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Jeff Levine submitting comments re: the Union Sq. DIF.
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Dear Members of the Board:
Thank you for the opportunity to comment on the proposed DIF district for Somerville Avenue. I comment the City’s staff and the Administration for working to come up with creative solutions to fund improvements in Union Square. However, after reviewing the proposal and the state’s DIF program in general, it is unclear to be whether there are any significant benefits to creating such a large DIF district. On the other hand, it appears that there are some drawbacks. If nothing else, a smaller DIF district, with a smaller budget, should be considered for just Union Square proper.
In brief, my main concerns are as follows:
1. Unlike in many other states, the DIF designation does not appear to provide any significant benefits to the City in terms of additional bonding capacity. While DIF designation will allow some flexibility in bond terms, these will still be general obligation bonds that are underwritten within the City’s bond capacity. If the infrastructure projects to be funded are so important - and I think many of them are- why not just use general obligation bonds as would be used for a new school or park project?
2. The DIF designation appears to theoretically allow the use of revenue bonds - which would be outside the City’s normal general obligation bonds - but it appears that there are so many conditions on the use of revenue bonds that they are not a useful option.
3. While there is no requirement to use the full additional revenue from this district for DIF projects, the budget submitted appears to have plans for all of this additional increment. If the Board of Aldermen wished to take some funding out of the DIF district for another use, it would not be in keeping with the DIF plans submitted to the state.
4. I am not aware of any additional state grants that the DIF designation will allow the City to access.
5. Quality of life in Somerville is about many things, not just roads and plazas. The best thing the City can do to maintain its quality of life is to maintain key City services. Right now, under the current administration, the City is doing just that. With a 30 year DIF district in place, however, bond payments could limit future options.
I think of the effort to redevelop Boynton Yards in the 1980’s and 1990’s. The City bought a large amount of land for redevelopment at high prices in the 1980’s. To pay for these acquisitions, it borrowed against future CDBG funds. The plan was to have the sales prices, which were assumed to be higher than the acquisition prices due to new roadways the City was building in the area. After the 1990’s recession, the City ended up selling most of this land at a loss, and was paying back the CDBG loans for a long time afterward. The payments on those loans could have gone for park or roadway projects elsewhere in the City. Instead, the funds went to pay off loans gone bad.
I urge the Board to use their legislative authority to seek additional information on this proposal, and to seriously consider scaling it back so that it does not limit the City’s future ability to fund other services with the additional tax revenue from the Somerville Avenue corridor. I might support a DIF district for Union Square alone, but not the entire Somerville Avenue corridor, representing so much of the City’s tax base.
Sincerely,
Jeff Levine
31 Curtis Avenue