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HomeMy WebLinkAbout2007-11-20 Board of Selectmen HandoutTOWN MANAGER'S REPORT Tuesday, November 20, 2007 s The annual Reading Police Christmas party for kids will be held at Austin Prep on December 9th from 1 to 3pm. Garden Club Memory Tree ceremony is December 2 at 4 PM at the Reading Public Library Special Town Meeting December 10. The Executive Director of the Reading Housing Authority has informed me that there is an affordable unit with an attached garage at Gazebo Circle that has come on the market. Anyone interested in this unit can contact The'Housing Authority office. Compost Center last day of operation is December 2. Compost Center is open for X-mas trees - January 12, 2008. Kudos for Sharon Thomas, Marie Amer and Sue Reardon of Elder/Human Services and Arthur Menezes and Jon Reed of the DPW for once again bearing the cold this past Wednesday to collect Thanksgiving baskets from generous Reading-ites and distributing them to families in need. They exemplify holiday spirit. Make-up flu clinic will be set up and advertised.. Credit for running a very successful flu clinic goes to HS Administrator Larry Ramdin, acting PH Nurse Diane Luther, CS Clerk Darlene Foley, and the prep work from retired HS Administrator Jane Fiore and former PH Nurse Trish Faulkner. Discussion of 100 seat requirement for full restaurant liquor licenses 7:45 Hearing Tax Classification 8:00 Traffic issues - process on multi-way stops; traffic citations . data; 9:00 December: 8 2007 - Meet.with Department Heads re strategic plannin 9:00 a.m. December 10 2007 -Special. , own Meeting D December 11 2007 Office Hours, Be i Ta 'uya 6:30 Highlights Cultural Council 7:30 Hearing 24 hour operation - Walkers Brook Drive Shell Station 8:00 Presentation - Northern Area Greenway Committee report Presentation - Birch Meadow Master Plan Town Manager's evaluation Review Action Status report 0 Page 1 of 1 Hechenbleikner, Peter From: Keating, Bob Sent: Monday, November 19, 2007 8:54 AM To: Hechenbleikner, Peter Subject: LED Holiday Lighting Peter: I was able to secure 24 strands of Led's for the second tree at the Memorial across the street. There were only C-7's available at this time. There has been a big run on them but more supplies will be available next year with an early order. The price for the 24 will be $350.00. 1 will be able to buy them at a better price next year. Most of the benefits of the LED's were contained in the Globe article but I will list them here. I hope to receive the order by Tuesday. I will bring you a strand. Bob. 1. They use 90% less energy 2. They last 50,000 hours or 20 years guaranteed The glass incandescent may not last a season. This saves man hours in checking each of the 15,000 bulbs in their strings each year. 3. They are durable one piece construction of plastic not glass which means no breakage. 4. They are safer as they are cool to touch. 11/19/2007 November 14, 2007 James Bonazoli, Chairman Board of Selectmen Town Hall 16 Lowell Street Reading, MA 01867 Re: Memory Tree Ceremony, December 2nd, Reading Garden Club Dear Mr. Bonazoli, The Reading Garden Club is holding its sixth annual Memory Tree Ceremony on Sunday, December 2, at 4 pm on the front lawn of the Reading Public Library. During the brief ceremony names of remembered individuals and special events are read aloud. We hope that you or another representative from the Board of Selectmen will be able to attend and speak at the ceremony. Please let me know at your earliest convenience if you will be joining us. Thank you. Suzanrce 7 H Was hairman eans Read'ub o 534 Franklin Street Reading, MA 01867 `O (781) 507-2175 w 0 0 Dallas officials cite drop in accidents, tickets with red-light cameras Dallas Morning Ne... Page 1 of 2 Dallas officials cite drop in accidents, tickets with red-light cameras Figures from program's first 6 months show drop in accidents, tickets 12:00 AM CST on Tuesday, November 20, 2007 By TANYA EISERER / The Dallas Morning News teisererZdallasnews.com Dallas officials believe the city's electronic red-light spies are causing motorists to hit the brakes. Preliminary statistics show that accidents and citations are drastically down at intersections with red- light cameras during the first six months of the program,,according to a report presented to the City Council's public safety committee Monday. "Police can't be at intersections at all times, but technology can," said Zaida Basora, an assistant director of the city's Public Works and Transportation Department. In Dallas, nearly 30 percent of all accidents at traffic signals were related to red-light running in 2006. That included 14 fatalities, 75 serious injuries and 487 minor injuries, according to city statistics. The city's first 17 red-light cameras went online in mid-January. For the first six months, statistics show, T-bone crashes dropped 75 percent and rear-end accidents dipped 57 percent at those intersections. The city added cameras each month through June and now has 60 operating throughout Dallas. The number of citations dropped an average of 49 percent for 36 of those monitored intersections after six months of operation, which officials said shows that the red-light cameras are having an effect. "Driver behavior is changing," said Elizabeth Ramirez, another assistant public works director. "Violations are down, and they're going down pretty drastically." Ms. Ramirez said she believes that is due in part to a "halo effect" generated by having so many other area cities with red-light cameras. The Dallas results are in line with what other municipalities have seen from their red-light camera programs. Several North Texas jurisdictions have reported significant reductions in accidents and violations at camera-monitored intersections. Studies have shown that red-light cameras reduce right-angle - T-bone - crashes 25 percent to 30 percent, city officials said. http : //www. dallasnews. com/sharedcontent/dws/news/loc alnews/stori es/DN-redlight_20m... 11/20/2007 Dallas officials cite drop in accidents, tickets with red-light cameras I Dallas Morning Ne... Page 2 of 2 Dallas officials plan to have 40 more cameras operational by next surnmer. A red-light camera violation is a civil offense with a $75 fine. In a change that began Sept. 1 and has generated some controversy, cities are required to send the state a portion of the fines they collect from red-light cameras. But Dallas staff members told the committee that Dallas wouldn't have to send any money for fiscal 2006-07 - which ended Sept. 30 - because expenses outpaced revenue during that period. City Council members said they are pleased with the results of the program. "We're going to stop the running of the red lights and keep Dallas safe," said Deputy. Mayor Pro Tern Dwaine Caraway, a member of the council's public safety committee. "If you run a red light, expect a ticket." 