The Government Operations and Rules Committee held a public meeting on Friday, October 19, 2012 beginning at 10:06 AM in the Ackermann Room.
The purpose of the meeting was to discuss Community Benefits.
Present at the meeting were Councillor David P. Maher, Chair of the committee, Councillor Craig Kelley, Councillor Minka vanBeuzekom, Vice Mayor E. Denise Simmons, Mayor Henrietta Davis, Councillor Kenneth E. Reeves and Councillor Timothy J. Toomey, Jr., Robert W. Healy, City Manager, Richard Rossi, Deputy City Manager, Brian Murphy, Assistant City Manager for Community Development (CDD), Stuart Dash, Director of Community Planning, CDD, Louis DePasquale, Assistant City Manager for Fiscal Affairs, Ellen Semonoff, Assistant City Manager for Human Services and Interim City Clerk Donna P. Lopez.
Also present were Terry Smith, Director of Government Affairs, Cambridge Chamber of Commerce, 859 Massachusetts Avenue, Heather Hoffman and Mark Jaquith, 213 Hurley Street and Leo Sepkowitz, 30 Boylston Street, Boston.
Councillor Maher announced that the meeting is being recorded with audio and visual devices.
Councillor Maher convened the meeting and stated the purpose. An agenda was prepared (ATTACHMENT A). Councillor Maher began the meeting with a general discussion of community benefits to include what is meant by community benefits, the background and payments made to community benefits by developers. He felt it would be helpful to define the terms "community benefits" and "linkage". The Government Operations and Rules Committee and the City Manager were asked to develop new criterion on how community benefits should be handled when payments are received by the City when a developer is proposing to up-zone property through zoning. A community benefit is the money paid or benefit provided by a developer for up-zoning property. Previously community benefit money was allocated. Currently money is being held by the City and will be expended when a policy is established. Some developers have committed to payments. He felt that money should not be used for infrastructure changes but should be applied to community benefits. Responding to the question of how many developers have made community benefit payments, Mr. Healy stated that relating to EF and Novartis there was an agreement of an amount of money to be paid for up-zoning. This money has not been allocated or encumbered. The EF project has a total value of $914,000 and is due 90 days after the building permit is issued. The remainder will be received when the certificate of occupancy is issued. Novartis has $1 million committed with $750,000 received by the City, leaving a balance of $250,000 due to the City when the certificate of occupancy is issued. The $750,000 is in an account waiting for direction from the City Council. Boston Properties has a development at 75 Ames Street. There is a $2.5 million penalty to Boston Properties if the housing is not built. Other examples of community benefits are Alexandria and Lesley. A community benefit is determined upon the approval of the zoning petition. Councillor Maher asked what mechanism is in place to insure that payments are paid. Mr. Healy responded that the mechanisms in place are the agreements, the issuance of the building permit and the issuance of the certificate of occupancy. This is then tracked by the Finance Department.
Councillor vanBeuzekom asked when the City received the funding does the City Council get notice. Mr. Healy stated that the City Council has to appropriate the funds which go into capital fund and has a budget code. Mr. DePasquale added that not every capital project is a detailed item.
Councillor Maher commented that every City Councillor has a different idea of what is a community benefit. Only Novartis and Boston Properties have paid money to the fund. Councillor Kelley stated that this is messy and complicated. It would work better to have the City say this is how a program can be managed. He stated that he is uncomfortable with looking for community benefits for special permits. Councillor Maher stated that the City has not spelled out what the needs are. A proposal was brought back and the City Council did not approve it. He hopes that guidance can be given, but the City Council should not monitor this program. Councillor vanBeuzekom added that the City Council can make sure that CDD has guidance. Mr. Healy stated that the City tracks the money, but does not make the deals.
Vice Mayor Simmons agreed that there is not a universal understanding of what is a community benefit. Councillor Maher stated that today community benefits are a payment made to the City in exchange for consideration of up-zoning. There were four instances where individual negotiations were made. The City Council felt it was messy and not transparent. There have been two projects since then, EF and Novartis. Vice Mayor Simmons stated that going forward it will be what community benefits will be. The City Council will assign this to CDD and then have a formula based on a percentage. A community benefits panel will be discharged with dispersing the funds. She felt that it might be a good model that a panel be established. Councillor Maher suggested a panel similar to the Affordable Housing Trust. Mr. Healy informed the committee that a special home rule petition would be required for this model, a 501C3. A special act created the Affordable Housing Trust.
Mr. Healy stated that $750,000 received from Novartis is sitting in an account waiting for direction from the City Council. Councillor Maher stated that the City Council cannot be involved in deciding who gets the money; we are attempting to establish a process.
Councillor Reeves asked why Novartis paid $1 million to community benefits while Pfizer paid nothing. The reason was Pfizer built as of right while Novartis sought a special permit. All aspects of special permits or large projects need to be reviewed and then turn the process back to CDD.
