AI-generated transcript of City Council Committee of the Whole 09-05-23

[Nicole Morell]: Okay. 23-389, Committee of the Whole, meeting Tuesday, September 5th at 2023. Sorry, 2023. The meeting is called to order. Mr. Clerk, please call the roll.

[Adam Hurtubise]: Councilor Sagan, President Morell.

[Nicole Morell]: President, six present, one absent.

[George Scarpelli]: Meeting is called to order.

[Nicole Morell]: There will be a meeting of the Medford City Council Committee of the Whole on Tuesday, September 5th, 2023 at 6 p.m. in the Medford City Council Chamber on the second floor of Medford City Hall via Zoom. The purpose of the meeting is to discuss a proposed district improvement financing for Medford Square. The council has invited Director of Planning Development and Sustainability, Alicia Hunt, Interim Director of Economic Development, Victor Schrader, Mass Development SVP for Real Estate Planning, Claire O'Neill, and Victoria Storrs, President of Storrs Associates, to attend the meeting. For further information, aids, and accommodations, contact the city clerk at 781-393-2425. Sincerely yours, Nicole Morell, Council President. At state, I think we have a presentation from Director Hunt, as well as the consultants. And before we get started, is there any questions from the council? I just can't see right now. Seeing none, I'll hand it over to you both.

[Alicia Hunt]: Madam President, thank you very much. Alicia Hunt, Director of Planning, Development, and Sustainability. I am here tonight, as Madam President just said, with Victoria Storrs from Storrs Associates. She is the city's consultant on this. as well as Claire O'Neill from Mass Development, who is the funder of this project, and Victor Schrader is also here this evening. He originally initiated this project for the city. So this evening, actually, I'm gonna turn it over to Victoria to talk about this in a very big picture way. The part of why we're discussing this with the council is because in order to, in the end, adopt a district improvement financing, in order to do this, you have to pass an ordinance that language is under review with council right now, but the ordinance would be to adopt the district. So we wanted to give you all the opportunity to talk about it, to hear from the consultant, to understand what was going on here, to ask questions and to think about it. And it is our expectation that the ordinance will be on the council agenda in two weeks in that meeting. So we just wanted to have this now for a robust conversation about anything on this. So I'm gonna turn this over to Victoria.