0 http://www. dallasnews.comisharedcontent/dws/news/localnewslstoriesIDN-redlight_20m... 11/20/2007 Table of Contents Section Paee 1.0 Summary of Findings 1 2.0 Overview 2 3.0 Methodology 3 4.0 Residential Fiscal Impacts 4 4.1 Education Costs 4 4.2 General Service Costs 7 5.0 Revenue Sources and Residential Cost to Revenue 10 6.0 Commercial Component and Cost to Revenue 12 7.0 Overall Net Fiscal Impact 12 8.0 40R Revenue 13 9.0 New Growth Tax Benefits 13 10.0 Construction Permit Revenue 13 11.0 Comparisons to Current Property Taxes 14 Appendix 15 About the Author 17 v Fiscal Impact Analysis Re-Development of the Addison-Wesley Site October 22, 2007 Reading, Massachusetts 1.0 Summary of Findings This Fiscal Impact Analysis is based on the Town of Reading 2008 budget and input from town officials for the proposed mixed-use re-development of the Addison-Wesley site consisting of 202 luxury apartment units, 160 senior housing units, 16 townhouses and a 160,000 square foot office building. In summary, based on conservative assumptions to protect the town's interests, the proposed re-development will result in the following: • The mixed-use redevelopment proposal will generate an annual net fiscal benefit of approximately$399,000, after deducting expenses, and has a cost to revenue ratio of 0.62. • The proposed re-development will generate approximately $1,059,000 in annual revenue and $660,000 in annual service costs. • The residential component will generate approximately 29 additional students, of which approximately 16 will be elementary students attending various grades preschool through 8; and 13 students will enroll in the high school grades. • The proposal will generate approximately $650,000 in building permit and associated fees payable during the construction period. • Consistent with the Commonwealth's 40R program, Reading will receive an additional $956,000 in one time state payments for. participating in the 40R program; $350,000 upon adoption of the 40R district; and $3,000 per unit ($606,000 total) upon the issuance of building permits for eligible units. • The re-development proposal has an estimated assessed value of $80,700,000 and represents a major source of new growth tax benefits. • In terms of assessed value the proposal will increase the annual taxable value of the site by 475% i.e. $80,700,000 vs. $17,000,000. 0 2.0 Overview Connery Associates has prepared a Fiscal Impact Analysis for a proposed mixed use re- development on the site of the former Addison Wesley Office Park in Reading Massachusetts. The redevelopment will consist of a commercial office building and a residential component comprised of various residence types. The residential portion of the proposal includes a luxury apartment community of 202 residences will be provided as part of a Chapter 40R smart growth zoning district, and as many as 25% of the rental housing will be consistent with the Commonwealth's affordable housing regulations. The residential component will also feature 16 two bedroom/loft town houses, all offered at the market rate. The third portion of the residential community will include a 160 unit senior housing facility including both independent and assisted living units. The commercial component will consist of 160,000 square feet of new first class office space. The primary objective of this study is to provide the Town of Reading (Reading) with a sound estimate of the annual net fiscal impact of the proposed mixed-use re-development and an understanding of the one-time fiscal benefits associated from both construction fees and chapter 40R payments. Reading's Fiscal Year 2008 data for operational expenditures has been employed for this study, and values are expressed in current dollars. For purposes of clarity, larger values have been rounded to the nearest $1,000 in most instances. Table 1, below, provides an overview of the re-development proposal. Table 1. Proposed Re-Development Residential Component Town Homes I Number of Units 2 bedroom/ loft space, market 1 16 Apartments 1 bedroom, market 1 bedroom, affordable 2 bedroom, market 2 bedroom, affordable 3 bedroom, market 3 bedroom, market Total 1 16 Total Senior Housing Independent senior living Assisted living Total Commercial Component First Class Office 76 25 61 20 15 5 218 80 80 160 160,000 s.f. 2 l~ 3.0 Summary of Methodology This report has two general analysis sections i.e. residential and commercial. The residential service cost is further divided into two broad categories; education costs and general service costs (all other non-school costs). For each general service cost category a per capita cost analysis was undertaken for those municipal departments where there is a measurable service cost. The Per Capita Method is more appropriately applied to residential development than commercial development since it assumes that there is a direct relationship between numbers of people and municipal service demands. While commercial development traditionally places much less burden on municipal services, our report does take into account the commercial / industrial service cost per municipal department. Accordingly, the per capita approach has been applied to residential development and the proportional valuation method has been applied to estimate commercial service cost. Relative to the residential component, to determine the annual general service cost (non- education) it was necessary to