committee is attached in Appendix C. 4. Develop Transportation Management Strategies Develop traffic management strategies that encourage alternative modes of transportation to offset, in part, the increase in automobile traffic development may bring. Traffic level of service measures should be redefined, and broadened, to include varying transportation modalities and include mechanisms to measure pedestrian and cyclist safety. 5. Consider Sustainability and Energy Conservation Measures The Town should develop sustainable regulations reinforcing Town Meeting's resolutipn encouraging environmental sustainability. This requires an understanding of the host of sustainability and self-sufficiency measures and methods used in existing projects executed by other municipalities and determine their appropriateness for Lexington. Examples of such municipal efforts and related resources are included in Appendix D. Furthermore, the Board of Selectmen and Town Manager's office should continue to use their committees to engage the community in a discussion and educatioh on sustainable issues. All entities involved in planning and business development should be sensitive to balancing environmental concerns with economic sustainability, working to maintain a competitive advantage for Lexington relative to other municipalities Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 10 of 19 1 1 1 1 i 1 F 1 1 1 1 Section 4: Recommendation Discussion 1 Pursue Revenue Enhancement through Commercial Development with Appropriate Infrastructure Improvements and Mitigation The data and 'range of scenarios evaluated within the Cecil Group and GLC Development Resources, Commercial Zone Analysis and Bui7d'Out Study provide both a theoretic and practical perspective on -the range of estimated revenue to be gained from development and, moreover, firmly establishes that Lexington stands to gain with any movement toward encouraging development within its existing commercial zones. Of course, calculating a revenue estimate depends greatly on the assumptions used about rents, construction costs, tax rates and market conditions. If a revenue goal is truly needed. to implement new policy directions, it should be considered as an order of magnitude rather than an explicit target. The Cecil Report identified approximately 3' million square feet of developable net building potential in the three areas and evaluated development scenarios at a low FAR of .35 and a high of .90 [CecirGroup and GLC Development Resources Commercial Zone Analysis and Build Out Study, Table 3-1 or 3-2, Pg 3-2] The higher density scenario would represent a theoretical maximum amount of revenue if full development is achieved but, as Cecil reports, would likely exceed practical limitations for implementation and mitigation. The lower density scenario ofi.35 as reported by Cecil would yield approximately $11 million over 10 years. The EDTF recommendation of 5 million is a moderate mid -point and could potentially be obtained using less than half the developable square footage identified by Cecil available in these commercial areas. While at one time the commercial sector comprised a high of 33% of the tax levy, over the last twenty years it has shifted and now comprises 20%. Residential properties - have appreciated at a far greater rate than commercial properties. In Lexington, this increase has meant a reduction in the share of the taxes borne by businesses. Residential taxpayers are bearing more than they have historically. Lexington 2020 Vision-.Econom/c Development Task Force - August 22, 2008 11 of 19 1 9 square footage and the quality and nature of the new development. In addition, time will be required before any revenue is realized as building owners and developers will need to go through the design, permitting and building process. This makes it imperative to create incentives for building expansion and renewal now. In tandem with this recommendation, the EDTF expects proper mitigation would be _pursued with any move toward further development. The Cecil Report suggests that required infrastructure improvements would be funded by the new development, and some of the mitigation should be borne by the developers. A cost analysis of infrastructure improvements needs that would be funded with town or state sources could yield a better approximation of net revenue projections. 2. Revise Zoning to Facilitate Economic Development Although opinions varied within the EDTF, the general consensus has always remained to pursue growth in our largest commercial districts. The desire to increase 'revenues from commercial development presents an opportunity for a comprehensive restructuring of zoning and permitting that accomplishes increases in commercial development, and at the same time, increases the livability for Lexington residents and workers. by instituting reasonable conditions of approvals. There are many new planning tools that were not available when the FAR was reduced. These tools can provide both safeguards and predictability to developers and citizens. Presently, in our largest commercial zoning districts, a special permit with site plan review (SPSP) is required when a developer or property owner (an applicant) wishes to build a structure with a total of 10,000 SF or more'of floor area,. However, in order to allow zoning changes customized to a particular parcel, a change in the zoning district may be pursued via the approval of a Planned Commercial Development (CD). It is this latter process the EDTF has discussed in the greatest detail. A CD applies only to one site and is tailor made to its unique characteristics. This process was developed to allow a developer greaterflexibility on the site, at the same Lexington 2020 Vision - Economic Development Task Force.