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12)    Adopt best practices for permit streamlining
Productive relationships between municipalities and the development community foster compact growth.  Municipalities should adopt best practices that can make permitting more predictable, equitable, cost effective, and efficient.  

Inefficient permitting and approval processes can discourage compact growth.  Developers who face a long, costly, and uncertain permitting process are likely to shift their resources and efforts to other locations, regions, or states.  This is especially concerning if inefficient permitting in appropriate locations causes developers to choose alternate locations that are inconsistent with the MetroFuture land use plan.  

Application of streamlined permitting processes does not require municipalities to lower their standards or feel pressured to approve bad proposals. Applied appropriately, Permit Streamlining Best Practices should reinforce local jurisdiction; encourage community supported projects; preserve local resources; and maintain the standard of review.  

The recommendations identified elsewhere in this strategy will also support streamlined permitting.  When municipalities have widely-accepted district plans with predictable and supportive zoning, and capital plans with corresponding financing strategies, then there exists a framework for developers to create responsive proposals.  A set of well-defined permitting best practices has been identified and should be adopted by municipalities.

12.a    Municipalities should adopt permitting best practices

13)    Expand regional support for marketing compact growth sites
Effective marketing of MetroFuture-consistent economic development locations requires two things: providing more accessible information about the costs and benefits of individual sites from a sustainability perspective; and strengthening concepts of sustainability in the culture of the economic development field.  

Economic development professionals have the capacity to be strong allies in the implementation of MetroFuture.  The Massachusetts Economic Development Council’s Strategic Plan identifies “social responsibility and a dedication to equitably building healthy, just and competitive communities” as one of the organization’s four Core Values.  Similarly, state agencies operate under the Commonwealth’s Sustainable Development Principles which equally consistent with the MetroFuture plan.  Stronger relationships between MAPC and these agencies and professionals are necessary to identify ways that principles of sustainability can be applied to support their economic development mission.

14)    Apply split tax rate to land/buildings to promote redevelopment
Municipalities that institute a split rate property tax apply a different tax rates to the value of land and the value of the buildings on each parcel.  Some municipalities already apply a split (residential/commercial) tax rates.  Like tax increment financing, split (land/building) tax rates can be a strong incentive for additional development.   Consequently, such tax strategies should be applied only on in municipalities and districts with consistent planning and zoning in place to guide the resulting growth.  

Municipalities with split (land/building) tax rates lower the tax rate on the value of both existing structures and on new construction of buildings and improvements; and increase the tax rate on land values in a revenue neutral way. (This is often called a green tax shift.)  By shifting the burden of the existing property tax away from the assessed value of improvements and onto the unimproved value of land, which is largely related to its location and regulated development potential, it will create incentives for more efficient use of underutilized land.

Any investments in improvements either by private individuals or the community itself will result in generally increased land values, so any future tax revenue increases would be generated by increased land values. Future revenues generated by the assessment on land values will enable towns to further decrease the mil rate on improvements, thus creating even more incentives for more future growth. 

14.a    MAPC and allied organizations should assess potential application of split rate tax structures in Metro Boston

15)    Increase the use of Tax Increment Financing
Tax Increment Financing (TIF) programs grant tax breaks to developers in order to stimulate development.   Under this legislation, landowners may be exempt from paying some or all of the incremental increases in taxes that result from increased property value after development.  A municipality may enter into a TIF Agreement with a landowner for a maximum term of 20 years.

A TIF Zone must be in an area approved by the Economic Assistance Coordinating Council (EACC) as an Economic Opportunity Area (EOA) or found to be an area "presenting exceptional opportunities for economic development" by the Director of Economic Development. Certification of the TIF Plan is issued by the EACC after the plan is accepted by municipal vote.  The EACC should adopt criteria requiring consistency of Economic Opportunity Areas with MetroFuture and the Sustainable Development Principles.  No such criteria currently exist. 

15.a    The Legislature should revise criteria for Economic Opportunity Areas to reflect the Sustainable Development Principles and MetroFuture

16)    Increase the use of District Improvement Financing
District Improvement Financing (DIF) programs allow municipalities to set aside a portion of the increase in tax revenues within a specified district to be used for improvements within that district.  This is a critical tool pays improvements through future tax revenues, allowing for less reliance on developer mitigation or impact fees.  While it can stimulate development, it also decreases tax revenues available to the general fund and should therefore be applied only in highly distressed areas.  

While relatively new to Massachusetts, District Improvement Financing has been implemented in other states with considerable success. A city or town wishing to use this tool must first designate a development district and program, which must be certified by the State Economic Assistance Coordinating Council.  A development district may be as small as one parcel or may comprise up to 25% of a town or city's land, and can be in effect for a maximum of 30 years. The development program must identify zoning and land use controls, development plans, infrastructure improvements, and a financial plan.  

Once a district and program have been certified, the city or town can use various tools to implement the program. These include purchasing land, infrastructure construction or reconstruction, incurring debt, and pledging tax increments and other project revenues for repayment of these debts.  Initial funding for these activities is usually accessed through municipal bonding.  Public/private partnerships can also be used to implement the program.

Additional flexibility in the District Improvement Financing program might result in more widespread application of this tool.  In particular, the program might be modified to permit off-site improvements that are directly related to the district.  For example, a municipality planning for town center revitalization might use DIF to fund the development of an off-site wastewater treatment facility, or infiltration beds for treated wastewater.  Similarly, DIF might be used to acquire a well site and aquifer protection land necessary to serve new compact growth.  

District Improvement Financing can be an effective incentive for growth, since the cost of improvements is not borne by the developer through mitigation payments, impact fees, or direct improvements; instead, the program transfers the cost of improvements to the municipality, along with some of the risk.  In order to minimize that risk, municipal policies should be coordinated to steer growth into the designated districts.  If an abundance of developable land exists elsewhere, or there is limited development potential within the district, then anticipated growth will not materialize, nor will the tax revenues necessary to pay for improvements.  In order to advance this coordination, the Massachusetts Office of Business Development should require development districts to demonstrate consistency with local plans, MetroFuture, and the Commonwealth Sustainable Development principles.  Currently there are no such criteria. 

16.a    The Legislature should allow municipalities to use DIF funds for off-site infrastructure improvements

16.b    Massachusetts Office of Business Development should establish consistency with MetroFuture and the Sustainable Development Principles as a criteria for DIF approval

17)    Enable widespread application of Impact Fees
An impact fee is a calculated and consistent charge on new development that is used by municipalities and other public entities to offset the cost of providing new services.   For example, a municipality can collect impact fees from developers to pay for a turn lane that will be needed once the traffic volume increases due to several developments, but each of the developments has paid “its fair share” of the cost into a mitigation bank so that the dollars are available once the lane is needed.  This process allows the municipality to meet the cumulative impact of multiple developments, which currently burdens the municipal infrastructure.  

Currently, impact fees are not expressly permitted in the state. Instead, many municipalities negotiate exactions that can be unpredictable and costly to developers, while often failing to mitigate the full impact of developments.  The current “closed door” process has little rhyme or reason.  Sophisticated municipalities might squeeze more out of developers, while larger developers have the resources and experience necessary to navigate the overly long and complex process.  Cities and towns may lack the technical capacity to evaluate impacts or to effectively negotiate with developers.  For municipalities, the benefits dwindle when boards are working at cross purposes and resources are consumed by long negotiations.

MAPC should work with stakeholders to develop legislation and guidance that would support application of impact fee assessments consistent with zoning, local plans, and regional plans.