examine the proposal's impact on a department by department basis. Obviously, full service costs for items like police and fire were included as well as the total Community Services budget line item. Since the re- development would include private service responsibilities for internal road maintenance, trash collection, lighting, and snow plowing, these traditional public works costs have not been assigned as a general service cost. Importantly, there are other departments or budget line items that will not be fiscally impacted by the proposal in any measurable way. Examples of non-included items are existing debt, existing employee salary/benefits, insurance, overlay accounts and free cash. After determining the per capita costs per affected department we applied said value to the estimated population of the proposal to generate the total annual general service cost. For education costs, we examined the current education budget and given our projection of the average annual number of school-aged children generated by the proposal, we estimated total annual education'cost. The education cost analysis is based on Reading's current education expenditures. The resulting value represents the estimated total incremental education cost. By combining the education and general service costs on a per unit basis the report derives the estimated annual service cost for the residential component. We are aware of the approximately $10,000 dollar actual net service cost per student (NSS) for FY2008 and the projected costs presented herein are consistent with that experience. However, as discussed in the report, we do not believe the proposal will generate the need for new school buildings nor will the operational, maintenance or administrative costs be measurably impacted. Accordingly, our school cost estimates represent the estimated incremental cost that will be associated with additional cost of instruction, special education, transportation and supplies. As noted earlier we employed the proportional valuation method to estimate municipal service costs associated with the commercial component i.e. the 160,000 square feet of office space. As indicated in the body of the report, we derived a service cost per square foot and applied said value to the 160,000 square feet of proposed new first class office space to generate an estimated annual service cost. lZ Determination of municipal service cost represents only one part of the fiscal equation. To estimate the net annual fiscal profile we examined the revenue stream to be produced by the proposed redevelopment. For the rental components we employed the income method based on anticipated rents to determine assessed value, for senior housing we . employed the replacement value approach, and for the for sale town house component we employed the full and fair market value approach. For the residential component, we also examined the applicability of local receipt revenue including excise taxes and any potential for incremental increases in Chapter 70 foundation school aid. For the commercial component, 160,000 sq ft of office development, we generated an estimated assessed value based on current market values and local assessment practices. We combined the residential and commercial revenue sources to determine a gross revenue stream. Items such as enterprise fimds were not calculated as part of the revenue stream (or cost) since they are pay for services used that usually result in small annual cash surpluses that in most cases is needed to cover contingencies. Relating the total annual estimated service costs for both the residential and commercial components to the total annual estimated revenue stream of both components generates the annual fiscal profile. Said profile is expressed as an annual dollar loss or gain and as a cost to revenue ratio (i.e. all service costs compared to all revenues). For example, a cost to revenue ratio of 0.50 means that for every dollar of annual revenue generated, the development will require 50 cents to pay for municipal service cost; leaving 50 cents as a net fiscal benefit to be used by the community for other municipal needs. 4.0 Residential Component and Fiscal Impact To estimate the fiscal impact associated with the residential component su nmarized in Table 1 above, we have divided municipal expenditures into two broad categories: school expenditures, or the incremental cost of adding new school age children to the public school system; and non-school cost which includes all other forms of municipal service costs (i.e. public safety, cultural, recreation, and other public services). 4.1 Education Costs For Reading, as in most communities, education is the single most expensive residential municipal service cost. In FY2008, Reading's net school spending is approximately $10,000 per pupil. In most instances the cost of adding new students is not an application of the cost per pupil times the number of new students because administrative, physical plant and certain operational costs may not be realistically affected. Additional school costs vary from community to community but in general, they are a function of the physical capacity / physical condition of the existing system, local enrollment trends and the underlying growth rate of the community. If a school system has considerable or moderate physical plant capacity, a stable to slow student enrollment growth pattern, and a low community population growth rate, the incremental cost associated with the addition of new students is usually considerably less than the average per student cost. If the overall school system is experiencing rapid enrollment gains, and community wide population growth rates are high and projected to remain high, it is likely that any 9 additional students may generate an increase in staff, redistricting or in some cases additions to the physical plant. For Reading, our review of total enrollment data indicates that from 1998 to 2008 enrollment has increased from approximately 3,900 students to approximately 4,300 students; an increase of 400 (an average of 40 students per year or 1 % per year). However, in the past five years enrollment has