[Stoers]: Thank you, Alicia. And thank you, Council President Morell, members of the City Council. I very much appreciate being invited here this evening to speak with you in person about district improvement financing. I've had the pleasure of meeting Councilor Tseng and also speaking with Councilor Bears, and it's a pleasure to meet the rest of you and to have this conversation. And before I get into my prepared remarks, I was back here in March, It was my first visit to the city of Medford, and we conducted walking tours, which were very productive for thinking of the policies and what could happen, because this is really about inviting the kind of development that the city wants to see. And did a lot of walking around the beautiful Medford Square. stepped out for an early dinner with Claire O'Neill from Mass Development before coming here, and I could already see some of the storefronts that had been either vacant or underutilized have been filled in just since then. And this makes it a great time to be considering district improvement financing as a tool for revitalization because you have some organic, natural growth and interest in business that's already occurring. And this makes it a great time to consider adding this tool to the things that the city can do. So we can move on to the first slide. I've structured the presentation to give you a very high level overview in just a handful of slides. And then there's more information that we can go through that provides more detail and certainly I'm here to answer questions, and all questions are good questions. So to begin, District Improvement Financing, or DIF, it's a tool for revitalizing Medford Square. This was the genesis of the original application to mass development for a grant for study and implementation. What the tool is really doing is giving you an additional opportunity to make happen the things that you have decided that you do want to see happen. The city has put a lot of effort into planning and public outreach and community outreach, and this is building on all of that work that you've already done. So as a financial tool, what DIF really does is it meets the goals of inviting new private investment on underutilized parcels, underutilized buildings within the city, within a portion of the city, Medford Square. It encourages the new business investment that's already occurring, and it lets you take action on the planning and vision that you've already accomplished. On the technical side, what the tool does is it captures a portion of the taxes generated by new growth. It spends that portion of the money on revitalization projects, public projects in Medford Square, such as traffic, bicycle and pedestrian safety. And the Diff Master Plan has a list that was thoroughly vetted and gone through with DPW and engineering. The private investment together with the public investments on things that make the square a good place to work, to live, to grow a business, creates a cycle of private and public investment in the desired projects. So the role of the city council in this tool, as Alicia mentioned, is to review and adopt a DIF master plan that's been provided to all of you along with some summary information. And the master plan directs the management of this financial tool. You adopt it by adopting an ordinance that formally activates the master plan and sets the tools in motion. And on an annual basis, you would appropriate the funds for the eligible projects in Medford Square. So you're still using your ordinary assessment, finance, budgeting, and appropriation processes. What's different from perhaps a reserve fund is that DIF gives you a structure and a dedicated revenue stream that you know you will have available to pay for those critical infrastructure projects. The requested schedule, why we're here this evening, is to speak with you, the committee of the whole, continue to talk about the tool, what the team has been recommending, what we see, hear from you and hear what you are seeing and answer your questions. We anticipate first reading of the ordinance at the city council meeting on September 19th. The second reading would be via publication. And then we are hoping that at your October 3rd city council meeting, you would be prepared to vote and ideally adopt the ordinance that activates DIF. And this timetable is important because under the statute that enables the tool, it acts on a calendar year. So by acting now, you're establishing baseline assessed values as of January 1, 2023. So any new growth that has occurred in this calendar year can be used to generate the revenue for the project, like traffic signalization. So the documents that have been made available to city council are the DIF basics one pager that summarizes the tool. And there are a lot of resources through mass development that will take you into as much detail as you wish. The one pager we thought was a good start. We summarize the critical terms of the proposed master plan in the Medford Square DIF summary. We created a podcast that I hope if you haven't had a chance yet to listen to, you will. And there's the draft DIF master plan. The actual ordinance is one page and is under review by council at this time. I wrote DIF secures meaningful revenue for public projects and created this slide really to make that visually clear. And when you have new growth, a portion of that tax revenue will go toward DIF projects, 50%, and 50% will continue to flow to the general fund for all of the city's other needs. What this graph shows is that lower rising dark gray triangle over a period of 30 years, the money to the general fund is also increasing substantially for all of your city needs because you're still getting all of the revenue from the current assessed value. So the general fund revenues are growing. The green strip, which is a little bit smaller, but also growing, is the effect of adopting the DIF and setting aside 50% of the new growth to fund your public projects. And that's about 7.7 million in the first 10 years. That is a meaningful amount of money, especially for starting projects, for some of the engineering, that would need to be done around infrastructure and traffic. And then over 30 years, conservatively estimated $81.3 million that the city would have available to spend just on the infrastructure and if administration itself, in addition to everything that's going to the general fund. So Medford assembled a terrific team of staff under Alicia. And of course, as Alicia said, Victor was instrumental in applying for and securing the grant. The team also has included DPW, engineering, assessing and finance. And so we've had input from really critical members of the City of Medford's team. And what the work was to get to this evening was to assemble a list of the public projects. The first question is, what are we going to do with this money? Why do we need it? Why do we want to try to set something aside? And so working with DPW and engineering, the list of projects is specifically designed to meet the needs of Medford Square and Medford Square as it's growing the way you would like to see it. We also created estimated development scenarios around specifically the three city-owned parcels that are underutilized, their surface parking for the most part. What happens if the city's vision for multifamily housing on those parcels is realized? On the private side, that throws off a lot of tax revenue that goes into the DIF and helps pay for, for example, the sewer expansion. And we drafted the DIF master plan using a template posted by Mass Development. It conforms to the DIF statute, which is Mass General Laws 40Q, for those who like to look up legislation. So it conforms to the statute, but also really reflects what the city of Medford is hoping to accomplish here. And it establishes the management and financial management going forward. That's an important component of the plan. We have provided information to all of you and will continue to do so, and also with the mayor. And we have created the schedule that I shared with you that we are hoping that you will have the ability to review and adopt the ordinance. At the risk of repeating myself a little bit, I do want to highlight the kinds of projects that DPW and Engineering came up with when we began talking about what could happen in Medford Square. And we looked at a lot of the MAPC and your other plans. You have a very rich fabric of goals and visions. And specifically to assist the development and assist the square with absorbing the potential of new households, one of the big focuses is traffic improvements. These are potential projects that could be funded with DIF. They don't need to be fully engineered at this time, traffic signalization, safety, roads and bridges. There's details in the document. Also service expansion and other aspects of utilities, including a utility needs analysis, if that is determined to be needed for the square. Land consolidation that might help if roadways should be realigned for goals that the city has. And also, and this is very important because while DIF is often used as an infrastructure finance tool, you can fund analyses, studies, and some of your internal administrative costs through those revenues. So you can have a source of funds to help the district be managed over time. So the... Remainder of the presentation is more detail about the tool and a little bit more detail about what Medford is doing with that. But I'd like to pause here and take any immediate questions, ideas.

[Nicole Morell]: Anyone? Any other Councilors? Councilor Caraviello.

[Richard Caraviello]: Thank you. Thank you for the presentation. Where's the funding coming for this project? Is it coming from us, the city, or through?

[Alicia Hunt]: Do you mean paying for Victoria's time, or it goes into the fund?

[Richard Caraviello]: It goes into the fund.

[Stoers]: When someone builds a new building, or significantly improves an existing building, their assessment goes up. This is going to happen with or without the DIF. And the increase in assessment is most of it is going to be considered new growth under Massachusetts state law. And so new growth is a portion of the assessment. So for example, you've got a $25 million building. Someone improves it by $25 million and you have a $50 million building. Tax revenues from that $25 million increase in assessment, a portion of that will be used to fund these projects. And the rest goes to your general fund.

[Richard Caraviello]: So if I understand this correctly, we're gonna be taking our new growth and putting into this, correct? 50% of your new growth. 50% of the new growth? Mm-hmm. Well, the one goes into the funds. And it's just the new growth in the district?