- August 22, 2008 13 of 19 r time allowing the Town greater certainty as to how the site will be used and built. As the initial step in the rezoning, the applicant files a Preliminary Site Development and Use Plan (PSDUP) with the Planning Board. This PSDUP is voted on by Town Meeting and must be adopted by a two-thirds vote. The final approval necessary as part of rezoning to a CD is the issuance of a Special Permit with Site Plan Review (SPS). by the Zoning Board of Appeals. This requires an applitaht to file a Definitive Site Development and Use Plan (DSDUP) and receive a finding by the ZBA that the DSDUP is in substantial conformity with the PSDUP approved by Town Meeting. Additionally, it is common for applicants to have received a full site review with the Conservation Commission delineating the wetlands and the building areas. There was general consensus within the EDTF that the ToWn Meeting phase of the CD approval process is too unpredictable and uncertain and should be overhauled to be more predictable and acceptable to developers and citizens. While a CD has no pre -determined zoning standards, -the five CD districts approved after 1987 have an average FAR of .25. The Cecil Group concludes that the CD mechanism does not appear to have shifted densities in a major way froth the .15 permitted in the underlying CRO or CM zones, although it is relatively flexible compared to the limits of other Towns. The EDTF has focused strongly on the concept pf Floor Area Ratio (FAR) as a means to quantify and discuss the concepts of build -out and density. The Cecil Report goes into great detail as to how FAR is calculated and uses illustrations as guidance. In brief, the FAR of a site in Lexington is based on the ratio of net floor area to the size of the lot less wetlands. It is worth noting that some see excluding wetlands from the FAR calculation to further constrain development potential because development in or outside the wetlands buffer zone is already regulated under the permitting authority of the Town Conservation Commission. It.has been argued that using developable area only keeps the development density low. Others perceive that the exclusion of the wetland area from the Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 14 of 19 calculation provides for balanced building, proportionate to the.available buildable area of a lot, thus maintaining a general aesthetic of a district. 3. Economic Development Advisory Committee Several communities, including Brookline, Needham and Westwood, have formed economic development advisory boards. Their advisory boards are comprised of residents with a diverse background of experience in finance, real estate development and law. The boards regularly meet with developers, review proposals and make recommendations about the merits of a new project. In some cases they recommend to the Selectmen, Planning Board and other town officials actions that will attract appropriate business development in their communities. The Economic Development Task Force recognizes the value of taking an active role' in _commercial development. The Town's regulatory boards and staff play a.vital role in shaping commercial development. Yet the specific objectives of eagh of these boards will• be appropriately focused in each of their areas. An economic development advisory committee can act as a focused resource for the Board of Selectmen to look at specific measures and general strategies which will enhance the overall commercial base of Lexington. Moreover, the board can serve as an advisory body to the Economic Development Officer and the Town Manager. The draft charter of the Economic Development Advisory Board (EDAC) is attached in Appendix C. 4. Develop Transportation Management Strategies The Cecil Report states that commercial development build -out will not be capped by the amount of floor area available to be developed, but by "the willingness of the Town to absorb additional traffic and the ability to mitigate those impact costs effectively." The Taskforce recognizes if we wish to maximize the commercial development potential, a shift in how we view and manage transportation will be required.. The MassHighway Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 15 of 19 Design Guidebook provides principles and implementation to improve transportation. The three commercial areas do not have a pedestrian or bicycle infrastructure. The area roadways have seen, and will see, several upgrades in the coming years. Last fall the Town striped a portion of Hartwell Avenue to accommodate bicycle traffic. The Town has advocated for upgrades by the State for key area intersections and expects construction of an upgrade at Waltham/Marrett in 2011. Design will begin for sidewalks along Spring Street and improvements to the intersection of Marrett Road and Spring Street. Unlike several of the key interchanges off of Route 128/195, the 4/225 interchange has not received an upgrade in thirty years. The Local roadways to these areas experience peak hour congestion. Recently, several of the Hartwell Avenue area businesses voluntarily took part in an employee survey to gauge interest