been essentially a stable; a phenomenon not uncommon for the majority of the region's mature suburban communities. The 2005 Reading Master Plan indicates that by 2020, if trends continue, there will be an additional 222 single family housing units. We believe the local analysis is a reasonable estimate. Accordingly, we believe that while Reading does have single family residential growth potential it will remain significantly below traditional rates of growth of the past 25 years. This conclusion is further supported by the 2005 Master Plan projection that indicates that due to anticipated declines household sizes the Town's population will likely decline by 3% to 4% in the coming 20 years. Accordingly, we anticipate the Reading enrollment rate will expand at a relatively slow rate and attain a student population of approximately 4,400 to 4,500 students by 2020, but maintaining a student per household average of approximately 0.60 students over the coming decade. It should be noted that Reading, in recent years, has taken major steps to address the potential of an expanding school population by building high quality new school facilities at every level. For the purposes of this report, we have assumed that any new students generated by the proposal would attend the existing school system; therefore, the cost of adding new students is a marginal or incremental cost i.e. a function of new instructors, supplies, special education, and transportation costs. The cost associated with the students generated by the proposal will not affect administrative costs or building operation costs in any meaningful manner. Further, we are aware that the elementary school closest to the redevelopment proposal is near operational capacity. Accordingly we have included an additional transportation cost component that allows for the utilization of space elsewhere in the system. The initial step in estimating school costs is to estimate the school aged children generated by the re-development. Table 2 below illustrates the values we used to estimate the number of school aged children by unit type. The total number of school-aged children (SAC) represents an "average year" and it should be anticipated that the actual number of students may fluctuate on an annual basis by five to ten percent. As part of this report, we reference, among other sources, Housing the Commonwealth's School Aged Children prepared in 2003 for The Citizens Housing and Planning Agency (CHAPA). The CHAPA report finds that building type, as well as number of bedrooms, was determined to play a significant role in student generation rates. Residential developments with two or less bedrooms per unit were found to generate relatively few school aged children, while three bedroom units generated more school aged children, but still considerably less than single family homes. Another important factor in the generation of school aged children from multi-family development is site, location. If a site is perceived to simply be different from. a "traditional" neighborhood, or if the site is a stand alone location without easy pedestrian links to surrounding neighborhoods, or 9 located within a commercial or industrial location, and with minimal private play area, then the number of school aged children per unit type may decline by more than 70% from the regional averages. While the site is somewhat isolated and has a commercial component, we do not believe the site fully conforms to an atypical location. As such, and to provide for a more conservative fiscal profile, we have estimated school aged children (SAC) based on higher traditional numbers knowing that there most likely be fewer SAC than estimated. Local school-aged children data indicates that multi-family housing in Reading generates school-aged children at a rate somewhat below the regional average but within the range of the regional experience. A 2001 Town wide survey of condominiums indicates 49 public school students generated from 527 condominium units; or a ratio of 0.092 students per unit. The most current data for the 205 unit Archstone (40B) residential community located on West Street indicates 20 school aged students; or a ratio of 0.095 students per unit. To be conservative and provide a level of school cost security, we have based our estimate for school aged children on the higher regional experience rather than the current and lower local experience, see table 2 below. Table 2. School Age Children by Unit Type Residence Type Number Students/Unit Students Town Homes 2 bedroom/ loft space, 16 0.25 4.00 market Apartments I I 1 bedroom, market 76 0.00 0.00 1 bedroom, affordable 25 0.00 0.00 2 bedroom, market 61 0.13 ( 7.93 2 bedroom, affordable ( 20 0.30 6.00 3 bedroom, market 15 ( 0.45 6.75 3 bedroom, affordable ( 5 0.90 ( 4.50 Senior Housing Independent living 80 0.00 0.00 Assisted living 80 ( 0.00 0.00 Total 29.18 Total without 0.134 29.18 Senior Housing We anticipate that the proposal will generate approximately 29 school aged children from the non-age-restricted apartments and condominiums. Based on traditional age splits for multi-family housing, approximately 16 students will attend from pre-school to grade eight, while 13 students will attend the various high school grades in any given year. Given the nature of school aged enrollments from multi-family developments, we anticipate that the large majority of the 16 pre-school to eighth grade students will be enrolled in various grade levels and likely no individual grade level will receive more than two to three students. Further, as a predominately apartment community, the actual 6 O r grade enrollment characteristics will change from year to year. Specifically, there will be very few students entering at the Kindergarten level and staying on through Grade 12. Given an estimated build out and rent.up period of two to three years after project approval, we estimate that the 29 additional children will arrive at a rate of approximately 9 to 10 per year from years 2010 to 2012. As noted earlier, based on our review of the school budget and discussions with the School Department we have employed the following estimates in the