Opinion: Special development districts need legislative approval
Our State and municipal budgets are under tremendous financial strain. As the recently released Transportation Finance Commission report demonstrates, Massachusetts has a backlog of between $15 billion and $20 billion in transportation infrastructure improvements.
With these financial realties and our anemic revenue picture, it is clear that Massachusetts needs to think creatively about funding options for infrastructure improvements, particularly when it is these improvements that are going to allow our cities and towns to grow their tax bases.
Two proposals currently before the Legislature, Senate Bill 146 and House Bill 159, would help cities and towns address these infrastructure funding problems. They would create a process through which municipalities can approve the creation of "special development districts" for financing things such as roads, parks, water and sewer facilities in a specific area. While this legislation does not represent a silver bullet for municipal finance, it does provide a creative alternative to help the commonwealth address its harrowing infrastructure-financing challenges.
The "special development districts" would allow landowners to self-finance bonds for a specific infrastructure improvement within the district's boundary. This type of funding is particularly appealing to cities and towns because they would have no financial liability for bonds and the bonds would not impact a city or town's Proposition 2 1/2 tax levy limit. The property owners within the district would seek this authority and then pay the bonds back over 35 years rather than the 20 years allowed under current law.
Of course, due diligence is important when granting even very specific powers to political subdivisions. To this end, some have raised concerns that these special development districts would sidestep Massachusetts's proud democratic process, create powerful un-elected "neighborhood" or "developer-run" governments, and would sidestep the valuable tax-limiting provisions in Proposition 2 1/2. These are clearly addressed in the proposals currently before the Legislature.
First, special development districts must begin with the support of at least 80 percent of the property owners that the project would impact.
The legislation then requires strict local oversight of the district. The municipality's governing body would hold a public hearing on the plan, solicit comments, and, if it sees fit, approve the proposal. After the districts have been established, the municipality appoints the district's prudential committee and can remove members of the committee with just cause. The districts would be subject to all other local and state zoning and permitting laws.
The legislation also expressly limits a district's powers to bonding for the improvements in the plan, contracting with construction companies to carry out the improvements, and assessing betterments on the property-owners in the district.
Finally, special development districts are not a way for cities and towns to get around proposition 2 1/2. If anything, it would reduce the current strain on local property tax rates.
Special development districts are the product of local property owners coming together to finance a project that will mutually benefit them and the tax base of the city or town. In the face of billions of dollars of infrastructure re-development needs, and with the specific protections provided for in these proposals, moving S. 146 and H. 159 through the Legislature is the right thing to do.
Moore is the state senator for 14 towns, mostly in Worcester County. Timothy Hoppe contributed to this editorial.
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