by David Dahlbacka in All Ages, Beat Reporter, City Finances, Development and Zoning, Environment and Open Space, Events, Neighborhoods and Squares, Transportation, Union Square
Posted on September 12, 2010 at 1:21 pm
Last Modified on September 15, 2010 at 4:05 pm
| September 15, 2010 | ||
| 6:30 pm | to | 8:00 pm |
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Somerville District Improvement Financing Program Public Hearing
Wed. Sep. 15 6:30 – 8:00 PM
Argenziano School
290 Washington Street
Somerville MA (map)
This is a public hearing on the proposed Somerville DIF, which covers Somerville Avenue and the area around Union Square and Boynton Yards/Inner Belt.
District Improvement Financing is useful in building tax revenue, provided the projects supported are high enough in density to provide adequate tax base. If they aren’t, the city is on the hook.
For background and issues to monitor, see Somerville District Improvement Financing Program.
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September 29, 2010
Brianna O’Brien
Planning Department
City of Somerville
OBrien@somervillema.gov
Re: Somerville District Financing
Dear Brianna O’Brien:
Somerville District Improvement Financing can be a useful tool for funding urgently-needed infrastructure upgrades in Union Square, Boynton Yards, the Inner Belt, and along Somerville Avenue. However, the DIF should be used cautiously.
The costs of maintaining ordinary city services in the DIF area are likely to increase due to ordinary inflation. However, the tax assessment for properties in the DIF area is fixed over the next 30 years, and any increase in tax revenue produced by new development or property improvements will almost surely go first to debt service on any bonds issued to pay for infrastructure improvements in the district.
While the DIF authority (the Mayor and Aldermen) have the power to divert any excess beyond debt service to pay for increases in ordinary city services, there will be none to divert if debt service uses up all the new tax revenue. This means that the rest of Somerville could have to pay for increases in ordinary city services in the DIF area. In particular, if the City encourages residential development in the DIF area, the increase in city costs (particularly school costs) from such development could have to be shouldered by the rest of the City.
To avoid getting into this situation, the DIF authority should work with the Planning Board to do the following:
1. As part of the permitting process for any new development in the DIF, the City should calculate the incremental costs of such development to the City as well as the incremental tax revenue. This includes indirect costs, such as school expenses, likely to be incurred by residential development.
2. As a matter of general policy, the City should emphasize high-value, high-job commercial development in the DIF area. If residential development is proposed, the City should ensure that the increased costs of new residential development in the DIF area are more than balanced by new high-value commercial development in the DIF area. If possible, the commercial development should already be in process.
3. If bonds are to be issued for infrastructure upgrades, the DIF authority should ensure that the increased debt-service cost of bonds issued against new development in the DIF area are more than balanced by new high-value commercial development in the DIF area. If possible, such development should already be in process and the bond issue should be dedicated to preparing for that development.
I am encouraged that Somerville is taking steps to upgrade its aging infrastructure. However, the City has already taken on a significant obligation, the iCubed funding for Assembly Square. Fiscal stability requires the City to ensure that high-value, high-job commercial development be pursued in the DIF area as well as in Assembly Square.
Thank you for your attention.
Sincerely,
David Dahlbacka
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The e-mail address for submitting testimony is incorrect on this posting. It should be BOBrien@somervillema.gov or, failing that, RMay@somervillema.gov.
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City Transcript of DIF Public Hearing (PDF)
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