preparation of Table 3 below: for each additional new teacher we have allotted $70,000 dollars for salary and benefits; to cover services, supplies, and equipment costs we have assigned a cost $1,100 per student; to account for special needs cost, we have assigned $18,000 per special education student, and estimated that 16% of all students will require some form of special needs assistance. Additionally, we assumed that an addition to existing bus routes may be needed to address enrollment allocation issues at the elementary grade levels and assigned a $50,000 dollar cost per year. As indicated by Table 3 below, the sum of aforementioned costs represent the total estimated incremental education costs. Essentially, this estimate assumes no new capital investments will be required to accommodate the proposed development since the total number of students directly enrolled in Reading will be 29 students spread out over 12 grade levels and kindergarten. Table 3. Estimated Annual Education Costs Number Number Cost of Services / Special Bus Total of of Instruction Supply Needs Route Education Students Teachers (1) Cost (2) Cost (3) Cost (FTE) 29 2 $140,000 $31,900 $72,000 $50,000 $293,900 (1) The services and supplies costs are calculated for all 29 students. (2) 4 special need students at $18,000 per student. (3) Assumes additional transportation cost to existing routes Based on the total costs indicated in Table 3 above, we can estimate the cost per new student at approximately $10,134; ($293,900 total education cost divided by 29 new students). On a per unit basis the proposal will generate an annual average education cost of $778 per unit, i.e. $293,900 divided by the total residences. It should be noted that our estimated incremental cost per pupil actually slightly exceeds the current net school spending cost per pupil. This anomaly is due primarily to the assignment of $50,000 in school transportation costs to the anticipated additional 29 students. 4.2 General Service Costs (Non-Education Costs) In calculating general service costs, we examined the operating budget of each general category of the FY08 Budget relative to operating costs and if the nature of the re- development proposal was determined to have a fiscal impact in a measurable and meaningful manner, said budgets were included as part of general service costs analysis. Consistent with all forms of new development, not all service departments are impacted. In this instance, we can determine no fiscal impact to such categories as Accounting, Finance and Public Works. The residential development component will also pay building permit and various other construction fees; therefore, there is no incremental cost impact to the building department during the construction phase of the proposal, and in reality there most likely will be a significant short term net fiscal benefit. Finally, the proposed uses will pay the public works enterprise fund fees on a usage basis as do all residential structures in Reading, and therefore have not been included as an additional incremental cost. General Service cost is generally primarily driven by population demand; accordingly it is often expressed as an estimated additional per capita cost. We note that the existing population per household in Reading is 2.71 (US Census 2000) and that said population per household is primarily supported by larger single family house. Further, as noted in the 2005 Master Plan it is anticipated that the average household size will decline in the coming decade. In comparison, the redevelopment has an overall residential mix which generates only 1.4 bedrooms per average unit and estimated population of 1.50 people per unit. Accordingly, we can anticipate a total development population of approximately 570 residents. In Table 4, below column one, to the left, lists the individual operating budgets. Moving to the right, column two indicates the FY08 budget estimate; column three the current per capita cost; and column four indicates where an incremental cost is anticipated. As indicated in Table 4 below, where no direct departmental cost is anticipated we have indicated said decision by showing a zero in the fiscal impact column. The values in the cost column are a function of 570 new residents multiplied by the existing departmental costs per capita. As noted earlier, there are some budgets like Public Works that are not assigned since the proposal assumes most if not all traditional public works costs will be provided privately. However, we have assumed an administration cost of $20,000 per year to be conservative. Table 4 General Service Impact by Department Departmental FY08 Budget Per Capita New Budget FY08 (1) Residents(2) Accounting $ 120,000 $ 5.04 $0 Community Services $1,160,000 $ 48.74 . $ 59,000(4) (all categories) Finance $1,052,000 $ 46.89 $0 Public Safety $7,261,000 $305.08 $173,900 Public Works $2,120,000 $ 87.43 ( $ 26,000(3) Non-school $ 368,000 $ 15.25 $ 8,700 Maintenance Total $267,600 1. Based on FY08 budget and Reading's population of approximately 23,800. 2. 570 additional residents 3. Estimated administrative cost, all other traditional public works services provided privately. Note: $3,000 of the cost indicated relates to the annual cost of trash pick-up at 16 town houses. 