[Stoers]: Correct.

[Richard Caraviello]: Okay. Is there gonna be any financing for the existing buildings to expand our new developments out of this?

[Stoers]: This tool does not enable public financing of private projects. you can partner, but it's not like a tax abatement of any kind. So you assist the development by making public investments, by fixing your sidewalks, relocating a roadway, and the individual projects are not receiving public funds.

[Richard Caraviello]: So if we had meetings with the Chamber of Commerce and the business district on what's happening here,

[Stoers]: I have been working closely with Alicia about what's been going on in the district. So perhaps you can shed some light on that.

[Alicia Hunt]: We haven't discussed it. They would weigh in. Perhaps we've been talking about infrastructure projects like water and sewer, not like business beautification. What sort of things would you think we would consult them on?

[Richard Caraviello]: These are all going to be disruptions to businesses in the square area. So I think that they should know Well, if- And I know they're needed there. I'm not saying they're not needed, but I think the businesses should know what's happening here and what's coming forward so they can be prepared for this.

[Alicia Hunt]: So this would be taking the new growth from the redevelopment of the parcels. And there've been plenty of meetings about the redevelopment of the parcels. We've had public meetings. We have met with members of the chamber about that. This is sort of thinking about future projects that might happen in several years. So it would be premature to talk to them about that we might do a sewer project in five years. We would talk to them when we're actually getting, once we had the money in an account and we're saying, okay, now we're gonna start to redo pedestrian stuff, then we would talk to them about it.

[Richard Caraviello]: So when do we think funds will be coming into this project if we approve it?

[Stoers]: it would activate for fiscal 25. And because development occurs over time, I think we've got about 500,000 estimated.

[Alicia Hunt]: July of 2024 is when we would start to get money into the account.

[Richard Caraviello]: 24 and 25? Yes. There's nothing, we won't be realizing anything in the near future?

[Stoers]: Not this year.

[Richard Caraviello]: Okay, that's it for the moment.

[Stoers]: And that corresponds with the assessment calendar. That's not any kind of decision that this group was able to make. This is the assessment calendar for all new tax revenues.

[Richard Caraviello]: So we wouldn't, so the money wouldn't be coming out of the assessments until 24, 25.

[Kit Collins]: Correct.

[Richard Caraviello]: Thank you.

[Nicole Morell]: Councilor Collins.

[Kit Collins]: Thank you very much. Thank you for the presentation and for the materials that were sent to us ahead of time. I did get a chance to listen to the podcast today over reading through the materials. multimodal. communication strategy. So thank you so much for the overview. I don't have any questions on the specifics so far. I mostly just wanted to kind of confirm my understanding of the justification for the tool in general. I remember that you mentioned in the audio that you sent to Councilors, the general fund doesn't lose any dollars. It just foregoes certain dollars from new growth. And my understanding, the reason for essentially pulling those out of the general fund is because it perhaps wouldn't happen otherwise on the same time scale or as fast, and it creates this flywheel effect that advantages the general fund over time. Can you just speak to that, just for the benefit of residents who are thinking, why are we pulling this out? How does this benefit the general fund?

[Stoers]: Councilor Collins, you put that very well. I mean, we all understand there are so many demands on the municipal purse. I've worked on this tool with municipalities throughout Massachusetts and similar tools, especially in Connecticut. And it has ended up being for communities a very good disciplinary tool to say, we know we need these projects. It is very difficult on a year-to-year basis to balance everything that we want to do. And DIFF creates a fund that you decide to dedicate some of your revenues for those projects over time.

[Alicia Hunt]: Thank you. Actually, so one of the things that is that so masked, we've talked with Claire from mass development and Victoria around is also that developers, big developers understand this tool. And when they see that there is a diff on an area that signals to them that the municipality is prepared to reinvest in that area. and it says to them that the city is serious about this area and maintaining it and doing what needs to be done to see additional development in the area that we know that we would put out to bid. We're actually talking with Mass Development about some additional real estate support and support to do the RFP for the parcels, that this would signal to the larger developers that the city is really serious about this project here. But that it has the potential of saying to other developers, maybe you want to look at other parcels in Medford Square, ones that aren't on the market and aren't owned by the public, because the city is really interested in redevelopment in this location. So that's some of where this came from. Part of why we're looking at this location and not a different part of Medford is because we do own these parcels. And so we can actually drive the start of the redevelopment of the development work here. Whereas in some of the other areas that need more development work, we don't own anything there. So it would be harder for us to sort of launch and say, well, we know what's predicted. The modeling that we have right now is based on the redevelopment of these parcels. plus some additional growth. Some developers have actually, since we started doing those Medford Square meetings, we've had a few developers reach out to us and property owners and say like, could I add another floor on my building in Medford Square? And that's exactly the kind of stuff that we've started to take into an account. And honestly, there are some properties here in Medford Square that maybe if a more forward thinking developer wanted to come in and move into Medford Square, we wouldn't mind seeing somebody buy some of these and do some more interesting things. So I don't want to name names, but.

[Nicole Morell]: Thank you. Thank you, Councilor Collins. Any other questions? Vice President Bears.

