The following is the 2017 State of the Town Report from Board of Selectmen Chair John Arena for the Annual Town Meeting
Good Evening and thank you to my fellow board of Selectmen, Town Manager Bob LeLacheur, Superintendent Dr. John Doherty, Reading School Committee, Town Meeting members, Town and School staff, and the citizens of the Town of Reading.
It is my honor to serve as Chair of the Reading Board of Selectmen for the coming year. There are three major areas I will cover tonight. First, a review major Board activities over the past year. Second, a discussion of some of the present-day challenges and realities the Board has been asked to address. Third, to describe the path ahead for the coming year, and how the Board plans to support it.
Since April 2016, the Board has undertaken multiple initiatives with long term beneficial effects for years to come. We proposed Senior Tax Relief, which was then approved by Town Meeting and ultimately the Massachusetts Legislature. This measure allows lower income seniors qualifying for the State circuit breaker credit the ability to reduce their property taxes, helping them stay in their homes near friends and loved ones. The measure permits a shift of about 2% of the residential property levy onto the rest of the class and provides a meaningful reduction in property taxes for eligible Reading seniors.
We helped define a formal Town economic development process, welcoming our new Economic Development Director and designing the process to catalog and market Reading to interested developers, agents and industries. More on why we did this in a few minutes.
We heard local voters last fall, when they rejected state ballot Question #4 that legalized recreational marijuana. We worked with CPDC to make sure to understand and close all possible loopholes before asking the town voters if they wished to ban commercial marijuana establishments. Earlier this month voters spoke by nearly a 38% margin. Earlier tonight Town Meeting voted to formalize that decision. A special thanks is due to our Town Counsel Ray Miyares and his firm for their pioneering legal efforts in this area, working closely with state agencies, to make sure residents were able to express their views.
We supported CPDC efforts to expand the current 40R smart growth district to adjacent areas of the downtown, which was just approved at this Town Meeting last Thursday. The decision also provides a countermeasure to hostile 40B’s appearing in these same areas.
We supported CPDC efforts to revise the Zoning Bylaw pertaining to Accessory Apartments, to prevent unintended consequences of the original language. The Accessory Apartment concept was designed to allow parents and relatives to remain independent and living in Reading while in close proximity to loved ones.
Together with the Trustees, we welcomed the opening of our new Reading Public Library, now returned to a center of community engagement. Thanks to the Library Trustees, Building Committee, Town staff and especially the voters of Reading who approved and funded this substantial project.
We set the residential tax rate factor reflecting the view that residential and commercial properties be treated with parity. A shift to commercial sector will be discussed in the fall of 2017 in order to equitably share the cost of Senior Tax Relief discussed earlier.
We re-approved an inter-municipal agreement for Regional Housing Services together with North Reading, Saugus and Wilmington to efficiently manage affordable units in each town using a common resource. This agreement will better support each town to manage the affordable housing stock we each work so hard to create.
Individual members of our Board, acting together with strong support of CPDC and ZBA and town staff, worked with the proposed Reading Village 40B to mitigate abutter objections. Please bear in mind that due to State 40B Regulations the Town of Reading was powerless to stop this project development. The final proposal was substantially improved due to the efforts of both day and night time government. This project also triggers Massachusetts Subsidized Housing conditions such that Reading may defer new 40B project applications through February of 2018. Note that Reading has several other 40B applications already in progress, and we will apply the same approaches in managing these. I want to thank former Board member Kevin Sexton specifically for his efforts in this area. Kevin’s business experience and idea generation materially added to the final proposal.
Finally, the Board called a special election in October 2016 to vote an override to Proposition 2½, last attempted in 2003. Working with the School Committee to identify and prioritize needs, the Board and Town Manager LeLacheur proposed a comprehensive solution that built-in a component of endurance that would have provided a 10 year operating window minimum. A majority of voters told us overwhelmingly in October 2016 that our proposal wasn’t acceptable. Reading’s Override discussions will continue into the coming fiscal year, which I’ll cover in more detail shortly.
Before my comments regarding our future, a few thoughts on the present. Over the last 12 months, our National and State politics have become increasingly polarized. Congressmen, Senators and the White House continue to generate sound bites daily, further echoed in 24-hour news coverage hyping every thought. With the electronic devices each of us carry today, we’re just a click away from fresh news, amplification and outrage commentary on Facebook and social opinion sites.
Disagreement is visible everywhere at the national and state levels. Tax policy. Cabinet appointments. Health Care. The Wall. Supreme Court nominees. Foreign trade. North Korea. Trump. Even families report inability to socialize with certain of their relatives over political disagreements.
Allowing these national disputes to enter into our town governance and processes should be handled very carefully, otherwise they will inevitably create objection, friction and outright argument, and ultimately become a drag on local progress.