4. Includes an additional $28,000 for library costs 80 Given the proposal's estimated population of 570, the annual total general service cost, as indicated by the Table 4 above, is $267,600. Furthermore, while Reading is reimbursed for its paramedic advanced life ambulance service, the rate of reimbursement, based on the insurance coverage of residents in an assisted living facility can sometimes be less than the full cost. While approximately 80% of said cost can be reimbursed assuming a variety of insurance plans, we recognize that there may be an equipment depreciation cost. Therefore, we assumed that insurance reimbursements will cover only 50% of "total" costs. We are estimating an additional 100 emergency service calls per year for the assisted living facility. Given that the emergency response team consists of 5 public safety personnel (fire truck and ambulance), for all responses we estimate that the average public safety response has a cost of $900. Accordingly, 100 added service calls with only a 50% reimbursement rate, the additional cost to the Fire Department will be approximately $45,000. For this report we are using a $50,000 additional cost factor. Not surprisingly, the major projected service cost item is public safety cost. Table 4 indicates that we have assumed $173,900 for public safety costs or approximately 2.5 additional public safety personnel. The decision to hire more staff is solely at the . discretion of the Town, but it is illustrated here to indicate the level of public safety cost assigned in this analysis and to indicate that the proposal has the ability to augment public safety staff without adversely affecting public safety elsewhere. in the Town or generating a negative fiscal result for the re-development. Departmental operating budgets also provide service to non-residential uses (commercial, industrial and institutional land uses) and using the proportional valuation method contained in The Fiscal Impact Handbook by Burchell and Listokin 1985 non-residential general service cost was determined to be relatively low, i.e. approximately 10% of total operational costs. Therefore, to reflect a more accurate residential service cost, the $267,400 gross service cost was reduced by 10% to $241,000. By adding the additional $50,000 for additional emergency service costs discussed above (the estimated noncovered portion of the insurance reimbursement) we are estimating a total general service cost of $291,000 or $770 per proposed residence. Table 5. Total Municipal Service Costs Education Non-education Total Service Total Annual Cost per Unit Cost per Unit Cost per Unit Service Cost $778 $770 $1,585 $599,000 As shown in Table 5 above, the average service cost per proposed residence will be $1,585 i.e. the total annual service cost divided by total number of residences. The ~ 9 estimated annual total service cost is $599,000 representing both the general service costs and the educational costs. 5.0 Residential Revenue Sources and Cost to Revenue Ratio There are a number of residential types included in the proposal. The rental elements will be assessed using the income approach and ownership elements using the full and fair market approach. Further, the 25% of apartment residences will be assessed at a value consistent with the State's affordable housing guidelines so that said units will be included in Reading's affordable housing inventory. In addition, the senior assisted residences have considerable service packages included in the monthly rent and as such, taxable value is usually generated as a replacement value. The following paragraphs discuss the assessment method applied to each residential component. Table 6 below provides an overview of the assessed value of the for town houses offered based,on an average size of 1,800 square feet and a sales value of $250 per foot i.e. average selling price of $450,000. Table 6. Estimated Assessments for Town Homes Town Homes Number Sale Value / Total for sale Assessed'Value Market rate ( 16 $450,000 $7,200,000 Total 16 $7,200,000 The senior housing component is comprised of 80 independent living units, and 80 assisted living units. Based on our in house estimates and Town assessments of similar properties we estimate a replacement cost of $140,000 per unit or a total estimated assessed value of $22,400,000. The third component, the 202 luxury apartments will have an estimated monthly market rental value of $1.75 per square foot for the market units and $1.15 for the affordable units. Using an average of 1,000 square feet per unit for rentable area of approximately 152 market rate units will have 152,000 s q. ft. of rentable space. Accordingly, the total annual gross rent of the market rate units will be approximately $3,192,000. Assuming a rental rate of 1.15 for the 50 affordable units, the approximately 50,000 square feet of affordable space will generate an annual gross rent of $690,000. Accordingly the total gross rent of all unit types will be approximately will be approximately $3,882,000. Consistent with other residential rental properties, using the above estimated annual rent and assuming a 5% vacancy rate, a 30% operation and maintenance deduction, and a cap rate of 0.10; we estimate the taxable value of the proposed development to be approximately $25,233,000 with $304,500 in annual taxes. 10 ui~ Table 7. Residential Assessed Value Residential Type Estimated Gross Annual 16 Town Homes 160 Sen. Housing 202 Apartments Total Assessed Value $ 7,200,000 $22,400,000 $25,233,000 $54,833,000 Property Tax $ 86,904 $270,368 $304,562 $661,834 Tax per Unit/Avg. $5,431 $1,670 $1,507 $1,751 Table 8, below shows the estimated cost to revenue ratio for the complete residential component. It combines the estimated property tax with two additional revenue sources i.e. the excise tax to be paid by the vehicles registered on site and a pro capita share of the charge for services receipts received by the Town. Combined they illustrate the estimate of average total revenue per unit. As indicated in the footnotes we have not assumed any incremental State Chapter 70 education aid will be generated. In the table below the average revenue per unit is compared to the average cost per unit to derive the cost to revenue ratio or fiscal profile of the proposed redevelopment. This ratio will most likely fluctuate 5% to 6% in any given year given background market conditions. Accordingly the revenue ratio should be considered as a long term indicator of the fiscal profile of the proposed residential component of redevelopment of the Addison-Wesley site. Further, in this instance the cost to revenue ratio indicated in Table 8 is strongly positive indicating highly that the positive fiscal benefit derived from the residential component will be a sustainable for the long term. Table 8. Service Cost to Revenue Ratio Property. State Excise Average Gross Service Cost to Tax per Aid(1) Taxes and Revenue Cost per Unit Revenue average local receipts per Unit Ratio unit. $1,751 $0 $224 $1,975 $1,585 0.80 1. We