[Zac Bears]: Thank you, Madam President. You kind of answered my question just then about how we modeled the estimates of where we'd be in 30 years. Does the model assume sale of the public land?

[Stoers]: That's an excellent question. And we asked that very early on and we spoke with assessment and finance. The trigger that makes it financially viable is that the activity, the parcel becomes taxable. And internally it was confirmed that the usual process in Medford would be even if the city owned it, if it was developed on a lease with a private entity. it would owe taxes, and those taxes could be captured and used to fund critical projects. Right, great.

[Zac Bears]: I just wanted to make sure, because I think that's a, you know, we all think there's tons of room for density in Medford Square, especially, but I think the question of sale or lease is still up in the air, or at least it is for me. So that's great to hear.

[Nicole Morell]: Thank you, Vice Mayor Barras. Councilor Tseng.

[Justin Tseng]: I think Councilor Collins and Councilor Bears hit the main things I wanted to touch on. We had a great walkthrough a few months ago. Thank you so much for taking that time and spending it with us, by the way. And from that conversation, really, I think the gist of it was, and I think what really kind of shaped my thinking about it was what's the difference between pursuing this and not pursuing this and keeping you know, keeping on track that we are going at. And from what you've said to me at that walkthrough and tonight in the chambers, and what Director Hunt has said as well, I think it seems like there's a strong, this is a tool that has a strong signal to, it serves a strong signal to developers that, you know, we're looking at developing the square more, bringing welcoming new projects in. The financial aspect of reinvesting in the square seems to be a very big draw. Would that be correct to say?

[Stoers]: That is absolutely true. There are many communities that have lovely downtowns that need both public and private, but often especially public reinvestment. Again, the many demands on the public purse where a city makes a commitment to improving the public infrastructure, the sidewalks, is there enough sewer capacity for a large building? You can have a pipe, but it's not at the capacity that you want. You don't have enough clean water going in. The DIF is a way to make a very clear statement that you're committed to inviting the right kind of development in the places that you want it, by co-investing along with the private side.

[Justin Tseng]: Thanks. Yeah, I think that's an important kind of point to summarize again for folks who are watching at home and for folks who are really interested in what a DIF might be. I think something else that we touched on when we were doing the walkthrough that might be in the podcast as well, which admittedly haven't had time to listen to yet. But something that I think would be a draw for my colleagues on this side of the rail is how involved the city council is in the diff process. And oftentimes that might maybe be annoying for some developers, but I do think You know, the level of cooperation that we would see between our offices is something that is really positive and democratic, gives some folks a lot of say in the process as well. I think that Some folks might be a little wary of some developments where given how historic some of the properties are. Now, I think that might be a misdirection of thinking. Would you be able to kind of speak to that and kind of like reassure some folks about that point?

[Stoers]: I can certainly reassure all of your historic considerations, your planning, your zoning, All of that remains fully in place. So the DIF does not enable the city to step outside of your rules and desires. And do you want to speak to that as well?

[Alicia Hunt]: So I just wanted to make sure that I understood. You're asking, like, does it change, like, our historic protections and stuff on the milling? Right. So it doesn't change what you're allowed to do so much as that money goes into the fund, and it's like a private capital fund just for Medford Square. So then the DPW, the city engineer says, you know, you're building these new buildings, we need to increase the water and sewer capacity into the square. This is a fund that would be used for it. Or one of the things that we've talked about is that there are some ideas around Medford Square traffic intersections that would actually be very expensive to implement. Some newer technology that would be interesting and might help with that intersection This would be a fun that you could draw from it. However, the way the diff is written and it is that you must, so we would, I actually, I hadn't expressed this before to Victoria, so I think if I'm getting this analogy, it feels a lot like the way the CPA works right now, right, where the CPA, as you all know, later this evening, gets an application, figures out an idea, wants to fund a project, but then they have to bring it to the city council, and the city council has to approve the appropriation. In this case, it would be the people managing the DIF, which we have envisioned to be city staff, my office, DPW, would figure out this is the project we want to do, and they would bring it forward to the city council, and the city council would have to vote to approve the appropriation. So it's a very parallel process to that, only it's not a board of residents who would review it, it would be the staff saying, this is an infrastructure project that is envisioned, the type that's envisioned in the DIF, it is in the area that is allowed for the DIF money to be spent on, and they would propose it, and instead of coming to this body and asking for a bond or free cash, they would ask for an appropriation from the DIF. that that's the analogy works for you. I just I had never come up with the analogy of the CPA before, but I feel like that's the right kind of set that answer.

[Justin Tseng]: Yeah. I mean, I think a lot of this is about kind of cutting off false narratives before folks might be worried about them. And so to set the record straight from the get-go, I think all of that really helps with that. And I think through your answers, I think it shows us that there's really a lot of dialogue and a lot of cooperation that goes into something like this, which is really exciting.

