I share the concerns expressed by other town residents regarding the impact of rezoning in every aspect of our lives: traffic, noise, water supply, affordability, etc. I thought this would be a good time to recirculate a pro-forma analysis of taxes I shared in the spring for existing town residents considering the downstream effects from rezoning. Anyone is free to take a look at the spreadsheet <https://docs.google.com/spreadsheets/d/1L4j2Hr0CF0cSSW5ay12Ja-14Gcva0YY1Hx_oHWHT6sA/edit#gid=0> and share their thoughts privately or publicly.
The high-level takeaway is that the proforma increase in property taxes for existing town residents will be very material. In my baseline case I get a 20% increase (~$4,000 per household per year). Depending on the assumptions used (# of units built, # of children per unit, average assessed value for new properties), I can see a range of outcomes between 8% ($1,500) and 30% ($6,000) in incremental property taxes per year for existing residents. I am not even considering capital investments, which will obviously be needed for an increase in population of the magnitude being proposed here. Who would be the beneficiaries of this covert tax subsidy? Developers and the future owners of expensive condos, at the expense of existing town residents. My analysis is not perfect, far from it. What everyone needs to understand though is that despite the proclamations of the HCAWG, rezoning would be a substantial net negative for our finances, and the precise magnitude, while very material in almost any scenario I can envision, cannot be quantified in advance with reasonable confidence. My goal in sharing this analysis is to bring a financial reality check into this process, which has been absent so far. The cost study <https://www.lincolntown.org/DocumentCenter/View/79178/LDS-Memorandum-to-the-Town-of-Lincoln-re-Oriole-Landing--3162018-1> shared by the HCAWG, which was put together by Civico, the developer for Oriole Landing and also the developer chosen by the RLF, is blatantly wrong. The cost per student used in their analysis ($6,287.59) is roughly 1/5 of the cost per student at LPS ($30,444) and ¼ of the cost per student at LSHS ($23,283). I find it very concerning that the HCWAG would endorse this study in their FAQ <https://www.lincolntown.org/DocumentCenter/View/79218/2023-08-16-HCA-Impact-FAQs-with-links-08162023> without fact checking it, effectively misleading the public. Don’t ask the barber whether you need a haircut. The impact to town finances is not lost to Weston's leadership. They are procrastinating for good reason. We need to get a lot smarter before making any decisions. The analysis estimates that 650 incremental housing units would drive a revenue shortfall of slightly over $8M per year. In order to absorb this shortfall, property taxes for existing owners would need to climb 20% in order to balance our future budget (an average of ~$4,000 per household), most of which would go to pay for high-school students at L-S and hire more staff at LPS. The actual figure would be dependent on the number of units that are eventually developed, their average assessed value and the number of children per unit, but under any scenario we can envision, rezoning will drive higher taxes for existing residents. It is important for residents to understand that the town is mostly self-reliant when it comes to its finances. If we look at the current fiscal year’s budget, 95% of our revenue comes from our own funds, and only 5% from the Commonwealth. While the laws are dictated by the State, if we decide to be compliant, the financial burden would be shouldered by local taxpayers. When looking at our budget, we need to separate fixed and variable costs. By far the biggest variable cost any Massachusetts town has is education. The cost of educating a high-school student is very straightforward. Our annual bill from Lincoln-Sudbury is derived from a linear formula tied to our enrollment and comes up to a bit over $23,000 per student. The cost of educating an additional student at the Lincoln Public School is a bit more difficult to derive, but we can make some reasonable estimation if we split the cost structure between fixed and variable. While small fluctuations in student count can be absorbed without changes in the cost structure (e.g. teachers), the magnitude of the potential student population increase required to be compliant with HCA cannot. Adding up town appropriations and state grants, the FY23 budget is just over $30,000 per LPS student, not including debt service costs tied to the school building. Less than 3% of those funds come from state grants tied to our student enrollment. Approximately 78% of those costs consist of personnel expenses (including benefits). There are 128 FTEs working in our school. Looking at the school’s budget detailed FTE table, we can easily see that the vast majority of those FTEs (110 out of 128) are teachers, content specialists, teacher assistants and tutors, which would by necessity grow if we added hundreds of students to our student body like compliance with HCA would require. If we assume that those personnel costs would grow at the same pace as enrollment, and also assume that 30% of non-personnel costs are variable in nature, we get an incremental ~$22,000 per LPS student, net of state grants. As to other town expenses (General Government, Public Safety, Public Works, Human Services, Culture & Recreation and the rest of Pension & Insurance), we have assumed that 30% are variable and tied to our population. We can refine this a lot more, but we should keep in mind they amount to less than 1/5 of the education costs in our model. We should also note that we are not contemplating any capital expenses, which is not realistic. To begin with, if we added 650 units and the corresponding number of children, we most likely would have to expand our school, which was designed to accommodate up to 650 children, and could probably host more than that number, but not quite the 322 projected. In terms of incremental revenues, the assumption is that new properties are assessed at $400k on average, which is in-line with the assessment per unit for a typical condo in Lincoln Station today. Local receipts are budgeted at the same percentage of property taxes as FY23 (2%) and our pro-forma state aid is increased in line with our population increase. The assumption is that the incremental 650 units (this is the new number of units as per Select Board meeting) would be in-line with average household size in Middlesex (2.56) and have an average 0.89 children. The children count derivation is detailed in the table. This is arguably not an aggressive assumption, Hanscom has 1.80 children per household according to the US Census. We should also note that the average unit would have to be assessed at $1.3M for the rezoning not to have negative fiscal consequences, which is of course far from a realistic assessed value for condos.
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