determined that for the 29 additional students added over a period of 2 to 3 years, the nature of the state aid formula is such that will generate no incremental Chapter 70 education aid. 2. Excise tax estimated at $100 per registered vehicle for 480 total vehicles or $48,000 or $127 per unit. Plus a per capita share of "charges for services" receipts fee i.e. $1,560,000 divided by 23,800 or $65 per capita. Assuming 1.5 people per unit the assigned revenue is approximately $97 per unit. Total excise and local receipt revenue per unit is estimated at $224. The residential conponent of the proposal will generate a net fiscal benefit of approximately $147,000 based on a cost to revenue ratio range of 0.80. For each dollar of revenue generated it will cost the Town approximately 80 cents to provide all municipal services to the residential component. Given the nature of the residential component it is anticipated that the positive relationship between annual revenue and 11o service costs will be sustained for the long term and that the proposed residential community will represent a long term net fiscal benefit to the Town of Reading. 6.0 Commercial Component Cost and Revenue Ratio The commercial component comprised of 160,000 sq ft of first class office space also generates municipal service costs and revenues. As in nearly all most communities the great majority of operating budgets are used to meet residential service demand, but some level of service cost is generated by commercial uses. The method employed to estimate commercial service cost starts with an estimate of municipal service cost associated with non-residential uses i.e. commercial and industrial uses. The proportional valuation method as detailed in Chapter 6 of the widely employed Fiscal Impact Handbook by Burchell and Listokin (1985) was used to generate an annual commercial/ industrial service cost. We refer the reader to Chapter 6 of said book for a detailed discussion of the methodology. Using said method we determined that not more than 10% or $3,000,000 of municipal service cost is attributable to existing commercial / industrial/ institutional uses in Reading. Using data provided by the Commonwealth as part of its 2001 build out study and information in the Master Plan, we determined that the Town of Reading has approximately 8 million square feet of occupied commercial, industrial and institutional space. Dividing the estimated cost of $3,000,000 dollars by the total commercial / industrial / institutional area provides an average service cost of 38 cents per square foot for all non-residential uses. Given the proposed 160,000 square feet of office space the estimated annual service cost will be approximately $61,000. Commercial property like rental income property will be subject to an income valuation methodology to generate an assessed value. After discussions with the Assessor we employed the following values to estimate total assessed valuation using the income method: vacancy rate of 10%; a capitalization rate of 10; and an expenses and management deduction of 30%. Using office rental rate of $27 dollars per foot, the assessed value of 160,000 square foot office use is estimated to be $25,920,000 million dollars. At said value, the commercial component will generate $312,900 in gross taxes based on the current tax rate of $12.07. Subtracting the $61,000 service cost generates a net fiscal benefit of approximately $252,000 for the commercial component and a cost to revenue ratio of 0.19. 7.0 Overall Net Fiscal Impact Table 9 illustrates the fiscal profile of each of the general mixed use components i.e. the residential and commercial component. The total row indicates the fiscal profile of the mixed-use redevelopment at build out, in current dollars. 12 /c 51) 2 Table 9. Net Fiscal Impact -Mixed Use Re-Development Redevelopment Gross Annual Annual Cost to Net fiscal Component Revenue Service Cost Revenue ratio Benefit (loss) Residences 746,550 $599,000 1 0.80 $147,000 160,000 sf. $ 312,900 $ 61,000 0.19 $252,000 Office Total $1,059,450 $660,000 ( 0.62 $399,000 As shown above the completed redevelopment will have a cost to revenue ratio of approximately 0.62 and generate, in current dollars, a net annual fiscal benefit of $399;000. 8.0 Massachusetts General Law OR Revenues. Consistent with Chapter 40R and subject to state funding an approved 40R zoning district with 202 program eligible residential units will generate a one-time payment of $350,000 from the Commonwealth of Massachusetts. Additionally as the building permits for the 202 eligible units are granted the Town of Reading will receive payments of $3,000 per unit totaling an additional $606,000. The total one-time payments from the Commonwealth will be $956,000 at the completion of the redevelopment. 9.0 New Growth Tax Benefits Consistent with State regulations the taxes generated by new growth may be collected and used as a revenue source for one year before becoming part of total assessed valuation and subject to mandated levy limitations. This feature of municipal finance was designed to provide municipalities with budgetary flexibility and to encourage new growth. As the project is constructed the appropriate tax year value will be calculated as new growth revenues. At completion, the proposal will have added approximately 80.7 million dollars to the total assessed valuation of the community and will allow the taxes collected from said development to be treated as new growth revenues (exempt from the 2.5 % levy limit). 10.0 Construction Permit Revenue In addition to property taxes and excise taxes the proposed residences will generate building permit, electrical, and pluinbing fees. We estimate that the proposal will generate approximately $650,000 dollars in additional fees for the general fund during the project build-out period. Said fees will be one-time fees that will cover all local administration and inspection costs during construction, and most likely the construction related permit fees will constitute a short term but significant additional net fiscal benefit to the community; in addition to the 40R revenues as noted above. 