An appreciative audience left the Devens revenue forum at Volunteers Hall Monday evening, happy with the level of detail MassDevelopment has provided about current and projected tax revenue, and looking forward to equally comprehensive information about capital and operating expenses. Selectman Leo Blair declared during the meeting that it is his goal to have a model with equally good expense data as a basis for bringing disposition alternatives to a vote at next spring’s Town Meeting.
Victor Normand of MassDevelopment said that at full buildout, Devens could have a total value of more than $1.5 billion, and could generate property tax revenue of more than $24 million per year, in 2008 dollars. Of the 4,422 acres in the Devens Enterprise Zone, 2,722 are within Harvard’s historical boundaries. The full buildout value of Harvard parcels could be $1.1 billion, generating $17.7 million in property taxes.
This information came as the result of a request to MassDevelopment in January by Harvard’s Board of Selectmen for detailed information about the status and potential for all land in the Devens Enterprise Zone. Normand led the development of this information and delivered the results to the Joint Boards of Selectmen on April 24. The information is contained in a series of Excel spreadsheets which detail, for every land parcel, information such as owner, zoning district, total acreage, open space acreage, finished area, valuation, estimated property tax, and environmental status (contamination requiring cleanup, e.g.). In addition, every parcel was classified based on historical town boundaries, to allow rollup of current and future potential value and property tax by town. Parcels were also classified as exempt from property tax, where usage so indicated (e.g. municipal utilities, Loaves & Fishes).
Normand gave an overview of the zoning categories and use designations by which each parcel is classified, including commercial (developed, undeveloped, unbuildable), residential (developed and undeveloped), open space, municipal, and federal/state (land that has been retained by federal and state agencies, not transferred for redevelopment). See table for details of zoning categories and use, for all of Devens and for the Harvard portion.
Tax examption agreements
Normand touched on two categories of taxation now in place—municipal service fees and ad valorem (value-based) property taxes. All but two current Devens businesses are assessed a municipal service fee based on square feet. These agreements will lapse when jurisdiction passes to a municipality, or to a new town, with taxation based on value and tax rate. The two most recent businesses, Bristol-Myers Squibb and Evergreen Solar, are taxed based on value, and have Tax Increment Financing (TIF) agreements which provide for exemption of taxation on building values for several years. BMS has 100 percent exemption from tax on buildings through 2014, then a sliding scale from 90 to 50 percent exempt in 2019, 25 percent in 2024, and finally no exemption in 2029. Evergreen Solar is 75 percent exempt in 2009, 50 percent exempt in 2014, 25 percent exempt in 2019, 5 percent exempt in 2023, and no exemption in 2029. Both businesses will pay full value-based tax on underlying land. BMS will pay an estimated $140k in 2009. Asked if there were any performance criteria to be met to maintain the exemptions, MassDevelopment Executive Vice President Richard Montuori said yes, mostly in terms of jobs created, and if criteria were not met, they could lose the exemption. At present, that determination would be the responsibility of the MassDevelopment Board of Directors. After jurisdiction transfer to a town, it would come under the authority of a Board of Selectmen.
—Leo Blair
When the floor was opened for questions, many expressed thanks for the revenue information that had been provided, but then moved on to questions about operating and capital expenses, past and future, that a town would have to anticipate if jurisdiction is transferred.
The first questioner asked about the financial obligation of the Army for Devens expenses. Montuori responded that the Army still owns some land there, and has no obligation to pay taxes. It would only pay if there were an agreement, or memorandum of understanding, and there is not. A later question confirmed that is the case for all federally retained properties (Bureau of Prisons, Job Corps, etc.), i.e. there are no agreements, and therefore no fees are collected. Montuori added that if towns assumed a jurisdiction, they would have the same obligation to provide services without compensation.
Keith Turner of Littleton County Road asked if Devens is currently operating at a profit or a loss. Montuori and Normand responded that it is a loss, averaging $5 million per year, funded by the “Devens general fund.” They explained that when the Devens project was authorized by Chapter 498 legislation in 1994, it was funded by a $200 million authorization, $120 million for capital improvements and $80 million for operations. Montuori also said that MassDevelopment will provide full details of expenses, historical and projected, but cautioned that towns should do their own analysis, because MassDevelopment does not operate like a municipality. In addition to municipal responsibilities, it is a redevelopment authority, with a significant real estate operation. There is no attempt to segregate organization and budgets to isolate municipal functions, so the data provided will have to be analyzed to understand how it applies to a town’s operations. Board of Selectmen Chairman Leo Blair passed out copies of MassDevelopment financial statements for fiscal years 2004 through 2007 with the comment, “It’s pretty clear what the numbers are.” Montuori reiterated his caution not to assume that a town’s financial statement would be the same, because of different missions.
Blair asked if there had been any independent review of the data, by MassDevelopment’s auditors for example. Normand responded that MassDevelopment results are always audited, but that the detail parcel data had been reviewed by the assessors only. Blair asked if there were assumptions; Normand replied that where assumptions were made, they are noted in the data.
What’s next?
Jim Ware of East Bare Hill Road asked, “Where do we go from here?” Blair suggested that the next step is to take the very good income data and match it with equally good expense data, to create a financial model that is “…relatively bulletproof, that most reasonable people can agree that the numbers are sensible. Move from there, with perhaps some independent, outside auditing, to give it that extra layer of credibility, so we could present a disposition question, or several disposition questions, to the voters. My personal goal is to be at that point by the spring 2009 town meeting.” Blair emphasized that he was speaking as a selectman, but not for the Board of Selectmen, as the board has not yet discussed it.
Darren Magan of Warren Avenue asked what happens to gas and electric utilities if jurisdiction returns to Harvard. He cited news articles in the last year highlighting towns such as Lexington and Littleton, as well as Devens, that were providing significantly lower utility rates than available privately from NationalGrid. He wondered if the Devens utilities could be expanded to serve Harvard. Montuori indicated it would be difficult, but not impossible. He also indicated the rate advantages had diminished somewhat in recent months, but acknowledged they still exist.
David Cruise of Tahanto Trail likened the current process to a corporate merger, describing the difference between “friendly” and “hostile” takeovers. In a friendly setting, parties collaborate and share information, and he expressed the hope that this would be the norm, citing the concern that something could be missed otherwise. He also suggested it would be important not only to have collaboration between Harvard and MassDevelopment, but also with Ayer and Shirley, looking for opportunities to share information and resources. He cited the communication leading to the 2B vote as an example of the downside of low collaboration. Montuori reiterated MassDevelopment’s readiness to supply information, while reinforcing the importance of the towns’ understanding the difference between municipal and redevelopment operations.
Selectman Lucy Wallace asked if MassDevelopment has been involved in the Weymouth Naval Air Station redevelopment, where three towns have formed a corporation to manage redevelopment and operations. Montuori responded that some financing has been provided by MassDevelopment, but he is not familiar with the project. He mentioned that Pease AFB has a similar approach.
Former selectman Bill Ashe asked about the standard to which Salerno Circle is being cleaned. Montuori responded that it is being cleaned to commercial standards, because that is the intended use. It would be much more expensive to clean to standards required for residential or school use.
The Devens parcel analysis documents have been posted to the town’s website, www.harvard.ma.us.
