Friday, February 6, 2004
FinCom probes land financing, development costs, specific uses
Last Wednesday, January 28, a near-capacity crowd engaged in a lively debate until midnight as the Finance Committee (FinCom) engaged in deliberations regarding the Benfield Land purchase. Phrases like the "devil's in the details" and "look before you leap" come to mind in observing the session.
As reported earlier this month, the Board of Selectmen voted unanimously on motions to have the town purchase 45 acres (Parcel A) of the Benfield land on South Street at a cost of $1.985 million. The town would purchase the land with funds from the Community Preservation Act (CPA) and, as called for in the act, designate 21 of the 45 acres for multi-use purposes, including affordable housing and active recreation.
CPA tax must be renewed (What are the CPA and CPC?)
In opening the session, FinCom Chair Lisa Jensen-Fellows, said FinCom's obligation is to comment on the financial aspects of the land acquisition, not whether it should be purchased or not. The recommendation to purchase came from the Carlisle Conservation Foundation (CCF), the Community Preservation Act Committee (CPC), and the Board of Selectmen. Final approval must come from a two-thirds approval at a Special Town Meeting, which is scheduled for March 23, 2004.
Before presentations got underway, Jensen-Fellows pointed out that, contrary to prior pronouncements, the purchase and development of the land parcel would require new taxes, or more precisely, a continuation of the 2% CPA tax beyond its original five-year commitment. This is because financing the land purchase will require that the current 2% CPA tax be extended for the life of any bond used in the financing. Jensen-Fellows stressed that this fact "needs to be known."
Development costs need attention
The major constituencies were represented at the meeting. Selectman John Ballantine presented on behalf of the CPC and was supported by audience participation from Caren Ponty (CPC Chair), Greg Peterson (CCF director), and Phyllis Zinicola (Planning Board) as well as others in the audience. Also presenting at the request of FinCom was Larry Barton, Town Treasurer/tax Collector, who provided financial projections for financing the purchase.
Ballantine's presentation was meant to bring the FinCom up-to-date on the project, including timelines. He reviewed the purchase and provided "gross cost estimates" of an additional $1 million for development of roads/parking ($200,000), ballfields ($400,000), and housing ($400,000). This set off a round of debate over what these costs might actually be. Jensen-Fellows opined that the housing costs looked particularly low, and that in her experience these kinds of estimates end up being "twice as much and taking twice as long." Ballantine explained that a completed plan was not possible given the short time-frame before the land purchase option expires (April 17, 2004), and so definitive cost figures were not possible. The big swing factor was housing, which could be zero if favorable development partners were attracted. FinCom member Deb Belanger requested that better estimates be developed.
Will there be any CPA funds left?
Barton next reviewed cash flow projections assuming $1.5 million of the purchase price was financed over nine years, the shortest time possible given available funds. It showed that the CPA fund account begins to grow again in later years, but reaches a balance of only $1.3 million in 2014 when the bond is repaid. This led to more discussion of development costs, as CPA funds would be used to develop the land. If the town ended up having to pay the $1 million estimated development costs, they could certainly do so from the CPA account, but obviously not much else. For the past three years the state has matched CPA funds collected by participating towns at 100%. The continuation of state CPA matching funds represents an upside, but cannot be counted upon.
Be explicit on low-income housing
Discussion ensued regarding housing plans, with a focus on low-income housing. FinCom wanted to know if Chapter 40B low-income housing was being planned on the 21 acres. Ponty explained that CPA rules allow for "community housing," which is based on a formula requiring median income levels, while Chapter 40B requires a tougher to meet 80% of median standard. Ponte thought that low-income housing was "likely" under either measurement but, without a specific plan in place and no time to develop one, nobody could say with any certainty. FinCom member John Nock disagreed, saying he felt it was more likely that no low-income housing would be built, noting the poor track record in Carlisle.
Belanger asked if there were any known issues that would preclude building low-income housing. Had anyone spoken with property owners abutting the Benfield property? No issues were noted, although at this point FinCom member Bret Bero declared that he and member Ray Wilkes probably fell in that category (abutters to the Benfield property) and needed to seek ethics committee guidance regarding their continued involvement with the project. Jensen-Fellows formally requested that they seek such guidance.
In response to the dual issues of additional costs and meeting low-income housing requirements, Peterson argued that he was comfortable that a plan could be developed to meet these criteria.
Doing it the right way
Moving to next steps, Barton floated an idea to "buy an option" to purchase the property one year hence, to give the town time to develop specific plans to address the issues raised by FinCom more comprehensively. Audience members explained that while a good idea, it was not feasible for several reasons, including the fact that a non-refundable $200,000 deposit was made on the current purchase option that is set to expire April 17, 2004.
FinCom members acknowledged that the Benfield property was a great purchase, complimented all the participants for the hard work and effort, and while supportive of moving ahead, wanted to ensure appropriate financial due diligence. As such they requested better development cost estimates — consistent with and sympathetic to the short time frame involved — and asked that the motion to be voted Town Meeting explicitly state that 40B low-income house is being proposed. Ponty agreed saying, we "want to do the deal. The question is how best to do it, and we're all trying to do the right thing."
© 2004 The