13 2Z 11.0 Comparisons to Current Property Taxes The site in its currently vacant but non-tax abated current condition has a total assessed value of approximately $17,000,000 and generates $153,000 in annual revenue. The redevelopment proposal, at completion, will have an assessed value (current dollars) of $80,700,000 and generate $1,059,000 in annual revenue of which $399,000 will be net revenue. In terms of assessed value the proposal will increase the annual taxable value of the site by 475% i.e. $80,700,000 vs. $17,000,000. In addition, the proposed redevelopment is expected to generate one time 40R and building permit payments totaling $1,606;000; the site, in the current condition, would take over ten years to generate equivalent revenue. 14 23 Appendix The information provided below summarizes school aged children relative to typical multi-family locations. In this report we have assumed that the proposed development in Reading would generate 30 children from 218 non senior residential units. Our assumption was that the school age children generation rate would track to the more traditional multi family locations and their associated school age children results. Accordingly my school aged children ratio (SAC) was 0.134 or essentially the same as the average (0.14) of the regional examples, regardless of the fact that multi-family developments in Reading are somewhat below the regional average in terms of school aged children per unit, approximately 0.10. Regionally Typical Multi-family SAC Generation Rates (2001-07) Name/ Location Number of Multi- Number of Students per Family Residences Students Residence Town of Acton 2,271 267 0.117 Incl. 40B Hopkinton 515 84 0.160 All Multi-family Incl. 40B Marlborough 164 20 0.122 Applebiar 40B Boxborough 572 74 0.129 Condominiums Reading 527 49 0.092 Condominiums (2001) Reading 205 20 0.095 Archstone 40B Scituate 112 10 0.089 Condominiums Marshfield 445 83 0.186 Condominiums . Incl. 40B North Andover 2,442 411 0.168 All multi-family and six 4013's but excluding. one, 100% affordable development Total 7,253 1,018 0.14 In addition to the above table of comparables the following project related information provides additional information relative to multi-family developments in communities with quality school systems. 15 Avalon at Lexington 198 apartments 104 children, SAC 0.52 (unit mix; 28 one bedroom, 114 two bedroom and 56 three bedroom 0.52 14% one bedroom 57% two bedroom 29% three bedroom The three bedroom units represent 67% of all students. One and two bedroom units (25% affordable) generate a SAC of 0.170 per unit. Avalon at Newton 295 apartments SAC 0.176 20% three bedroom 55% two bedroom. 25% one bedroom The two year old development is 97% rented and generates 52 school aged children; 21 of which were previously enrolled in the Newton School system. The development generates 25 students from its 235 one and two bedroom units, or a rate of 0.11. The remaining 27 students are generated from 59 three bedroom units or a rate of 0.45 Concord Massachusetts We also examined two Town of Concord comparables; Fairhaven Gardens on Abbott Lane and Warner Woods on Laws Brook Road. Combined the 122 units of Fairhaven Gardens and Warner Woods (all two bedroom units) generate a total of 13 school aged children in 122 units or a SAC ratio of 0.106. Melrose Massachusetts Oak Grove Village has completed Phase 1 (267 units), 35% one bedroom, 63% two bedroom and 2% three bedroom. Phase 1 is 94% rented and as of September 4, 2007 there are 4 school aged children or an SAC ratio of 0.015 per unit. Rents range from $1,550 to $2,400 per month, the affordable housing percentage is 4% of total units. This development is a classic transit oriented development. 16 About the Author John W. Connery Connery Associates Principal Education: Master of City Planning Ohio State University 1971 Bachelor of Arts Boston University 1969 Experience: Mr. Connery has 36 years of community planning experience. He has worked in the Mid West and for the past 33 years in New England. As founding principal of Connery Associates in 1980, he has had over 250 municipal and private clients. Mr. Connery has developed an expertise in municipal zoning, fiscal impact analysis, and project pennitting. His professional assignments have included numerous downtown redevelopment projects, community master plans, zoning studies, and cost of development / fiscal impact studies. Working with Goody Clancy and Associates in 2001 he completed and had.adopted the Zoning Plan for Eastern Cambridge with the associated fiscal impact analysis. Mr. Connery's current private sector projects include various residential and commercial fiscal impact studies in Massachusetts including the expansion of Mashpee Commons, the Natick Mall, and life style shopping centers in Dedham, Lynnfield, and Westwood. Further, Mr. Connery has also recently prepared fiscal analyses for senior living facilities in Lynnfield, Braintree, Sharon and Dedham Massachusetts. He is also preparing fiscal impact studies for various 40B and traditional residential developments throughout the Commonwealth; and he is currently preparing comprehensive zoning amendments for Lynn, Watertown, Lawrence, Melrose and Malden Massachusetts. With Judi Barrett (principal author) of Community Opportunities Group he has assisted in the development of a 42 community case study regarding the relationship of school aged children and multi-family housing and the resulting fiscal impacts. Mr. Connery has also taught one-semester courses in urban planning at the University of Massachusetts at Boston and at Boston University, and has been a guest lecturer at both Harvard and Tufts University Graduate School on a number of occasions. He has been employed as an expert land use and zoning witness before both the Land Court and Superior Court for both public and private clients. He is a past president of the Massachusetts Consulting Planners Association and an active non-professional member of the American Institute of Archaeologists. Telephone 781 665 8130 Fax 781 665 5864 E-mail: Johnconnery@comcast:net 17 pTING OfQ SEI,E,C Tay, Bo IB SS T v ! $S 1 please P . _ g l _ -k7 AqAA"-'