Councillor Maher turned the discussion to linkage. He asked Assistant City Manager for Community Development, Mr. Murphy to give an overview on linkage. Mr. Murphy stated that linkage is incentive zoning that was adopted by the City Council in 1998 to mitigate the impact of new commercial development on housing affordability in the city. The purpose of the Ordinance is to promote the public health, safety and welfare by encouraging the expansion and upgrading of the City's housing stock while accommodating the expansion of housing and commercial opportunities in the City and to provide for a full range of housing choices throughout the city and to increase the production of needed affordable housing units. The Ordinance requires contributions for certain non-residential developments where an increase in density or intensity in use is approved via certain Special Permits. The required contributions are made to the Affordable Housing Trust. . A study was done that showed that development of commercial property impacts housing. Large scale development pay a linkage fee designated for affordable housing. The linkage fee is based on the size and the zoning district where the property is located. The goal is to mitigate new construction for housing. Contributions are made to the Affordable Housing Trust Fund. Not all non-residential projects are required to make incentive zoning contributions. Only developments larger than 30,000 square feet which receive certain special permits included in the Section 11.202.1 are required to make contributions. Projects that might otherwise be required to make a contribution may be exempt from the Incentive Ordinance for reasons such as Incentive Zoning Ordinance not applicable in the zoning district, special permit project not listed in 11.202.1, as of right development, or project exempted from Incentive Zoning Ordinance through Zoning Ordinance change. Pfizer paid no linkage payment because it built as of right. Mr. Healy stated that the legal background of the ordinance is based on a Nexus Study. There have been two Nexus Studies done by the City. Mr. Murphy stated that the linkage rate is based on the CPI and was most recently increased to $4.44 per square foot over 2,500 square foot for projects 30,000 square feet or over pursuant to Section 11.203.1(a) of the Zoning Ordinances. There is a meeting on October 25, 2012 with Barry Bluestone who did the Nexus Study. Mayor Davis stated that the logic in the Nexus Study was that increased housing was needed for additional workers in Cambridge.
Councillor Maher asked if this is a good time for the City to look at adjusting the linkage fee, probably expanding and introducing the concept that funds be provided to non-profits in the City. He stated that the funding would go to the Affordable Housing Trust and to the addition of a community benefits fund. Mayor Davis stated that she is comfortable with the community benefits emanating from square footage asked for by the City Council. This could be clear that going in that there is a fee for up-zoning. If more zoning is requested then it must be stated that there will be more community benefits. Councillor VanBeuzekom suggested tacking community benefits onto the formula that exists. Councillor Maher stated that this is an option.
Councillor Reeves stated that he would like the community benefits money to be given to a Human Service panel for disbursement of the funds. He stated that he favors a Human Service Panel. He spoke about day care and its importance to youth aged 0-3 as well as the needs of college aged students. Councillor Reeves stated that he would like the census reviewed to show where children are living in the city and who is being served. Mayor Davis agreed and stated that she would like to know where the children are who are being served. Vice Mayor Simmons stated that she wanted the neighborhoods to be looked at and disbursement made on a needs basis. Mayor Davis spoke about the difficulty of defining the neighborhood boundary lines. She suggested language such as 1/2 mile from the project.
Councillor Maher stated that he wanted direction from the City Council and then the framework can be developed.
Mayor Davis asked from whom is the money being collected and how is it being dispersed. She stated that she likes the Human Service panel for the community benefits funds similar to the Affordable Housing Trust. She stated that development has an impact in the overall carbon footprint. She also wanted consideration for the viability of environmental aspect; energy efficient and loan fund for energy.
Vice Mayor Simmons commented on the idea that money collected from developers goes to a panel for disbursement. If this is the model, she wanted more City Council discussion on the disbursement of the funds for community benefits.
Councillor Kelley added that the City Council needs an evaluation of community needs and then establish guidelines for where this money should be spent. The City Council needs to know what funding is expected. Councillor Toomey commented that the adjacent neighborhoods to large scale development are bearing the brunt of the development specifically in areas such as traffic and housing and these neighborhoods should receive a greater portion of community benefits.
Councillor Maher stated that increasing linkage needs to be done carefully in order to not negatively impact businesses. He felt that linkage is too low and must be reviewed and expand the coverage area. Mr. Healy added that the revenue stream is not huge. He also spoke about the possible cuts in federal grants. Mr. Healy raised the issue of the asset of 101 Rogers Street and the need to study the issue further.
At this time Councillor Maher opened the meeting for public comment.
Mark Jaquith, 213 Hurley Street, stated that he did not hear mitigation discussed and it is important in the community benefits discussion.
Heather Hoffman, 213 Hurley Street, stated that private developers are being enriched. Mitigation is important. The tax base and jobs are benefits but there are burdens such as pollution, etc.
Terry Smith, Cambridge Chamber of Commerce, 859 Massachusetts Avenue, spoke about pricing Cambridge out of the game. Drainage, water, traffic, transportation issues can be monitored in the special permit process. He mentioned the concerns of the chamber members - the City could be down zoned to agriculture and then require up zoning. If the City Council were to establish an additional payment for additional Community Benefits it may be good to set the date to fix the zoning. Energy efficiency and retail development was not considered in the 2000 Nexus Study. There is a lot of money to do energy efficiency work.
Councillor Maher outlined the next steps. Mr. Healy and Mr. Murphy will review steps to expand linkage and come back to the committee with a draft framework for community benefits and linkage. Councillor Toomey requested linkage fee information from other communities. There are two aspects to consider. To move quickly to define community benefits and move slower with linkage and also look at the possibility of a Human Service panel.
Councillor Maher thanked all present for their attendance.
On motion of Councillor Toomey the meeting adjourned at 11:33 AM.
For the Committee,
Councillor David P. Maher, Chair,
Government Operations and Rules Committee