Town of LexingtonEconomic Development Summit

2017

Joint Meeting Board of Selectmen & Planning BoardPresented by the Economic Development Office and EDAC – June 22, 2017

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Meeting Objectives

1. Data review on the Town’s commercial environment

2. Discuss options the Town might consider to support and enhance the commercial environment

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Population = 32,700

Average Age = 45.3

Owner occupied = 75%

Largest group = Female 45-54

Smallest group = Male 20-24

Lexington’s Profile

Source: ESRI Business Analyst, 2017

100%

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Lexington’s Spending Profile

Annual Lifestyle Spending Total Households

Travel = $67M (three times more than the nation average)

Education $56M (three times more than the national average)

Consumer BehaviorDog = 37%Cat = 21%

Source: Esri 2016 Business Analyst

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Daytime Population: 38,747

Largest Sector: Science and Health Care

Lexington, Workforce

Top Employers in Town:

Company Name Product/Function Employees

MIT Lincoln Laboratory Research/Communications 3,500

Shire Pharmaceuticals Biotech & Pharmaceutical 2,400

BAE Systems Sensor Systems 530

Brookhaven at Lexington Health Care 220

Cotting School Education 182

Beth Israel Deaconess Medical Center/Children's Hospital Health Care 175

Lexington’s Organizing Principals

Lexington

Education

PhysicalCharacter

Economic Health

Diversity

Services

Environ-ment

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Challenges

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CostsMajor school and public safety investments will reduce the Capital Stabilization Fund to zero in by 2024

High Property ValuesFactors: Regional housing storage, strong demand given proximity to inner core, reputable school system, and desirable housing

Stagnate Commercial Factors: Limited commercial land, restrictive zoning, and shifts in market preferences have contributed to a decrease in proportion of commercial values

Lexington’s Proposed Capital Projects & Costs

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$200 Million in Projects

6 school-related projects = $142.2M2 public safety projects = $45.8M1 community center project = $8M

Future projects may also include: A new high school or renovation & additional capacity for elementary

Proposed Debt Mitigated with Capital Stabilization Fund

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Planning ahead & saving a

portion of the annual tax levy led

to $26M

Current projects will deplete the

Capital Stabilization

Fund by FY2024

Impact on Residential Tax Bill

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• Board of Selectmen do not have a written policy on the range targeted for increases• Annual Average Increase 2.8% for the next 9 years (assumes FY16 values as constant)

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9,1099,584

10,03210,441

10,906

11,481

12,191

12,95513,506

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year

TAX BILL FOR AVERAGE SINGLE-FAMILY HOUSELexington 2009-2017

Single Family Tax Bill

48% increase between

2009 to 2017on the average SF

tax billFY17 = $13,506

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

PROPERTY TAX LEVY COLLECTED 2006 - 2016RESIDENTIAL CIP

Residential $129M

CIP$33.7M

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2010 2011 2012 2013 2014 2015 2016

Levy Growth from New Residential Construction $1,206,197 $1,112,487 $1,222,142 $1,400,099 $1,451,904 $1,686,061 $1,712,987

Levy Growth from New Industrial/Commercial Construction $206,414 $1,208,359 $960,174 $1,297,354 $635,052 $408,312 $197,429

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

Fiscal Year

NEW GROWTH TREND FOR COMMERCIAL vs. RESIDENTIAL2010 - 2016

Levy Growth from New Residential Construction Levy Growth from New Industrial/Commercial Construction

Lexington Commercial Compared Source: MA Department of Revenue

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0

500000000

1E+09

1.5E+09

2E+09

2.5E+09

3E+09

3.5E+09

Bedford Burlington Lexington Waltham

Commercial, Industrial, and Property Assessed Values 2009 - 2016

Bedford, Burlington, Lexington and Waltham

2009 2010 2011 2012 2013 2014 2015 2016

Percent Increase since 2009

Burlington = 24%Waltham = 21%Lexington = 14%

Bedford = 1%

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12% CIP Value, FY16

Decreased by Half

1986 CIP Value = 24%

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1986$0.31

2007$0.20

2017$0.21

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Existing Built Environment

Total number buildings:

10,693

Total number of commercial buildings:

463

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85%

4%

9%

2% 0%

Lexington's Real Property Classifications FY17

Single Family Homes

Commercial/Industrial Buildings

Condos

Two-Family and Three Family

Apartments/Multi-buildings

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Lexington’s Commercial Districts

Total Town Area: 16.6 Square Miles

Commercially designated land:6%(approx. 1 square mile)

Commercial Construction

• 1960 – 1970’sMost commercial built

• Significant drop after the 1980’s

Change in Land Use Polices

Prior to 1980s

No FAR restrictions

1984

Restrict height to 2 stories in Town Center

CM & CRO FAR Limited to .25

By Planning Board

1987

FAR changed to 0.15 by Citizen’s Petition

Adopted “Transportation Trip

Wire” = High Threshold for

Mitigation

2009

FAR in the Hartwell increased to .35

Source: Town Meeting Members Association, Warrant Information Reports21

1970’s (what we have!)

