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Tuesday, March 29, 2011

Public Hearing On Assembly Square DIF Scheduled For March 31st

This Thursday, March 31, the Board of Aldermen will be holding a public hearing about the sale of municipal bonds ("DIF Bonds") to support development at Assembly Square, in anticipation of a final vote on Thursday, April 14. This meeting will be held at 6pm in the Aldermanic Chambers of City Hall.

The following information is part of an email floating around encouraging residents to attend the meeting and voice their concern. (The opinions and views expressed in this email belong solely to the author and do not reflect the views of Ward 5 Online or Courtney O'Keefe.)

It reads, "In terms of its potential as a source of tax revenue and jobs, Assembly Square provides Somerville with its most important economic development opportunity over the next 10 years. Over those next 10 years, the Metropolitan Area Planning Council projects that Assembly Square development will add 4,100 new jobs to Somerville's economy. Upon buildout (which will take more than 10 years, the City projects that Assembly Square development will add some $13 million to the City's annual property tax revenues.

Unfortunately, the mere fact of development of Assembly Square is no guarantee that Somerville residents will benefit from increased property values or the increase in jobs. The City -- under the leadership of Mayor Curtatone and the Board of Aldermen -- has a key role in guiding development in the City's best interests.

And Somerville residents have a key role in affirming and advocating for those interests, and in making sure that in focusing on the goal of completing development at Assembly Square, we don't lose sight of why we have set out upon this path, and why we have invested our tax dollars in supporting that development.

There is no disagreement that completion of an Assembly Square Orange Line T stop is critical to the success of Assembly Square development.

As political changes in Washington have led to the loss of important federal funding for that project, the State, the City, and the developer have worked to cobble together a creative financing package -- including $75 million in City-guaranteed bonds -- that can keep the project moving forward, even in the face of a down economy.

This is no small feat. Nor is it a guarantee that Somerville residents will benefit from the anticipated tax revenues or jobs. Navigating our way to the pot at the end of the rainbow will depend upon the exercise of municipal leadership, in partnership with the developer and the community, to ensure:
1.) agreements are in place to minimize the City's financial exposure as a result of failure or poor performance of the infrastructure constructed with the help of DIF financing, or as a result of failure of the development to generate sufficient revenues to cover bond repayment;
2.) that Assembly Square development maximizes the site's potential for generating tax-revenues by fully exploiting the opportunity to attract office and R&D uses; and 
3.) that City vigilance in the execution of bond funding adequately protects us from exposure to losses and erosion of tax revenues, and ensures that Somerville residents, who are disproportionately footing the bill for infrastructure development, will reap their fair share of employment opportunities -- construction and long-term jobs -- at Assembly Square.

The City is proposing to sell $25 million in bonds that would be paid off -- over a 30 year period -- with the property taxes from the first three blocks to be developed at Assembly Square, which will include 400 residential units, 287,000 square feet of retail, a hotel with 160-200 rooms, and 1,050 parking spaces. These three blocks and the places at Assembly Square where roads, intersections, the Community Path, and stormwater management systems will be built, are part of a DIF (District Improvement Financing) District.

This DIF financing comes on top of $50 million (soon to be $58 million) in so-called "I-Cubed" financing in partnership with the State. The I-Cubed bond financing presumes repayment with the anticipated increase in sales tax and payroll tax revenues that are generated by the entire Assembly Square development. If those tax revenues don't materialize, the City is on the hook for the difference.

This Thursday's public hearing at City Hall and the two weeks leading up to an anticipated Board of Aldermen vote on the sale of the DIF bonds will provide Somerville residents with our last best opportunity to advocate for an arrangement that guards and advances community interests.

An affirmative vote on the DIF is like signing a purchase and sale on a house. If there are any conditions you want to include -- problems you want the seller to address, assurances you want the seller to provide -- these have to be included as part of the purchase and sale agreement. Once you sign the agreement, it becomes too late to add new conditions.

There is no doubt that a DIF is needed to fill the gap in funding for the infrastructure essential to moving forward at Assembly Square. The question is, are there provisions that should be inserted in — or removed from — the existing DIF proposal, and are there agreements with the developer that should be memorialized as attachments to that proposal, so as to minimize Somerville’s financial risk, to increase the likelihood that development at Assembly Square generates the tax revenues we are all hoping for, and to ensure that Somerville residents benefit from the employment opportunities that their tax dollars have made possible.

Some of the issues we raised at the hearings in November have been addressed. There are three outstanding Issues:
(1) collateralizing the performance of the infrastructure, to minimize the City's cost in the event of failure;
(2) ensuring that development achieves Assembly Square's potential as the crucially important source of revenues that we need it to be; and
(3) ensuring that Somerville residents -- who are subsidizing the cost of development at Assembly Square directly benefit from the employment opportunities that that development creates."

Please contact your alderman and the alderman-at-large with your concerns and thoughts regarding this significant financial decision and its impact on the future of Somerville. You can find their contact information in the Alderman page here on the website.

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