[Stoers]: Yes, and Councilor, since you used the term false narratives, this gives me the opportunity to say, this is not a new tax. This is not a new tax increase. Most parcels within the DIF district wouldn't even necessarily know it unless they were to make a capital improvement to their property. And then what they would see is an assessment increase exactly the same as they would if DIF were not in place. So it really operates within the background. The parcel owners are not going to pay any more money than the otherwise if they're not being assessed. So that's a false narrative that I hear a lot, and I'm always happy to say, DIF is not a new tax.

[Nicole Morell]: Thank you. I just have two questions. The first, I mean, I think my colleagues have really kind of leaned on it, but I will just say it once more. Understanding that the incentivization that is referenced in this is the fact that there will be improvements in the area that this is used for. There's no other incentivization or tax breaks or things like that. ensuring that funds that come from the new growth in this area will be put back into the area.

[Stoers]: That is correct. And if you'll forgive me, President, I will footnote, if down the road the city were to decide to use an incentive program, you would be allowed to. But that's not what we're here to talk about. That's not what the DIF does. It simply doesn't rule it out. So you continue to have those other tools available if you ever do want them.

[Nicole Morell]: Do you have any examples of areas, squares that have used this that you could reference or share with us?

[Alicia Hunt]: Sorry, this is Claire O'Neill for Mass Development, who's more familiar with other communities that have done this. Thank you.

[SPEAKER_08]: Thank you, President Morell. Good evening, members of the council. So my name's Claire O'Neill, Senior Vice President of Real Estate Planning at Mass Development. We were very happy to provide this technical assistance to the city of Medford. In terms of other communities that have used this tool, one of the ones that I'm most familiar with, and I live in a neighboring community, is actually the city of Worcester. So Worcester used DIFF as a foundational tool in the redevelopment of the downtown. It was incredibly impactful. not only to spur developers coming into town and seeing that the city was really putting money into the specific area, but it also helped with incredibly specific infrastructure projects. Something that I also wanted to mention this evening is that not only is DIF an economic development tool, but it's a signal to your economic development partners, whether at the state level, the federal level, that you are investing in this area and you are putting money into this area. And so it is incredibly helpful when they are reviewing different grant applications that you might be making in concert with putting different funds in place to see that the city is making very definite investments. And that might be related to the infrastructure grants. It might be related to private projects, whether it's affordable housing projects that are looking for LIHTC credits and the state is looking to the community to show the community's skin in the game, or it might be using the underutilized property program, which is another program managed by mass development on behalf of the Commonwealth. So, you know, this is a very good way of community using an economic development tool to make real investment in a specific area of town.

[Nicole Morell]: Thank you.

[SPEAKER_08]: You're very welcome.

[Nicole Morell]: I have one question then probably for you, Director Hunt, specific to Medford. Just thinking about the edge of Medford Square, I don't know, I haven't seen the map of what exactly would be included, but understanding that we talk about infrastructure investments, knowing that the edge of Medford Square is a bit of a, the roadways are at least a jurisdictional nightmare. Is there anything that has to be considered from that point of view?

[Alicia Hunt]: So I'm just going to ask you if one of these slides is the map, or I would have to go to another document. But in the big picture way, we would still have to be paying attention to the ownership of the roads and who has the right and ability to do stuff. But we have found as a general rule that if we can put planning money into something that's on state property, they will often then build it. And I'm seeing that in a smaller scale with things like we actually put seed money into Clippership Connector, which is finally going to construction this fall. But there are other projects that if we, while we don't own and we can't control Route 16, for example, if we did design work on it using this money, then in theory, the state would be more amenable to moving forward with it. it's just sort of a in a big picture way. We would have to be careful about the jurisdictional and like what money can we actually can we spend any money on a state road or does the state have to do it?

[Nicole Morell]: Okay. Thank you. Any other questions from Councilors at this time?

[Alicia Hunt]: And I will just say that the four page document that we sent you has the map in it. Okay, so that's it. If you wanted to just see the easy the met the diff summary that really probably has everything you need to have a general understanding of what's going on.

[Nicole Morell]: Thank you. Councilor Tseng. Councilor Tseng.

[Justin Tseng]: Thanks. I realized that there is something in our package that I don't think the general public has had a chance to see, which is the model for the chart. I think it's appendix A in the master plan with estimates of what revenues might look like. Would you feel comfortable showing that to the public?

[Adam Hurtubise]: Maybe putting it on the screen or something.

[Stoers]: I'm very comfortable showing this to the public. I created this document. It is public. It belongs to the city of Medford. The chart is in a rather complex Excel file, and that gets very ugly when you're trying to put it on a screen in this kind of a situation. I think Alicia is, what Director Hunt is looking for is perhaps the PDF of the DIF Master Plan. We can scroll down and that, it wouldn't be especially readable from where I'm standing, but it should make the view of it available to the public.

[Adam Hurtubise]: Yes. I was just gonna open it up.

[Justin Tseng]: Yeah, I was thinking generally if um if even if we were just able to see the gist of that chart, um 26

[Adam Hurtubise]: Trying to make it a little bigger on my screen so you can see.