• Single use buildings

• No residential nearby

• Driving a car only option

• No sidewalks

• More square feet provided

Today

• Mix of uses

• Transportation alternatives

• Walkable

• Food, entertainment, services

• Residential supports project

• Less square footage needed

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Lack of Investment

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Retail ChangesLoss of Retail Establishments

• 86 = Retail Trade, 2002

• 65 = Retail Trade, 2012

Source: US Census

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Lexington Tax Rate

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2016 Tax RatesCommercial = $28.40Residential = $14.60

Small & Independent Businesses Suffer

Adopted in 1980

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FY2016

Square Feet Assessed Value %of AV

CD = PLANNED COMMERCIAL

2,212,250 $410,691,000 40%

CM = MANUFACTURING

1,854,680 $250,817,000 24%

CRO = REGIONAL OFFICE

1,216,600 $156,446,000 15%

CB = CENTRAL BUSINESS

488,300 $85,816,000 8%

CR = RETAIL SERVICE

425,130 $74,172,000 7%

CLO = LOCAL OFFICE

273,360 $28,862,000 3%

CN = NEIGHBORHOOD BUSINESS

104,410 $18,485,000 2%

CS = SERVICE BUSINESS

49,640 $7,439,000 1%

TOTAL 6,624,370 $1,032,728,000

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$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

CD CM CRO CB CRS CLO CN CS

Total Assessed Value Per Commercial District2007 vs. 2016

FY 2007 FY 2016

Value Per Commercial District 2007 vs. 2016

$410MPlanned Commercial Districts FY16

$250M Manufacturing (Hartwell) FY16

Modest redevelopment in CM since 2009 with change FAR at 0.35

Options to Enhance Commercial Potential Today

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Illustrative Projection of Potential Tax Revenues Eliminating FAR Control

Hartwell (CM) Forbes & Bedford (CRO) Both Areas

Additional Square Footage (Gross) 2,679,429 2,717,608 5,397,037

Average Assessed Value/Gross Square Feet $175 $175 $175

Additional Value 468,900,075 $475,581,400 $944,481,475

Tax Rate (FY16) per $1000 of Additional Value $28.40 $28.40 $28.40

Additional Gross Annual Taxes at "Build Out" $13,316,762 $13,506,512 $26,823,274

Annual Absorption Rate 10% 10% 10%

Annual New Square Footage (Gross) 267,943 271,761 539,704

Average Assessed Value/Gross Square Feet $175 $175 $175

Annual Additional Value $46,890,008 $47,558,140 $94,448,148

Tax Rate per $1000 of Additional Value $23.63 $23.63 $23.63

Illustrative Annual Growth in Per Annum Gross Tax

Revenue $1,108,011 $1,123,799 $2,231,810

Balance

Lexington

Education

PhysicalCharacter

Economic Health

Diversity

Services

Environ-ment

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Hartwell, Forbes, & Spring

Hartwell, Forbes, & Spring

Invest

• Hire a real estate analyst and coordinate with property owners run proformas to test zoning alternatives

• Contribute to the REV operations annually

• Develop a brand identity for commercial areas and coordinate with a marketing consultant – life sciences cluster

• Invest in transportation infrastructure

Adopt New Zoning

•Eliminate the FAR in the CM and CRO and allow for mixed use by-right

• Support private efforts that included infill development and housing options

Prioritize Staff Efforts

• Identify a team who can champion economic development with EDAC and EDO

• Create a life sciences collaborative with local residents who are leaders in the field to inform Town officials of trends in the industry

• Explore TIF, DIF and MassWorkGrants to fund transportation infrastructure

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Center & East Lexington

Center & East Lexington

Invest

• Redesign the Economic Development website showcase the Town's assets, consolidate resources, and establishes a strong online presence

• Hire a retail market consultant to craft a retail strategy tailored to the regional retail landscape and analyzing expected development potential and retail trends for the Center and for East Lexington

Adopt New Zoning

• Amend zoning to allow for sidewalk sales outdoor seating in the Center and East Lexington

• Allow for more height in the Center and East Lexington consider a reasonable height 50’

• Consider eliminating or reducing parking requirements Center & East Lexington

• Revise zoning in the smaller commercial districts to allow for current day uses such as breweries, juice bars, and food halls

Prioritize Staff Efforts

• Create a Lexington Public Arts Committee

• Work with local businesses to host an "open street" event

• Develop a plan to designate and create a public innovation space in Lexington Center and East Lexington that allows the public to introduce new and enlivening activities and entrepreneurial events

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Trade-offsBenefits

• Increased Revenue

• Alleviate Tax Burden for Seniors & Working-class residents

• New Housing Options

• Support Local Businesses

Impacts

• People & school-age

• Traffic

• Alter Suburban Character

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Questions and Discussion

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FAR @ .15

Model Existing Building

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FAR @ 0.9

Model Existing Building

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