Friday, March 12, 2004
FinCom presents financing options for Benfield Parcel A
On March 3 before a packed room at Town Hall, the Board of Selectmen, Finance Committee (FinCom), and the Community Preservation Act Committee (CPAcom) met for a discussion of the Benfield property purchase in preparation for the Special Town Meeting on March 23. Hult recused himself from the Benfield discussion, since he is a member of the Carlisle Conservation Foundation (CCF) that is holding the option on the property. He turned the gavel over to Selectman Vivian Chaput.
Chaput introduced the discussion of the Benfield Parcel A purchase by thanking everyone for their efforts, and reminding the audience that everyone involved was a volunteer and to please be civil in discussing the subject.
Protecting the town from 40B
FinCom Chair Lisa Jensen-Fellows acknowledged the generosity of the Benfields and went on to highlight important considerations and the balancing of competing interests that went into developing FinCom's recommended financing structure. The FinCom took seriously both the requirements of the Community Preservation Act (CPA) that the money be spent on multi-use projects, including housing, recreation, open space and historical preservation; and the financial risk of not complying with 40B housing requirements, which she characterized as "real and substantial."
A state law, known as Chapter 40B, mandates that a minimum of 10% of housing in every town be "affordable." In towns like Carlisle that do not meet the 10% requirement, a developer may appeal to the state for a comprehensive permit to build higher density housing than permitted by local zoning requirements, provided 25% of the units are affordable. A recent amendment states that towns that add 10% of their required quota of affordable housing units per year will not be required to accept 40B developments.
Selectman Doug Stevenson asked for clarification of the 40B housing risk, suggesting that any such development on Parcel A would "only buy two years" protection. Jensen-Fellows disagreed, arguing it was more than two years protection and outlining a scenario where a 40B developer building 100 units, only 25% of which needed to be affordable, could come into Carlisle (as has happened in Lexington and Bedford) and increase the burden on Carlisle schools by three-fold. Instead the town could control the building of just 26 affordable homes.
Before presenting the recommended financing structure, FinCom member Deb Belanger outlined two objectives and four recommendations. The objectives were to pay down the debt as quickly as possible, while leaving some money in the CPA Fund for future projects. The four recommendations included first, a consideration of a minimum number of housing units, if housing was approved. No number was specified but Belanger explained that if housing were to be undertaken "economies of scale" should be pursued. Second, use at least 75% of any state matching funds to pay down the loan balance. Third, set a maximum cost of $1 million for any future development plans, and fourth, limit recreational development to one playing field, with a preference that this field actually be located on land other than the Benfield property.
FinCom financing proposal
Belanger then walked through a detailed review of the proposed financing plan. In total, four financing scenarios were presented. First, a base case $1.95 million land-only purchase assuming no more state matching funds into the CPA Fund. Second, a base case $1.95 million land-only purchase assuming continuation of state matching. Third, a $1.95 million land purchase plus a $1 million land development cost with no matching state funds. Fourth, a $1.95 million land purchase plus a $1 million land development cost with matching state funds.
Under scenario one ($1.95 million land only, no match) the recommended financing structure was as follows:
1. $500,000 down payment on the $1,950,000 purchase price
2. $1,450,000 Bond Anticipation Note (BAN) for one year
3. $300,000 additional down payment at maturity of the BAN, from funds that had accumulated in the fund
4. $1,150,000 ten-year bond issue
Under this recommendation, the CPA fund balance never dips below $600,000, and if the town elects not to continue the CPA surtax, the remaining debt obligation can be discharged from within the CPA balance in 2006.
The worst case scenario unfolds in scenario three ($1.95 million land purchase plus $1 million development, no state match). Here, the additional $1 million for land development (e.g., housing units, playing field, roads, etc.) is added to the ten-year bond in year two. Under this scenario, debt payments, and the surtax, continue for 12 years.
In both cases, the picture improves if matching funds from the state continue. In the land-purchase-only scenario (#2), available CPA funds increase to $2 million by year five; and in the land-purchase/development scenario (#4), the note can be repaid in year five, or approximately three years before maturity. The 2% surcharge was assumed to continue beyond the original 5-year term in all scenarios.
Rapid debt repayment
In response to the recommendation, the Selectmen were generally complimentary, saying they appreciated the principles applied in the proposal, e.g., rapid repayment of principal. The only issue was why housing development scenarios were presented at all. Selectman Tony Allison "worried that showing such scenarios suggested that housing development was a done deal, when in fact the decision to build units or not would come from future planning efforts."
FinCom members thought otherwise, and suggested that not to present such scenarios would be misleading. If CPA funds are used, it is expected that the purchase would comply with the requirements of the fund regarding multi-use projects. The citizens need to understand what they are being asked to approve. FinCom member John Nock noted "[FinCom] would not have recommended the land be purchased at all if the intent was just to leave it as open space."
CPAcom, Selectmen tangle
CPAcom member Phyllis Zinicola walked through a review of the draft motion to be presented to Town Meeting, asking the town to acquire Parcel A using CPA funds. The most controversial called for the "back" 26 acres to be designated for open space, while the "front" 19 acres would be used for affordable housing units and/or playing fields.
Stevenson said he had hopeed that the latest draft would provide for an "open planning effort that did not unnecessarily restrict" what might be developed on the land. Other Selectmen agreed, arguing for maximum flexibility.
Zinicola, and other CPAcom members present, explained that the way the draft was written, maximum flexibility was in fact retained except with regard to designating all 45 acres as open space. The CPAcom's position is that the front 19 acres must be used for recreational and affordable housing purposes. Once the decision was made to use CPA funds, planning and subsequent development must remain consistent with the fund requirements that call for multi-use land projects.
Audience members questioned the wisdom of "pre-wiring" the development efforts [toward housing] and even building playing fields at all — "Even Ray Charles can see that playing fields do not belong on this parcel!"
The CPAcom held to its position.
© 2004 The