Here's a bit more background on the Oriole Landing affordable units: There are 15 affordable units out of a total of 60 units, or 25% With 25% affordable, all 60 units count towards our SHI (the state's affordable housing index) Our zoning requires 15% affordable
At a cost of $1 million the town obtained 10 additional affordable units for qualifying people to live in at a cost of 100K each, with 60 affordable units counting towards our SHI at a cost of $16K per unit. At the time this was negotiated the town was paying an average of $250K for each affordable unit for qualifying people to live in. By keeping our SHI above 10% we are not subject to "40B" developments: 40B is the state law that allows developers to ignore town zoning density restrictions for multi-family buildings. The town has historically worked very hard to maintain an SHI above 10%. We are currently over 12%. Margaret On Thu, Nov 2, 2023 at 9:27 AM Benjamin Shiller <benshil...@gmail.com> wrote: > After posting, additional data was very quickly brought to my attention. > Apparently, even without a 1 million dollar forgivable loan, the rate of > return on the investment was anticipated to be 14%. That seems > very high, and was the expected return on investment at that time. Yes, > home prices went up, increasing their profits. But that does not change the > fact that it would certainly appear that the $1 million forgiveable loan > seems unnecessary. I now join the call for more transparency and citizen > involvement in future negotiations. > > On Thu, Nov 2, 2023 at 8:54 AM Benjamin Shiller <benshil...@gmail.com> > wrote: > >> The stated numbers in earlier messages in this thread suggest that Civico >> earned about $8-$12 million in profits from Oriole Landing. If true, it >> still does not necessarily imply that we were ripped off as a town. It >> might have been that we needed to provide the $1 million forgivable loan to >> make it such that the *expected* profits at that time were high enough to >> build. First, the profits need to be as high as the developer could have >> earned elsewhere. Second, there’s an ex-ante ex-post problem. After >> building, real estate prices in Massachusetts increased dramatically, >> implying that the profits that they ultimately earned may be much higher >> than the profits that would have been reasonably anticipated. All that >> said, it’s still good basic economic practice to get many developers to >> make competing bids. >> >> >> >*From Civico’s own documentation (link below), they estimated the total >>> *development cost per condo was $351K (including acquisition costs). >>> This means that it would have cost them ~$21M to complete the 60-unit >>> development. Considering the $1M loan and the sale price of $32M, Civico >>> made ~$12M in only 4 years on a $20M investment, in addition to any rents >>> collected. 60% return on assets seems pretty profitable to me. This doesn’t >>> even include the benefit they would have gotten from any leverage. >>> I am not comparing the project itself to the Winchester project. What I >>> am pointing to is that Winchester was able to negotiate a deal with Civico >>> that includes a $1.5M payment from Civico to the town, as well as other >>> concessions like more affordable units and extra parking. Winchester was >>> able to negotiate this because the project had to go through town meeting. >>> In fact, the first time, it failed the vote, and only passed on the second >>> round after these concessions were made. >>> I would like to repeat what I said in my first post: I am not against >>> redeveloping the mall. What I do continue to find troubling is that we are >>> being pushed into rezoning the mall through HCA, because a developer said >>> that they would not go through town meeting. >> >> Rezoning the mall through HCA would eliminate our ability to vote on the >>> project and extract concessions from developers. Additionally, we have been >>> told we would apply for public grants to benefit private developers. >>> Let’s learn from the experience of Winchester and not eliminate the >>> strength of our town meeting process. >> >> >> >> Ben >> > -- > The LincolnTalk mailing list. > To post, send mail to Lincoln@lincolntalk.org. > Browse the archives at https://pairlist9.pair.net/mailman/private/lincoln/ > . > Change your subscription settings at > https://pairlist9.pair.net/mailman/listinfo/lincoln. > >
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