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Lebanon Study: Revenue From Development Beats Predictions



Valley News Staff Writer
Monday, November 13, 2017

Lebanon — Developers often underestimate how much projects will contribute to city coffers and overestimate their impact on municipal services, according to a study commissioned by the City Council.

The study, which will be discussed by the councilors on Wednesday, sought to address the concerns of residents and officials who worry that a growing number of housing units contributes significantly to increases in expenses, such as emergency services and schools.

“There is no evidence of the city’s property tax rate increases being a direct result of these projects,” consultants wrote of housing and tax data from 2010 to 2016.

Rather than create an immediate strain on city resources, residential developments more commonly contribute to incremental increases in taxes and demands on services, “like other people-places in Lebanon,” according to the study, which was produced by the Arnett Development Group of Concord.

Fears about the impact and cost of development were front and center during the Planning Board’s nearly 2½-year preliminary review of the proposed 306-unit Carter Country Club Houses on the Hill project, which was expected to cost Lebanon a $360,000 deficit once complete.

During the review, which ended last month, many of the country club’s neighbors worried there would be no way to track the tax estimates provided by developer Doug Homan and his consultants. Questions also arose about whether past developments were correct in their projections.

In February, about 400 residents petitioned the City Council to help provide clarity on the issue. They asked for a study looking into developments “currently under planning consideration, and of every large project that has been approved, but is still unbuilt or unfinished.”

The Council responded by hiring the Arnett Development Group in May.

Consultants found that most projects predict new housing will result in city deficits.

However, projected tax revenue is often underestimated.

For instance, the Timberwood Commons apartment building was initially predicted to draw $1,716 per unit in taxes, but actually contributes $3,554 annually.

The same is true of Twin Pines Housing Trust’s Rivermere Community Housing, which contributes $979.76 per unit in tax revenue, about $37 more than expected.

Development also puts less of a burden on the school district than previously thought, according to the study. Even with more housing, Lebanon school enrollment declined between 2010 and 2016, consultants said.

Consultants also found developers overestimate how many students will move into completed housing.

A total of 222 new students were expected on completion of the Prospect Hill, Rivermere, Timberwood and Sleeper Village projects, yet only 41 had moved in by 2016. However, at least two of those developments aren’t yet complete.

“There is no evidence of the school’s tax rate increases being a direct result of new students coming from these projects, although they are part of the system’s cumulative total,” consultants wrote.

Overall, the study found that development “kept tax rate increases in Lebanon to a lower level than would have occurred without the developments.”

The results brought attention to how Lebanon’s Planning Board receives projections about developmental impact, according to Interim City Manager Paula Maville.

For many projects, she said, developers are allowed to submit their own studies using different models.

“There is no real standard form,” Maville said on Monday.

As part of their contract, the Arnett consultants are expected to provide a spreadsheet tool the city can use to keep track of future projects, Lebanon Planning Director David Brooks said.

The company will also make recommendations on how the Planning Board can standardize impact studies for large projects, he said.

But even if studies are more accurate, they’ll likely remain only a piece of Planning Board deliberations, said Carl Porter, the board’s vice chairman.

“When you’re trying to forecast the future you’re never going to get it right,” he said on Monday.

No study can take into account every variable regarding a project’s future, and there’s no perfect model that works for every development, he said.

Zoning Board member Al Patterson agreed, saying city boards shouldn’t rely solely on studies when making decisions.

“I don’t know that (the study) helps for me,” Patterson said, adding he also looks to how a project impacts, emergency services, traffic and accidents in surrounding communities.

“I don’t believe you’ll ever get a good guesstimate on anything like that,” said Patterson, a retired Hanover police officer.

In its study, Arnett’s consultants didn’t analyze other issues related to development, such as infrastructure, traffic, economic opportunities and quality of life related to developments, all issues city boards track through approval procedures.

It’s one of those problems that was partially responsible for ending the Planning Board’s review of the Carter Country Club subdivision.

Earlier this year, a city wastewater study found the project likely would put Lebanon’s sewer system over its city-mandated threshold.

The City Council is also scheduled on Wednesday to discuss a temporary fix to that sewer problem.

Maville is proposing Lebanon adopt less stringent sewer flow standards more closely aligned with state recommendations, as well as a new limit on new sewer connections. Only developments up to 10 single-family units will be allowed to hook up to city sewer, she said.

If the Council votes to adopt Maville’s recommendations, they would be in effect for a year. By then, she hopes a long-term solution will be in sight.

The City Council is scheduled to meet at 7 p.m. on Wednesday at City Hall.

Tim Camerato can be reached at tcamerato@ vnews.com or 603-727-3223.