Monday, September 22, 2008

Economic development hurdles for Sandwich, MA

Let's suppose that I'm the CEO of a corporation looking to expand into a new location to house the company's marine products engineering staff. What questions am I going to want answered in order to make a diligent decision?

1) What are the quality of life attributes of the town and nearby towns? (Cost of housing, quality of schools and recreational facilities, etc.)

2) Is the location good for commuting to our other facilities?

3) Is the communications infrastructure adequate? (That is, availability of T1 or other broadband connections.)

4) What is the price of available space and how much will construction/buildout cost?

5) How quickly can I get everything permitted and underway?

6) Is there a tax incentive available to defray property taxes for a period of time?

7) What is the tax rate for real and personal property?

How does Sandwich stack up?

1) Great town. Small, historic, beautiful. Beaches not so good. Water temperature better suited for seals than people. Schools rank well statistically, but superintendent indicates that the situation is dire. Some recreational facilities (Oak Crest Cove is great) but the town lacks in fields and courts. Average cost of a house is over $400,000. Ouch!!

2) Perfect access to Route 6. Much better than a Down Cape town, but still over the bridge.

3) T1s are available. We should be okay on this one.

4) Not much space available. Almost all of it in private hands. Cost of construction is comparable to other towns in southeast Massachusetts.

5) Town says its permitting process is getting better. That's good, but the Cape Cod Commission scares the b'Jesus out of me. If we can find land in the growth incentive zone (GIZ), we'll save on CCC time and expense, but the incentive zone is still a couple or three years away.

6) There is a tax increment financing policy. That's good. But the other towns also have the same policy.

7) Look at these tax rates! Sandwich's commercial rate is 50% higher than the abutting towns and nearly double the average of the other Cape Cod towns. (See "FY2008 TAX RATES Massachusetts - Cape Cod, South Coast, South Shore.")

CEO's Conclusion?

Sandwich loses out because:

a) Taxes on our $10 million investment will be $26,500 more per year (based on fiscal year 2008 rates) than they will be in Wareham and, from what I've been reading, it's pretty sure that they'll be proposing an override, which will kick up the tax rate even more.

b) The Cape Cod Commission will cost us at least a year of time and a hundred thousand dollars or more of attorney's fees and mitigation expenses.

My conclusion:

Much has been accomplished in Sandwich with respect to planning for a GIZ and the town can look forward to zoning changes to assist in its establishment.

The Economic Development Committee has been working with our permitting departments to facilitate the quicker flow of paperwork and approvals through the system using work flow optimization in conjunction with a new software system.

Our town administrator and his staff are great resources for companies looking to establish their business in Sandwich.

But...

We suffer from four major obstacles that conspire to suppress our success in economic development:

I) The Cape Cod Commission is easily dismissed by a prospective business simply by locating across the canal. So why locate in Sandwich when a nearby town, like Wareham, is free of the chains of the CCC?

Solution? We need to press forward to create our growth incentive zone(s) in order to "pre-pack" the CCC permitting process, making it less of an obstacle for new businesses.

II) Our tax rate is totally out of line compared with our neighbors. This puts us at a huge disadvantage and it's one of the first things on a relocation due diligence list.

Solution? We must find creative ways to finance our town government and schools without going to the override trough. If we can hold the line for a few more years, we'll likely be more competitive with our neighbors.

III) All of our neighboring towns have economic development incentive corporations (EDIC). We turned ours down at last January's town meeting. That speaks volumes as to where our priorities are and puts us at a multiple of disadvantages in attracting potential businesses and negotiating deals with them. People may argue about the language in the enacting legislation that uses the word "blight" or that the EDIC (actually called the Sandwich Economic Incentive Corporation, or SEIC) would exercise eminent domain over private properties (which it cannot), but not creating the SEIC will set us back in any attempt to generate new commercial tax dollars.

Solution? Get it back on a town meeting warrant and educate the voters about its merits.

IV) There's not much land left to develop commercially. That is true and there's not much that can change that reality.