[Justin Tseng]: Yeah, it's a bit hard to read, but I think there is a point here that's maybe important to make, that I think when we think of the alternative when we don't do diff, we don't realize that we might be limiting new growth as well. And so the revenues we capture from new growth, we can kind of see in this model, like how different the C column is from the A column. And if you could walk through that really quickly.

[Stoers]: If you'll pardon me, I'm going to get my reading glasses.

[Unidentified]: Of course.

[Nicole Morell]: Christopher, do you want to address your question now or you're late?

[Adam Hurtubise]: Yeah.

[Zac Bears]: I noticed there were some properties that were on the main streets that weren't included in the map, and I know they're residential properties, but is that essentially why they weren't included in the district? Is it because they're residential? There was a couple on Salem Street and maybe one down on Main Street.

[Stoers]: Some of the, I believe the municipal properties we didn't, We didn't wanna have all of those because they are not going to be revenue generating.

[Zac Bears]: Yeah, it was just, it was like the corner of Ashland and Salem. It just seemed like there were some exclusions on main drags.

[Stoers]: Yeah, there was, we were looking at the map as the area where development was already occurring and could be catalyzed by revitalization of the three underutilized city parcels, and also as the area where public investments were desired or would really be needed to support the growth in the households.

[Adam Hurtubise]: Oh, I see.

[Alicia Hunt]: He's saying how this comes down to that. Those are residential properties.

[Adam Hurtubise]: Sorry.

[Stoers]: So Councilor, the residential properties, because they're not going to be generating revenues, in certain circumstances they were excluded.

[Zac Bears]: Okay, and it was basically just you were looking at, were you looking at the use of the parcel or are you looking at the zoning district when you made those determinations, I guess is really my question. The use. Okay, thanks. Do you wanna?

[Stoers]: Yes. So, what isn't especially visible is, Among these columns, we have the first one, it's the end of the fiscal year, your fiscal year ends each June 30th. The next column is the total receipts if you do nothing. If DIF isn't implemented, this is the estimated tax revenue based on the current value and modest growth factors that you would expect to see over time within the Medford Square District. Column A, which is the second column with the dollar signs. Column A is what would be going into the general fund for the city if you do nothing. And it's actually the same as the total receipts, because if you don't do the diff, everything goes into the general fund and the city makes its decisions. Column B, which is just after that first vertical line, tax receipts from diff growth as a driver. And that's really the column that is creating the opportunity here. If div is adopted and you get that catalytic effect, that virtuous cycle of public and private co-investment, then you're getting more revenues, more new tax revenues from that new growth than you would have if you did nothing. So the next column, I have the formula C equals B plus A. And in that column, that's with the diff, with the catalytic growth from the co-investment, you're getting all of the revenues that you would get if you did nothing, plus revenues starting at a modest 19 million. This grows over time by year five, an additional 1.46 million in tax receipts. only half of which are estimated to go into the diff. And so column C is what is available. And that gets up to 5.7 million compared to 4.3 if you did not have that virtuous cycle catalyzed by the diff. And then the last two columns, D and E, they're equal because they're showing, well, they're not equal. they're showing what goes into the general fund. You're getting all of the revenue currently from the current assessed value. You're getting half of the revenue from the catalyzed investment going into the general fund. So if you're looking at the very top line of column D, that's $3.8 million. It's a little bit more than if you don't do diff because revenues grow over time. By the end of year five, that's $5 million going to the general fund compared if you you know, scroll over in your mind to 4.27 million if you don't do the diff. And that's a substantial change. What goes into the diff because it's only 50% of new growth is a smaller amount, but it is a very meaningful amount. We're looking at 19,477,000 by the end of year five, 730,000. And then it jumps up over conservative estimates over 1 million within a few years. And the reason the numbers grow is essentially new growth within the DIF is cumulative. So you have a million dollars, $5 million of new growth in year one, you have 5 million in year two, you have 10 million that are generating your revenues. And that's why you see the growth in column E, which is the allocation through the DIF management. into the funds for your public projects. And I can go into much more detail about those numbers, but only if you ask.

[Justin Tseng]: Could you go quickly, I mean, could you give us a quick explanation about how you arrived at these numbers?

[Stoers]: Oh, yeah, absolutely. I was provided with the current assessed values and the current tax rates and the division between CIP and residential and some very modest escalations in terms of revenue, likely if you do nothing. So that's the base case is where you are right now. I created the estimates for growth from DIF. I started with the three city parcels under much discussion and envisioned on two of the sites, a mixed use largely residential, units up to seven stories, I think 77 units per apartment. I ran out some cash flows based, I do housing and affordable housing pro formas as part of my business, and created an estimate of what that future assessed value would be. I checked those future assessed values against market properties in Medford and nearby, and came up with potential assessed values from those major private investments that the city has been talking about. And I applied the same escalation factors to a modest tax rate. There is no value escalation in the buildup scenarios. Once the new growth is determined, it just stays at that number. That's depending on your assessor's policy. So we were just very conservative. The build-out scenarios were really focused on the three underutilized city-owned parcels. And as I mentioned earlier, we did check that a lease would also generate tax revenue. It doesn't have to be a sale. The city can make its own decision in its own time. Also having spoken a lot with Director Hunt, and as I said, walking around the city, we made some estimates for modest organic growth based on the kinds of questions, can I put another story on my building and add some apartments? And so very conservative estimates that you'd have that kind of organic growth going on at the same time. So while I did not estimate additional catalytic $30 million investments or assessments other than on the three city owned parcels, the organic growth from businesses investing and reinvesting on a smaller scale is estimated throughout the diff. And it could be, you could see more investment, you could see less, but I talked with the assessor and he was pleased that I was being very conservative.