and routing for private transit service. These employers together are exploring options.for a private shuttle. The single largest private employer, MIT Lincoln Laboratory, operates, shuttles to Cambridge for its employees. Another business operates a shuttle bus between its locations in Waltham and Lexington. The 128 Business Council Alewife shuttle serves Hayden Avenue. In addition, LEXPRESS serves the 16 Hayden Avenue medical building. Significant commercial expansion is occurring in Waltham, and Burlington. This will likely impact traffic in surrounding communities regardless of whether Lexington pursues a focused commercial expansion strategy or not. Recognizing that development projects generate traffic and other regional consequences, the city of Waltham and the towns of Weston, Lincoln, Burlington and Lexington are now working together to promote more orderly development. By forming the 128 Central Corridor Coalition, the communities are looking to improve transit options, bring zoning rules into sync, create a unified system for mitigation efforts, and consider the effects of seemingly unrelated projects across all four communities. If Lexington adopts a pro -active approach to commercial development, the Cecil Report points to the Town's ability to potentially recap some costs of transportation infrastructure increases via that development. Lexington 2020 Vision - EcoiiioniicDevelopment Task Force - August 22, 2008 16 of 19 i As stated in the Cecil Report, "Without appropriate regulation, new development could cause a range of negative impacts to the Town; in practice, many of the potential impacts can be removed or reduced {"mitigated"} as part of the permitting and approval process." [Cecil Group Inc and GLC Development Resources Commercial Zone Analysis and Build Out Study, Pg. 1-5]. 5. Consider Sustainability and Energy Conservation Measures Although the marketplace is responding to the need for sustainable practices, incentives such as tax credits, fast -tracking permits or density bonuses that would encourage the marketplace to adopt sustainable practices sooner, require thoughtful evaluation. At the State level, one initiative, conceived as bringing businesses, utilities and municipalities together to address our dependence on non-renewable energy, is the Green Communities Act. See Appendix D. Municipal government can influence the level of sustainable practices used in Town. In some instances this may be fairly straightforward with new zoning regulations, creating incentives for individual and neighborhood efforts such as energy generation, and charging fees for poor practice, e.g., impermeable surfaces, inadequate insulation, waste creation. The EDTF assumed sustainable development practices would continue to be part of Lexington's regulatory structure. Lexington has in place some regulations and policies that address sustainability practices but the other existing metrics commonly used are out of synch with our goals of sustainability. That is, we measure congestion for vehicular movement, not pedestrian movements; we measure traffic but not carbon emissions; we measure impervious surface but do not credit undisturbed sites. The Taskfprce supports using resources such as energy, water, materials and land more efficiently than building just to the State code. Incorporating sustainable practices into the commercial development process will ensure long-term economic sustainability. Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 17 of 19 Section 5: Summary The Economic Development Task Force's work centered around two key elements: potential growth in commercial property and the overall regulatory framework for commercial development. The potential revenues are attractive yet must be balanced with the character of the community. The choice of the right amount of development is important and will be determined by community factors and market readiness. In summary the Taskforce recommends the following efforts: 1. Revenue Enhancement through Commercial Development with Appropriate Infrastructute Improvements and Mitigation 2. Revise zoning and permitting 3. Create an Economic Development Advisory Committee 4. Develop a strategy to mitigate traffic increases due to development 5. Develop measures to encourage sustainability As the EDTF concludes its work, it recommends the Board of Selectmen and the Planning Board move forward on these carefully evaluated and thoughtful recommendations. Section 6: Participants The Economic Task Force members have met monthly for two years. The Taskforce was well represented with active participation by Town Officials, local businessman, developers, residents and business advocates. Members have gleaned an understanding of the factors influencing and controlling development and engaged in in-depth analysis and spirited discussions. Members listed in bold attended multiple meetings. Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 18 of 19 OP Jr 1 Adam Sacks Art Katz Carl Valente Charles Hornig Colin Eaton Colin Smith Richard Canale Ed Grant Fernando Quezada Fred Johnson Gant Redmon Gregory Zurlo, Co -Chair Jerry Michelson John McWeeney John Rosenberg Kevin MacGuire Larry Smith Mary Jo Hobart Maryann McCall -Taylor Mollie Garberg, Co -Chair Narain Bhatia Norm Cohen Richard Pagett Rick De'Angelis Rod Cole Sheila Watson Susan Yanofsky Tom Fenn Wendy Manz Bold = Active Lexington 2020 Vision - Economic Development Task Force - August 22, 2008 19 of 19