Solution? An important discussion regarding this and the future of the town's commercial tax base is underway, thanks to a $150,000 grant made possible by Chris Bailey with the support of our state senator, state representative, and the task force that proposed the SEIC. This townwide plan will facilitate the development and redevelopment of the limited commercially zoned land that we do have.

I'm not surprised that companies steer clear of Sandwich, given the current state of affairs we find ourselves in, but I'm confident that we can meet the challenges I've listed above in numbers I, III and IV. I'm not so confident that we will make the right decisions regarding number II, and that will prove to be a deal breaker.

------------------------------------------------------

FY2008 TAX RATES Massachusetts - Cape Cod, South Coast, South Shore

Town / Residential / Commercial / Personal

Sandwich 9.61 / 9.61 / 9.61

Abutters to Sandwich
Falmouth 5.65 / 5.65 / 5.65
Bourne 6.54 / 6.54 / 6.54
Barnstable 6.58 / 5.80 / 5.80
Mashpee 6.58 / 6.58 / 6.58
Abutter Avg 6.34 / 6.14 / 6.14

Proximate Towns
Wareham 6.96 / 6.96 / 6.96
Plymouth 10.33 / 10.33 / 10.33
Proximate Avg 8.65 / 8.65 / 8.65

Rest of Cape Cod
Chatham 3.67 / 3.67 / 3.67
Dennis 4.35 / 4.35 / 4.35
Truro 4.49 / 4.49 / 4.49
Orleans 4.52 / 4.52 / 4.52
Wellfleet 4.72 / 4.72 / 4.72
Eastham 5.08 / 5.08 / 5.08
Provincetown 5.12 / 5.12 / 5.12
Brewster 5.55 / 5.55 / 5.55
Harwich 6.05 / 6.05 / 6.05
Yarmouth 6.23 / 6.23 / 6.23
Rest of CC Avg 4.98 / 4.98 / 4.98

South Coast Towns
Dartmouth 6.43 / 9.78 / 9.71
Marion 7.56 / 7.56 / 7.56
Fall River 7.67 / 16.31 / 16.31
Fairhaven 7.86 / 15.67 / 15.67
Taunton 8.22 / 17.59 / 17.59
Lakeville 8.70 / 8.70 / 8.70
Freetown 8.93 / 14.08 / 14.08
Rochester 9.03 / 9.03 / 9.03
Acushnet 9.25 / 11.24 / 11.24
Mattapoisett 9.80 / 9.80 / 9.80
Raynham 10.28 / 14.12 / 14.12
New Bedford 10.55 / 21.51 / 21.51
Carver 11.33 / 17.49 / 17.49
Marlborough 12.72 / 24.58 / 24.58
South Coast Avg 9.17 / 14.10 / 14.10

South Shore Towns
Marshfield 8.72 / 8.72 / 8.72
Hingham 9.20 / 9.20 / 9.20
Duxbury 10.61 / 10.61 / 10.61
Hanover 10.61 / 11.00 / 11.00
Pembroke 10.93 / 10.93 / 10.93
Kingston 11.88 / 11.88 / 11.88
South Shore Avg 10.33 / 10.39 / 10.39

Copyright 2008 Randy Hunt

8 comments:

  1. Thanks Randy. Where is the Comparison of Local Tax Rates 2008? This is my first entrance on a Blog. Thanks, David L.

    ReplyDelete
  2. David L.

    Thanks for asking about the comparitive tax rates. See my latest post for that information.

