Banta-Davis housing demand, costs estimated
by Karina Coombs
While a rental housing project may be viable in terms of revenue covering operating costs and a return on investment, it is not financially feasible without public subsidy, according to a study commissioned by the Carlisle Affordable Housing Trust. Chair Greg Peterson provided a summary of the recently completed mixed income rental housing market study and financial feasibility report during the Housing Trust’s February 27 meeting.
The 63-page draft report prepared by RKG Associates looked at the potential demand for mixed income and non-age restricted rental units on either town-owned land at Banta-Davis or another as yet to be identified parcel. Three different sized projects were considered: 22, 32 and 44 units. The report also examined a number of housing and demographic characteristics within Carlisle and in relation to six neighboring communities.
Explaining that he was not “terribly surprised” by RKG’s findings, Peterson explained that the town’s lack of existing market-rate rental complexes created a lack of comparables that made it difficult to evaluate the financial feasibility of the project.
Peterson said that RKG was chosen for the study because they were an experienced “brand name” consulting firm that would give the Housing Trust access to the most information. On the other hand, he said that RKG does not usually work for small town governments; rather the firm typically deals with risk-averse “highly capitalized institutions.”
While Benfield Farms project was considered when looking for comparables in town, RKG determined that Benfield Farms was only feasible because of the deep subsidies it received and was not a model that could be followed by private developers. RKG reported that the total project cost for Benfield was $9.8 million, or $377,380 per unit, which they noted was two and a half times the “feasible value of a hypothetical, 26-unit project” developed by the private sector without subsidies.
RKG estimated that construction costs on Banta-Davis, using the larger less expensive model of 44 units, was estimated at $8.1 million or $182,810 per unit requiring a subsidy of $1.14 million. The required subsidy increases to $1.4 million when the cost to relocate the Little League field is included.
Because Carlisle has high land costs and does not have public water or sewer, development costs are high. Unlike other potential sites, a project at Banta-Davis would not have land acquisition costs and could tie into the school’s wastewater treatment plant, which has unused capacity. RKG estimated that locating the project on another parcel of land would increase the costs to $10.1 million and the required subsidy to $3.2 million.
The report said that Carlisle lacks amenities traditionally wanted by renters, which might lower the demand. However, the report did acknowledge that “as more [surrounding] towns achieve the 10% minimum [and build fewer new rental units] Carlisle may be in a better position to capture more of the region’s rental housing demand.” The report also concluded that the population best served by affordable rental housing over the next five years would be seniors.
100 to 150 units preferred
Both RKG and Peterson noted that developers would prefer projects in the 100 to 150-unit range. For a project of this size Carlisle would need to identify a parcel of land approximately 18 acres (ten to 12 acres for buildings and wastewater treatment and six acres for a public water supply).
Housing Trust member John Gorecki asked about the possibility of partnering with a friendly developer and building a 150 to 200 unit rental property to completely satisfy the town’s 10% mandated affordable housing supply. At this scale, subsidies would not be needed. Peterson admitted that it could be one way to deal with the problem, but noted that there were not many properties in Carlisle with this amount of acreage that were not already in conservation. Housing Coordinator Elizabeth Barnett added that both Chelmsford and Littleton had recently taken this approach.
“What’s the alternative?” asked Peterson, who explained that without rental units, the town leaves itself vulnerable for 40B development on any four-acre parcel of land. “We know from the math that every rental apartment we build prevents between five and six of these Long Ridge Road style houses from ever getting built.”
Peterson estimated the number of four-acre lots at 400. “We’re looking at north of 850 new houses in town before we reach our goal,” he said, echoing the findings of RKG. An addition of 850 homes would be 50% more houses than Carlisle already has. “Do we think we could add 50% of our school population? I would submit that would be pretty hard to do.”
Barnett reminded the group that they would be looking to spend tens of millions of dollars to expand the school. Peterson added, “You add enough extra density to the town . . . at what point do you overwhelm the on-call Fire Department.” The group estimated the annual cost of supporting a full-time department at between $2 and $3 million annually.
CSC questions to be addressed
The Housing Trust also went over its presentation to the Carlisle School Committee (CSC) on February 11. CSC Chair Mary Storrs was present for this discussion. Peterson said he was trying to connect Board of Health member Lee Storrs with the engineer who conducted the water balance and wastewater report to ensure he was able to ask his question from the February 11 meeting about a nutrient capacity analysis.
CSC member Melissa McMorrow had also asked some questions about the traffic study during that meeting. She wanted to know if the study could be expanded to include the analysis of traffic generated by an additional 400-student school on Banta-Davis and interactions between the school and the traffic from a 50-unit rental building. She also had asked about an analysis of Goff to see if an access corridor were possible.
Peterson followed up with the engineer to increase the scope of work and asked that an additional $1,000 in funds be authorized for answering questions and/or appearing at meetings. The Housing Trust had already authorized $7,500 for the study. Storrs explained that the CSC had not met to discuss the Banta-Davis project since the February meeting and warned that more questions could be coming at a special CSC meeting to be held on March 27.
Peterson was inclined to start having the engineer answer McMorrow’s questions, but Gorecki suggested they wait until after the CSC meeting, adding that he did not want to spend the money if the CSC was not going to vote to support the project. Peterson explained that he wanted to have the questions answered so the public would have all the information in a timely manner. All members except Gorecki approved the fund increase for the traffic study.
School Committee reluctance voiced
“We’re getting a lot of pressure to throw all the studies away and not even consider letting the land go,” explained Storrs. “Putting housing next to the school doesn’t make a lot of sense to people.”
Peterson questioned why housing near a potential future school would be a problem, noting that the current school is in the village center and surrounded by homes and businesses already. “It’s the scale of the housing,” replied Storrs, explaining there was concern about school children going past apartment buildings.
“I’ve heard the concern about rental housing before,” said Peterson. “Do we want renters in town?” “I want to rent in town,” added Storrs.
“I hear the concern and want to keep it in balance,” Peterson continued. “I’m prepared to have chips fall where they may here. I just want the public to understand what we’re all collectively up against here.”
Stevenson added that building rental housing on town-owned land would at least keep high density 40B housing out of people’s neighborhoods. “It’s not like we have ten good options,” he explained.
The Housing Trust will hold its next meeting on March 27. ∆