Earlier this year, our Board was asked by more than 200 petitioners for endorsement of their Human Rights Statement. Selectmen Barry Berman and I met with petitioner representatives in two meetings and discussed two different statement versions. These meetings were cordial and genuine common understanding on individual topics was evident to me. Our board will further discuss the subject this month.
Our basic freedoms of speech and thought guarantee us the right to express opinions on any topic in any medium we chose. I defend the right for citizens to speak their mind, even where I might disagree with the subject matter. The central question to me then is the propriety of elected officials taking voted positions for or against lawful citizen speech.
To this point, the Town Manager shared with me a discussion with a resident who offered that the Human Rights Statement had our Board attempting to take away his rights to criticize our President Trump. We live in interesting times. Walking straight down the center of political Main Street will be challenging for all of us. Let me now turn to the challenges facing us in the year ahead – There are two key objectives we must make progress on this year:
1st Objective: OVERRIDE
We must again start the process to place a suitably designed override question on a future ballot for Fiscal 2019. That’s going to require substantial effort by the schools and town to determine needs, appropriate budgets and develop the necessary background and support materials. We’ll need to gauge the public’s tolerance levels and allow sufficient time for public commentary and responses.
I am committed to bring such an override back to the voters for the FY19 budget. As explained further in the Town Manager’s warrant remarks, the ability to deliver town and school services will markedly decline unless new revenues are in place by then. Before we can do that, major improvements are needed this year in how we develop and present override information, and how we receive comments back from the voting public. In particular, a means to survey voter opinions is needed to bring out objections and other inputs from voters to help shape the proposal.
Beyond the mechanics of the override itself, there is also a substantial public relations issue ahead. We must increase the level of trust between the town, school and voters. I heard from multiple voters after the October failure who indicated a lack of trust in what they heard from the Town and Schools regarding override size, growth rates and forecasted spending.
Some voters objected to the sheer size of the override as too much- even though on a proportional basis, it was a lesser percentage as compared to the successful 2003 override. Some voters were confused over the complexity of the override structure, which was designed to including an element of endurance to extend its over 10 years. And others took the view that as the town had managed perfectly well to date, just how bad could the current set of needs actually be?
If Taxpayers are expected to pay more in taxes, they’ll first need to know and agree to what uses these new tax dollars will go to and then vocalize their support. They will also need to be given information on potential and real changes to excluded debt balances and their incremental impact to property taxes. In particular, I am thinking of new debt required for a proposed renovation of Killiam School and the retirement of earlier debt for the Library and High School.
To that point, I will tonight commit the Board of Selectmen to provide voters a clear and prioritized summary of the Town purposes a proposed override would be used for, and our view on the likely future for excluded debt. These summaries will be prepared as part of the normal FY19 budget planning cycle. I also commit that our Board will at the same time provide voters with a alternative version FY19 Town budget identifying reductions in spending required should an override again fail. Citizens need to understand the consequences to both success and failure.
I ask my colleagues on the School Committee this evening to commit to generating these same two views of their FY19 budget. I would suggest our two boards standardize the design of these documents for easier comprehension by voters.
Reaching Voters:
On the subject of voter outreach, the world has changed how it gets its news and public information messages. It’s less about evening newspapers and local television and more about web content, mobile devices and blogging.
This year’s outreach effort requires greater use of Social Networking to help spread information regarding the override, the budget and related support materials. The town and schools have definite limits in what types and in what medium we may use to made information public- but our data and sources can be copied, amplified and broadcast by interested citizens within their own personal networks, and likewise they can help to funnel questions back to elected officials for general responses. To that point- I’d like to acknowledge the members of YES For Reading group for their pioneering efforts in social networking and outreach last year. To those listening tonight- they would benefit from additional volunteer help in the future.
Sizing:
One core question in the Override is size, and how to design it to be as effective as possible, as long as possible. In 2016, the Board voted to put forth a $7.5M Override proposal which was defeated soundly by an 18% vote margin. A new sizing effort is required and the Board must evaluate the level of support in the voter community to shape a final proposal. A key input to the process are the proposed FY19 budget and priority lists from Town and School. We know more about voter expectations entering this year. Much of the prioritizing process developed last year remains useful as we undertake the override effort again.
2nd Objective: Override frequency and Economic Development
The evidence is clear that since the 1980 passage of Proposition 2½ in the Commonwealth, cities and towns with more commercial property and therefore greater commercial tax revenues simply do not need to rely on Override ballot questions as frequently. For the peer communities with 87% or more residential property (and for reference Reading has 92%), 10 of 11 (not including Lynnfield) have asked voters for Overrides more often than Reading has, and 10 of 11 (not including Stoneham) have passed Overrides more recently than Reading has.
Conversely, in the other peer communities with larger commercial property sectors, only 1 of 14 (Westford) has asked more often, and only 3 of 14 (Walpole, Natick and Canton) have passed an Override more recently.