    Randy Hunt

    ReplyDelete
  3. Randy;
    There is no question that Sandwich has a higher tax rate than all of its neighbors. But, Plymouth is undergoing lots of economic development both commercial and retail, and their higher tax rate has not been the deal breaker.
    For us, the deal breaker is being under the guidelines and costs of the Cape Cod Commission. Mitigation fees, permitting fees, etc. add up to much more than years of higher taxes.
    At a recent EDC meeting, we brainstormed the idea of having our few remaining Industrial and Commercially zoned areas not becoming a GIZ or CCC pre-permitted areas, but a new idea - being Cape Cod Commission FREE ZONES. This will then put us on par with Plymouth, and better in charge of our future. We will continue to vet this idea to totally understand what costs it would add to the town. But this shows that with brainstorming new ideas can be developed and solutions found.
    The EDC is committed to work toward bringing the right type of commercial businesses to Sandwich. These businesses will not only help to fund our schools and town services, but will embrace our historical, community and cultural character, and help to sustain the Community’s natural beauty for future generations.
    Cindy Russell
    EDC Chairman

    ReplyDelete
  4. Hurdles or road blocks in our great town of Sandwich will allways be a stumbling block for economic development. No matter the hard work of those that are attempting to say other wise.

    The effort put in by our own economic committee has not been rewarded with any dramatic changes that will in my opinion change how Sandwich looks at itself from a business point of veiw.

    Can changes be made that make it more inviting for out side business to relocate here is the million dollar question.

    The past repetition that preceded all this effort to make acceptable changes for business to relocate here in Sandwich has cast a long shadow across our town. What ever changes are made must be so dramatic they will unfold this image in an honest and forthright manner.

    Eliminating the Cape Cod Commision from the process still will not change how we as a town overall feel in regards to this matter.

    One just needs to look at what has happened to our Golden Triangle,Oak Crest Cove,Public Golf Course and our famous Marina area where we can not even get a condemmed building down to make way for another business to understand this town is not prepared to handle development that can undoubtly effect our taxes in a positve manner.

    Taxes, are we prepared to make a long term committment to a business if they relocate here?

    Can we change the building codes to enable businesses a suitable location that does not infringe upon what ever is in place now? Are we willing to do that as a town?

    What ramifications does spouting overides to do what ever project we need to get done here in Sandwich have on how out side commercial businesses feel about our present bleak financial picture in operating all the town departments?

    Who gets to make up the list of the right type of commercial property and where is the support for this type of building in Sandwich comming from?
    What one group determines, does not make it acceptable to every one and there in lies the dilemma as to how do we compromise the differences?

    Carl J

    ReplyDelete
  5. Mr.Hunt

    I would like to offer one part of a solution to bringing in new business here to the great town of Sandwich.

    Reduce the STRUCTUAL DEFICIT in an ordely manner that does not include more overrides.
    Put in place a plan that does make our town look like it has ghetto implications to get some state approval based on untruthful facts.

    Carl J.

    ReplyDelete
  6. Randy, thanks for your dedication to our town. All very thoughtful and useful information for the general public who are interested in making informed decisions about the future economic realities we face. Hopefully town meeting will see the wisdom behind the SEIC and the LCP as we all meet in May.

    Tim C.

    ReplyDelete
  7. Randy,

    Love that tax rate comparison for towns on and near the.

    http://randyhuntcpa.blogspot.com/2008/09/economic-development-hurdles-for.html

    (Post of 9/22/08)

    Are these figures available somewhere in one place for FY2012 or does one have to call each town to get the rates?

    ReplyDelete
  8. Why are Sandwich's re taxes double the rest of the Cape?

    Easy, those $$ are going to line someone else's pockets.

    Teacher's Union?

    How many retired cronies and teachers living down in Boca are getting a peice of the action?

    This is what happens when government officials sign deals with unions to give away other people's $$.

    No collective bargaining for government employees.

    You are getting screwed 2 ways because your house is worth less. Higher taxes = lower real estate values.

    Sill wondering why houses are worth less in Sandwich?

    Answer: Rip off taxes due to government employees getting better deals than those of us in the produtive sector.

    ReplyDelete

I monitor all comments. As long as there are no personally defamatory statements and/or foul language, I'll post your comment. For this reason, your comment will not appear instantaneously. To comment without registering, choose Name/URL and type a screen name (or your real name if you like) into the Name field. Leave the URL field blank.