Building Our Infrastructure without Reducing Funding for Social Services

Sat, 10/27/2007 - 04:01 — vidchair
WHY WE NEED CHAPTER 40T & HOW IT CAN BE USED

Our State and municipal budgets are under tremendous financial strain. There is a huge back log of State and local infrastructure projects that need to be addressed. It is a rare community that is able to fund all the water, sewer, roads and other infrastructure needed to support existing neighborhoods and new desired development.
We traditionally have relied upon general obligation municipal bonds, repaid from property taxes to pay these costs. Property tax payers are saying no more. We can ill afford to miss out on alternative and innovative techniques to finance public works that many other states have used for years. In 2006, Massachusetts did not access any of the $15 billion in land-secured tax-exempt financing used to fund infrastructure.
As a totally local option, Development Zones (designated sections of a town or city benefiting and paying for the improvements) established under Chapter 40T would provide the Commonwealth with access to this capital. Such Zones would serve much the same function as traditional betterment districts. In both, the costs of improvements such as new roads and sewers are assessed against the property receiving benefits as distinguished from the community at large. Chapter 40T offers several key advantages over traditional betterment financing. First, the Development Zone is a voluntary imitative by the property owners that benefit from and pay for the improvements. Secondly, the project is financed by bonds issued by the Massachusetts Development Finance Agency or a Local Improvement District, if selected by the property owners. The municipality is relieved from any financial involvement. The credit of the community is specifically not pledged to repay the bond issue. Third, the property owners may pay the assessments back over a term as long as thirty-five years as opposed to twenty under the General Laws.

Some typical projects that could be funded under Chapter 40T:

• Does your town or city have neighborhoods that for years have complained about poor septic systems, roads or other public works needs? They could organize and petition the municipality to establish a Chapter 40T Development Zone to fund the improvements paid by assessments on the property within the Zone. This means that only those benefiting directly from the improvement would pay the cost.

• Do you have a downtown area with a parking problem that is choking business? The business owners could get together and petition the municipality to approve a Development Zone that would self-fund a new garage and /or other needed improvements. The garage could be owned by the city or town or a Local Improvement District.

• Does the community wish to encourage new quality development but wants to make sure that additional services or facilities are paid for by the developer or new residents? The formation of a 40T Development Zone could fund such improvements.