Despite having strong positives of an educated workforce, easy access to 2 major state thoroughfares, good housing stock, a low commercial tax rate, excellent electric rates, and good schools, Reading has stubbornly remained in the lower quartile – the lowest 25% of population – among its peer towns relative to economic development and economic growth. Solving this problem is critical to our future, as it helps creates a long-term alternative revenue source to overrides to fund town and schools.
Some residents dismiss the relative urgency of Economic Development proposals because of the long time to beneficial results relative to today’s budget needs. That’s short sighted in my view. Had our Economic Development efforts begun 10 years ago with the same funding, focus and vigor that’s in place today, we’d be in a better place today.
To say it simply – Failing to plan means planning to fail
Economic Development and Tax Revenues
Reading is largely a bedroom community. That means residential property taxes are the overwhelming source of taxes. Additionally, we have lots and lots of school aged children. That means on the spend side, higher percentages of our budget dollars go to education. There’s nothing wrong with these facts, but it does mean our budgets are under different financial stresses versus our peers. Reading does not have the same income and spending profiles other towns have.
Our residential class size has continued to grow since 2010 with increased numbers of condominiums entering inventory, further increasing our dependence on residential property taxes.
Today, approximately 2/3 of all Town revenue is derived from property taxes within the prop 2½ levy; in 2018 that sum is forecast to be around $64M. About 91.5% of that will be derived from residential class and 8.5% from Commercial, Industrial & Personal Property, rounding to the nearest half percent.
Let’s take a look at Reading relative to 25 peer communities comparing employment headcount and employment headcount growth, as a proxy to measuring commercial development intensity. Jessie Wilson, hired as a part-time Economic Development Liaison to complete a 25-town peer community assessment, compiled this data. Towns with higher employment traffic driving to them represent towns with higher commercial development levels.
These chart show the average town monthly employment along the X, and the 5 year change in that same employment measure along the Y. The bubble diameter compares the size of monthly employment to the number of working age adults in the town. Big bubbles mean more employees than working age citizens travel into the town. Small bubbles mean more employees than working age citizens leave the town to go work somewhere else
Its clear Reading has a comparatively low level of average monthly employment to its peers, coupled with very low growth of employment over the measured 5-year term. We’re largely a place for citizens to sleep, eat and raise families, and leave to go work elsewhere.
We need to position Reading as destination for employees to travel to and spend discretionary dollars on local shopping, food, entertainment and other purposes. This doesn’t mean we aspire to make Reading into a Woburn or Burlington. Reading is starting off such a small commercial base, that even a medium-sized improvement will yield good benefit to our tax revenues. Our focus must include redevelopment as Reading has a very small amount of open land available for new development relative to peers.
Let’s look at the average salary levels of that employee headcount we discussed earlier, as an indicator of the potential for discretionary spending by employee visitors. Looking at the slide above drawn from the same peer towns analysis, we see that in 2010 and 2015, while Reading average employment salary grew, in both years we remained last in average employee salary levels, reflecting our predominantly small business – retail type base.
Victor Santaniello, our shared assessor with Wakefield prepared a study for the Board also illustrating this same point:
The commercial property class valuation totals 281.4M and is heavily weighted towards small and medium valued properties.. This pie chart shows the total class separated by parcel valuation and count.
25 Large and very large valued properties (Primarily those at Walkers Brook, shown here in teal and purple segments) represent about 60% of the total commercial class property value. 170 small and medium valued properties make up the 40% remainder. To move the needle enough, economic growth will require medium and large projects, and ultimately, another Walker’s Brook sized event. Attracting projects of these sizes means Reading requires a focused and sustained Development management effort, led by dedicated town staff.
To that end, in 2016 the Board voted to add a full-time in-house resource for commercial and redevelopment growth, paid for by revenues collected from revolving fund permits. Andrew Corona, the Economic Development director joined us over the summer, and is focused on three key areas:
First, to develop our Reading ‘town brand’ and related outbound messaging to get us on the map and into the minds of potential companies and developers and commercial brokers.
Second, to assist with project visioning and concept developments, including citizen forums and listening sessions for inputs and feedback.
Third to assist in the intermediate steps of project planning to provide town support as is needed,
Such as the two projects shown here.
The first, shown in purple outlines was Article 23 proposal approved Thursday to expand the present 40R Downtown Smart Growth overlay.
The second, shown in the green outlines, is to assist in the marketing and redevelopment outreach for the industrial segment on Walkers Brook Drive. This area has the best potential for high value commercial and a significant redevelopment project.
There’s a lot of work ahead – but even the longest journey starts with a single step.
Reading has weathered many challenges over its 373 year history, and brand-new issues await us in the years ahead. Our future progress and success hinge on our officials and citizenry solving these problems carefully, respectfully and transparently.
May God continue to bless the Town and Citizens of Reading.
Thank you for your time this evening.