[George Scarpelli]: Thank you. Thank you for presentation. Just a couple of questions. I know that I know I heard you, I apologize for being late, but I was listening on my phone. And there are some limitations that we can't proceed with if we go with the diff that other communities have used. I know that you said that the private-public partnerships can't be entertained anymore. I believe that's what you said.

[Stoers]: I did not say that, I'm sorry if I wasn't clear. They can absolutely be entertained. What you can't do with DIFF, you'd have to use a different tool, is reduce somebody's taxes.

[George Scarpelli]: Okay, so what other communities similar to Medford have used this process?

[Stoers]: There's been a lot of redevelopment in the city of Somerville. I know I used to live in Somerville, it's unrecognizable to me at this point. Quincy has very successfully revitalized its downtown over time with DIF integrating renovation and new buildings with its existing historic structures and implementing infrastructure projects.

[George Scarpelli]: So is there a list of communities that have used DIF?

[Stoers]: I wish, and Ms.

[SPEAKER_08]: O'Neill will explain. Thank you. Originally, when DIF was first brought into the state of Massachusetts, all of the DIFs that were proposed by a community had to go before the Economic Assistance Coordinating Council with the state to be approved by the state as well. Between, when was it? 2015, yes. Around 2015, that requirement was removed. Adoption is purely a local process at this point. So at MassDevelopment, we try to keep tabs on which communities are adopting DIF. We often provide assistance to them, such as this, to help them think through the process. Ones that I know are interested in starting the process soon include the town of Barstaple, looking at using DIF for the Hyannis downtown district and public improvements there. We've also worked somewhat with the City of Gloucester is interested in it as a tool. The City of Gardiner is looking to use it. I'm trying to think of smaller communities there. The City of Brockton has used it very successfully. Again, focused on residential parcels available for development close to their transportation links. So there isn't necessarily a formal list because it's adopted at the local level, but I've given you some of the examples.

[Stoers]: Victoria can add to that as well. I can add to that. I've been working with mass development on DIF for a little over five years now. And through them, I've worked with city of Attleboro, city of Amesbury, town of Dedham, town of Plymouth. separately with the town of Easton. And Easton was interesting because they had a very deep need to increase their sewer capacity. They had invited multifamily development down near their transit area, and their DIF is expected to pay about half of the costs of the sewer so that residents in other parts of the town are not paying for water and sewer expansion. in a part of the town that they don't necessarily go to. I do know from having written case studies for mass development, and these are all on their website, I think you mentioned Taunton, Long Meadow and East Long Meadow did a joint diff because there was a great site for redevelopment that was in both communities. I think that was the three case studies. And then it had been used more on the case But it's, you know, it's a great question because you don't see the headline. And in fact, I periodically search on the internet for other communities who've adopted it. And often the reason you know that it has been adopted is that there is a public and private reinvestment going on.

[Nicole Morell]: Thank you.

[Kit Collins]: Thank you, President Burrell. Thank you so much for that. And just very quickly, while the chart is still up on the screen, I just wanted to mention when I look at this and see a lot of columns, I see a lot of numbers. To me, it seems like the important thing, at least from my perspective, to look at is comparing column A to column D, which, and correct me if I'm wrong, seems to compare. deposits to the general fund if the diff is adopted versus if it's not. And when I think about this tool in the context of our goals, revitalizing Medford Square as a hub for resiliency and community and business development, and as a source for increased tax receipts to the city, I think that what nobody wants is to privilege any one area of the city over another, but to this, it seems like this model is showing us that overall receipts into the general fund will increase, especially when you look at it 5, 10, 25 years out than if this tool were not implemented based on the modeling. But it sounds like it's based on using this in other cities.

[Stoers]: Councilor, you put that very well. Thank you. Vice President Bears.

[Zac Bears]: I think I would actually go in for a similar approach as Councilor Collins here. Once we start putting up 30-year charts and seven-figure numbers multiplied by whatever 25 of them on a screen, it can get a little overwhelming. But essentially, my understanding of this is that this tool assumes that all else equal, if the city sends a signal, we're going to put half of the, we're going to define a little map area that we want to improve. In this case, Medford Square. The city commits to take 50% of any new revenue that comes in in that area from new construction to make improvements in that area. And the assumption is that that sends a signal to the property owners in the area or people who might wanna buy parts of parcels in the area that, hey, come here, we're gonna have nicer roads, we're gonna have nicer sewers, we're gonna have nicer public infrastructure, you should build here too. And that that will increase revenue more than if we hadn't sent that signal. And we have the special case of also looking at redeveloping some public land that might even be able to accelerate or be a catalyst for that. So essentially, if we send that signal and nobody responds to it, nothing changes. We just are where we are and are where we were going. If people do respond to that signal or we do have a successful project, then we have a revitalized square with more public improvements and also private development has decided to come that may not have otherwise come in. Is that basically what this tool is designed for? Okay, cool, because I think, you know, and essentially you've made a set of assumptions saying, hey, we think this seems like a good candidate for it. New growth is happening. We have these parcels. That's how we came up with these numbers. They're just estimates and then we'll see how it turns out. But if the investment doesn't come, there's actually no major issue other than that there's a fund to, you know, the money was still going to be in the city's coffers to use for improvements that it may have made anyway, if the DIF didn't exist. Okay, cool.

