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Community Corner

Article by Town Administrator Steve Maio

Lost in the shuffle of the Town wide debate over the parking garage project approved at Town Meeting is the positive long term tax revenue that would greatly benefit the Town. Not to mention the badly needed infrastructure improvements that will be implemented at no cost to the Town. This public/private financing of the project is consistent with investment promoting strategies like Tax Increment Financing. Although the ultimate configuration of the project requires thoughtful consideration, we can boil the financial impact down to some very simple facts.

  1. The current assemblage of properties as is generates $67,000.00 per year in tax revenue.

  2. The assisted living facility combined with the public/private garage is projected to generate $213,000.00 in taxes upon its opening in 2016.  This figure is based upon an analysis completed by the Director of Assessments Victor Santaniello.

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  • The Town has offered $105,000.00 per year for twenty years as a tax reduction to encourage this investment in Wakefield to offset the cost of the garage.

  • The Town has included its land in the project while retaining ownership rights in the form of an easement that will be recorded at the Registry of Deeds.

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  • The project includes land owned by The Savings Bank, Wakefield Cooperative Bank and BrightView that will also be subject to the Town’s easement, thereby  increasing our property rights

  • The Town’s parcel of land located in the back will gain direct access to Crescent Street, perhaps our last opportunity to do so cooperatively.

  • In order to protect our investment the Town will contribute its pro rata share to ensure the proper maintenance and operation of the garage at a cost of $25,000.00 per year.  Of this figure, $10,000.00 per year is designated as a capital reserve.

  • When the garage is completed the current lease payment of $5,500.00, required for access to the Town lot, will no longer be necessary.

  • As my excellent High School math teachers would say “show your work”.

                $213,000.00 -         New Taxes -

    Less    $ 67,000.00 -          Old Taxes -

    Less    $105,000.00 -         Tax incentive

    Less    $ 25,000.00 -          Maintenance

    Plus    $ 5,500.00 -             Access payment -

     

    A net of $21,500.00 year one positive impact and increased downtown parking 

    It is important to note that the projected tax revenue listed above will change every year.  In all projections forward we are using 2.5% as an increase.

    Not directly tied to the taxable side of the equation are the added infrastructure improvements to the town that will be paid for by BrightView.  They are as follows:

    1. Replacement of the sewer line from Centre to Crescent Street.  This line is approximately 600 feet – cost $500,000.00.

    2. Replacement of drainage line from Centre to Crescent Street (a portion running under the Town owned lot).  This line is roughly 560 feet long – cost $200,000.00.

    3. Upgrade to electrical service and removal of utility pole in the middle of the lot.  Cost is estimated at $200,000.00

    Finally, the project will generate a one-time payment of building permit fees in excess of $200,000.00.

                A number of writers have questioned whether the Town is receiving far value for the land.  I submit that the Town lot in question as an individual separate piece of land is of marginal value.  With the combination of the Town parcel and the parcels owned by The Savings Bank and Wakefield Cooperative Bank, Brightview can create more housing units for our older residents.  It is the value of these additional units, estimated at $1.5 million, that makes the building of the garage feasible.  Brightview’s cost to build our “portion” of the garage, which continues to increase due to environmental issues, is three million dollars.  We offer a tax incentive of one and a half million dollars because we are receiving a credit of one and a half million dollars for our land.  Incidentally, because BrightView owns the garage, subject to our easement, they taxed for the garage, increasing the Town’s revenue.  

                Finally, some have countered we should build our own garage.  To build our own garage in the Downtown area would require takings of private land by eminent domain and would also cost us approximately $450,000 per year in bond payments. By partnering with the two banks and Brightview, we receive greater tax revenue, infrastructure improvements and assistance in maintaining the garage all for the cost of $105,000 a year in tax relief and $25,000 in maintenance fees.  This is the nuts and bolts of a public/private partnership.

                Besides the benefits of additional parking, tax revenue and infrastructure improvements, this project is a shining example of Wakefield’s new direction of utilizing tax relief as an incentive to promote development in our town.  In October 2013, The Economic Development Committee, chaired by Selectman Paul DiNocco, sponsored a forum to discuss the Main Street Program, along with a tried and true strategy called Tax Increment Financing (TIF).  TIF is a nationally recognized strategy to promote investment by reducing the incremental increases in taxes over a number of years on the improvements to properties.  The goal is to work with developers and encourage them to invest in Wakefield as opposed to our neighbors (like Reading or Lynnfield).  This project utilizes that underlying tenet to better our community.

                As a result of this type of project Wakefield receives:

    1. Increased net tax revenue of over One Million Dollars for the first twenty years.

    2. One Million in infrastructure improvements

  • Continuation of our mantra of making Wakefield a destination place.

  • Jobs

  • We receive all these improvements and go a long way to resolving a decades old problem of downtown parking in return for an unsightly marginally valued parcel and a deferral of $105,000 in taxes for twenty years.   This is a once in a lifetime opportunity to maximize the value of our lot and create a stream of tax revenue for generations.  It enjoys unprecedented support from the Board of Selectmen, Finance Committee and Chamber of Commerce, who all recognize how vital this is to the long term economic development of Wakefield.

    Now it is certainly true that Brightview could build a smaller project without the garage and we would benefit from increased taxes in the short term. Unfortunately adherence to that philosophy never really moves the Town forward.  If I adopted that philosophy, I would not be doing my job for the people of Wakefield.   In July, a column in the Globe entitled “The Suburbs Must Adapt or Wither” addressed the fact that the suburbs needed to change how they operate or they would cease to be economically vital.  I am heartened because of all the good we have accomplished together over the last few years, but also realize that we have a long way to go if we wish to remain a vibrant community.  

    Recently, I received an article from Dan Sherman written in the Boston Globe by Paul McMorrow.   Mr. McMorrow is the associate editor at Commonwealth Magazine and has a wealth of experience in commercial development.  In his article Mr. McMorrow states “Suburban towns have to invest in parking garages as tools for unlocking economic development”.  The article also speaks to the necessity of creating a denser and more amenity rich downtown in order to attract and retain citizens.   In order to achieve that goal, suburbs must find “room to grow upward instead of sprawling outward”.  In my opinion, the garage achieves part of that goal in a careful and economically feasible way.  Of course we own the process to ensure that this facility is well designed and built well.  I believe that we are up to that challenge. Wakefield has a lot going for it.  This project with all its amenities helps us adapt to the changing landscape around us for a brighter future.

    I think that if you view the recent forum on WCAT or on the Town Web site at www.wakefield.ma.us, you will agree that a Yes vote on question 1 helps Wakefield achieve a brighter future.

    Again I am happy to discuss this or any other issue of importance.  Please contact me at 781-246-6390 or email at smaio@wakefield.ma.us.


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