The Fiscal Impact of Mixed-Income Housing Developments on Massachusetts Municipalities
May 2007
Boston, MA - The burden on municipal budgets of mixed-income homeownership developments in Massachusetts may not be as great as is often assumed, according to a new study prepared by the University of Massachusetts Donahue Institute for Citizens’ Housing and Planning Association (CHAPA). According to the report, The Fiscal Impact of Mixed-Income Housing Developments on Massachusetts Municipalities, the eight housing developments analyzed in the study did not have any measurable negative impact on public services in their municipalities. The housing developments in the study are located in Brookline, Falmouth, Northampton, Peabody, Sandwich, Wellesley and Wilmington.
“One of the primary arguments against proposed affordable housing developments is that they will be a drain on municipal budgets, especially regarding school costs,” said Aaron Gornstein, Executive Director of CHAPA. “This comprehensive study demonstrates that mixed-income homeownership developments on the whole are positive assets for the communities in which they are located.”
The UMass Donahue Institute also found that the mixed-income homeownership developments in the study have the same fiscal impact on their towns – whether positive or negative – as the vast majority of their neighbors. The study used an original fiscal impact tool - the fair share method - that compares average town expenditures per housing unit to the actual property taxes residents pay for their homes. The Donahue Institute used the method to analyze complete tax assessor’s records for FY2005 for five towns in the study.
“We know that demand for public services will vary considerably over time as couples have children, age and live alone,” said Eric Nakajima, Senior Research Manager at the UMass Donahue Institute and principal author of the report. “What really surprised us was how similar, in the end, most homes are to each other when you balance out average expenditures with the taxes people actually pay.”
The study further concluded:
School costs are rising in cities and towns throughout Massachusetts; however, those increased costs are occurring in communities with declining enrollments as well as increasing enrollments. In short, enrollment is not the most significant factor driving increases in school costs.
Three of the towns showed modest positive fiscal impacts from their mixed-income homeownership developments; while four of the towns showed modest negative fiscal impacts.
The state, developers and municipalities may be able to plan appropriately for development in a manner that ensures that future growth does not have a long-term negative fiscal impact.
“This report offers hope to the state, municipalities and developers that we can better understand the real impact of housing developments and plan collaboratively to shape development that ensures that affordable housing gets built and town budgets are not harmed,” said Eric Nakajima. In addition to Mr. Nakajima, the report was authored by Kathleen Modzelewski and Allison Dale, both with the UMass Donahue Institute.
The report is to be presented at a CHAPA Breakfast Forum Thursday, May 10, 2007 at 9:30 a.m. The full report and information about the forum are available at CHAPA’s website, www.chapa.org.
