Friday, March 5, 2004
FinCom gets housing cost estimates
On February 25, Selectman John Ballantine and consultant Toby Kramer of Riverside Consulting appeared before the Finance Committee (FinCom) to discuss potential development costs associated with acquiring the 45-acre Benfield property called Parcel A. Riverside Consulting is a Concord-based firm that provides planning advice on affordable housing projects.
The Special Town Meeting on March 23 will vote on the purchase of the two-million-dollar parcel using the town's Community Preservation Act (CPA) funds. (See box on page 5.) To complete the project, however, additional funds will be needed to build affordable housing (40B housing), playing fields, and for related development costs, such as roads.
40B housing costs
The analysis presented by Kramer assumed 24 affordable-income units under two distinct scenarios: one where all the units are rental units, the other, where all the units are sold and privately owned. In both cases, actual development would not be undertaken by the town but outsourced.
A 24-unit rental development was estimated to cost $3.5 million, including $2.6 million for construction and the remainder for roads, general development, infrastucture, site work and developer fees. $2.7 million would be covered by permanent debt, leaving a net additional cost to the town of $800,000. The units would rent for an average of $1,450 per month and would generate an estimated positive cash flow of $31,026 per year, after expenses and debt service.
The ownership option would cost an estimated $4.2 million to develop, including $3.2 million for construction. Home sales were estimated at $3.82 million, assuming an average sales price of $159,000 per unit. Thus, under the ownership option, the net additional cost to the town would be $377,000.
FinCom members acknowledged that Kramer's presentation represented only illustrative estimates, but agreed that the analysis provided a much-improved estimate of costs versus previous data. This, in turn, would allow FinCom to better develop financial recommendations prior to the Special Town Meeting.
Where will funds come from?
The committee also discussed how the town might absorb this additional cost. It may do so directly, using CPA funds or other moneys. In either case, however, this would likely entail new taxes, either through the continuation of the 2% CPA surtax or possibly through new property taxes. In addition, funds may be sought from state programs, e.g., MassHousing or other agencies that support rental and home ownership opportunities for low- and moderate-income residents, but such programs would likely involve "strings" that the town might find onerous.
Equipped with this new information, FinCom Chair Lisa Jensen-Fellows delegated to FinCom members the task of developing scenarios for funding both the land and other costs. FinCom member Bret Bero opined that while developing such scenarios was clearly an important exercise, it was more important that the town (Board of Selectmen) address fundamental public policy issues surrounding the land purchase and its subsequent development. More specifically, will public or private funds be used to develop the land? Will the additional funds required for development come from the CPA fund or the town? Will the town's affordable housing be clustered in one area or spread around the town?
© 2004 The