[Justin Tseng]: Thanks.

[Nicole Morell]: Thank you.

[Justin Tseng]: I think Councilor Collins asked my question. I mean, I think there is a concern that pursuing this model might privilege one district over others, and I think there are a lot of moving parts here, but it seems like if this model does come to be true, then the new growth that we get from this can be reinvested. I don't want to take too much time because I know we have a general meeting to go to, but I know I know there are folks at home who definitely have questions. I would encourage them to reach out to the city, to reach out to Director Hunt, and we'll get the answers to those questions.

[Nicole Morell]: Thank you, Councilor Tseng. And before we get to Councilor Caraviellol, to that point, this will be coming before the council many more times, a couple more times, depending on how votes go. So there will be more opportunities for questions from the council, questions from the public. Councilor Caraviellol.

[Richard Caraviello]: Thank you, Madam Mayor. One last question. What happens if going down the line The city says, hey, we need the money for x, and we don't want to put the money into that. Where does that leave us?

[Stoers]: Two things. First, if you have a contract to lay a sewer pipe, you have to make good on that contract.

[Richard Caraviello]: I'm not saying that. What happens if 10 years down the line, we've made improvements on things, and the city's saying, hey, you know, there's a funds a little tight and the times might get tight. Are we obligated to always put 50% of the new growth into this?

[Stoers]: As long as the DIF exists, you are obligated to put the 50% of the new growth in. There are two back doors that speak directly to your concern, councilors. One is that annually, the city can sweep excess funds from the diff accounts back into the general fund. And that would be a decision that diff management would look every year at are we covering our costs? Are we able to, you know, pay our share of the signalization? And if the answer is yes, and look, we have 2 million left over that is uncommitted. then they can recommend that that be swept into the general fund and used for those purposes during a hard time.

[Richard Caraviello]: So we would have to go before the group, the other group.

[Alicia Hunt]: So whoever's managing it would recommend that to the city council, that this money should get put back into the general fund. So it would probably be a decision made with the budget director, whoever's managing the fund, the finance director. But then it would be a vote of the City Council that would take that money and put it back into the general fund.

[Richard Caraviello]: Thank you.

[Nicole Morell]: Thank you, Councilor Caraviello.

[Stoers]: I did want to follow up. Since DIF is enacted by the City Council, and I'm not saying I've seen this happen. I would not want to see it happen. But if you discover that this tool 10, 15 years down the line has already accomplished what you want, then you can legislatively end the diff as long as you don't owe anybody money from it. So it remains a tool for the city council to use. You can sweep it on the recommendation and if it's an important use for the city and you can end it, you could also amend it. Again, because it's a local process and you're a city council, you meet regularly enough that making changes down the road remains possible. So this becomes your tool. Thank you.

[George Scarpelli]: Thank you for clarification. I think that was a great question for the fact that we don't have a very stable financial outlook so far in Medford. We don't have a thriving you know, new growth process. We don't we don't. We're not seeing much in the sense that, um, where communities you've talked about Quincy Somerville, they have new development going on across the community that if something like what Councilor Caraviello did say if we're locked in and we have a concern financially, whether it's understanding that we have control to stop something or grow something, I think that's a concern. So I just wanted to bring that up. I think that was a great point. So thank you.

[Stoers]: Thank you, Councilor. When I took the tour sponsored by Mass Development with the City of Quincy, they pointed out what it had looked like before the diff. So you're at the beginning, and that's a very good point that you're making. You will continue to be thoughtful about how you use this tool and how you review it. And I very much appreciate that you've invited me here to help with your review. Thank you.

[Alicia Hunt]: As we're ending, I was just gonna share. So Victoria is not local anymore. So she is here overnight. She's around tomorrow morning. She's very accessible via Zoom meetings and phone calls. When this comes back in front of the council, she'll be remote on Zoom. But if for any reason somebody wanted to walk around the square or whatever, she is here tomorrow morning before she goes back home. So I just wanted to share that. Thank you.

[George Scarpelli]: present receive and place on file.

[Nicole Morell]: Thank you. On the motion of Councilor Scarlatoiu, do you want to receive and place on file and adjourn? Adjourn, please. Thank you. Motion of Councilor Scarlatoiu to receive and place on file and adjourn, seconded by Councilor Collins. All those in favor? All those opposed? Motion passes, meeting adjourned.