When Chris Nash of Topsfield Associates—the most recent prospective developer of the Smith property—appeared before the Planning Board last month, he described a project that included a chain pharmacy of 13,000 square feet, a retail/office building of 20,000 square feet, and 135 parking spaces. He suggested that the assessed value of his proposed project would be in the neighborhood of $10 million and could generate possibly $200,000 in taxes to the town. The $200,000 number has since been picked up and repeated in other venues.
Even though this project now appears unlikely to happen, let’s take a look at the asserted tax impact just in case it ever comes up again. And let’s start by seeing what an assessed value of $10 million looks like for retail-intensive developments.
The chart below compares the key metrics from 2 nearby retail centers that each have assessed values in the ballpark of $10 million. The Topsfield proposal, for comparison, is shown in the right column. It’s hard to see how it could get to a valuation of $10 million based on this data.
So what is a more realistic assessment figure for the kind of development that was proposed by Topsfield Associates? I’m not an expert in the intricacies of commercial property valuation, but here’s one that appears to be a good comparison: 100 Boston Road in Groton, MA contains a 16,000 square foot CVS (pictured above), a separate 15,000 square foot professional building on two floors, and 112 parking spaces all on 9 acres. It’s located on a state highway–Route 119/225–just outside of the center. Overall, it’s as close a comparison as you’ll find, I think. Current assessed value in Groton for that entire package is $2,556,700.
This CVS-anchored property in Groton would yield property taxes of about $49,600 if it was in Bolton. If you consider that the Smith parcel in its current state is generating about $13,000 in annual taxes, the net impact then is really more like $36,600.
The $36,600 number itself becomes even smaller if you factor in an average Cost of Community Services (CoCS) allocation for commercial/industrial property. Studies suggest that for every dollar of tax revenue from commercial/industrial property, there is normally about 50 cents worth of municipal expense required to support it. The other 50 cents is the true additive contribution. That means that the $36,600 from above represents about $18,300 in true impact to the town budget. We’re now a long way from $200,000, and we haven’t even talked about impact to surrounding property values and other issues associated with this location.
So, it seems as if it would take at least four CVS-type developments to reach the $200,000 figure that has been floated, that is if you used the higher $49,600 tax revenue number. If you used the lower number of $18,300, it would take ten such developments. As they say, be careful what you wish for.
—Roland
*To anticipate a possible question, yes, there are other taxes that come to the town from businesses, for instance: personal property tax on tangibles such as equipment, furnishings, inventory. These sources of revenue, from what I can tell, tend to be a small part of the overall tax profile of a business-zoned parcel when compared to the land and buildings part (the exception, of course, being businesses that house sophisticated technology or machinery).
Bolton Center Historic Neighborhood Blog 
Thanks for the insight Roland. It definitely helps to have both the visuals and comparisons layed out to see what the impact might be of a similar project here in our town center.
Roland,
Thanks for the insightful analysis. Another interesting analysis is to take the mythical $200K and look at the impact on the average residential tax bill. According to the assesssors yearly report (http://www.townofbolton.com/pages/BoltonMA_Assessors/BoltonAssessmentBrochure2011online.pdf) , the average tax bill for a single family house for the current year is approximately $8851 ($717 Million assessed value / 1574 houses * 19.42 tax rate /1000). $200,000 is apporximtely 1.2% of total tax collections. Thus a 1.2% reduction in the average residential tax bill would be approximately $103. At $36,000 we are talking about an approximately $19 reduction in average tax bill.
I would rather get rid of cable TV for a month to save $100/year than have to put up with the increase in traffic in our town center and change in character that this development would bring.
Does this take into consideration the increased cost in police, fire, equipment for police and fire departments? Does this take into consideration the increase in need for road repair? So if it doesn’t then wouldn’t the overall net taxes be actually a loss?
Agree, and indeed I have attempted to take those factors in account in this post–that’s what “Cost of Community Services” is all about. The studies say that for every dollar of tax revenue from commercial/industrial land use, it costs an average town between 35 cents and 65 cents in services to support that land use (fire, police, infrastructure, other services). In the example in the post, I used the mid-point number of 50 cents. That’s still a financially positive contribution, to be sure. My real point with all this is that when we’re talking about these kinds of numbers (“…this development could bring in $xxxxx to the town coffers!”), we should view them with some balanced analytical perspective–let’s use numbers with some basis in reality first of all and then let’s account for costs and consequences, as well as benefits, when making judgements about these kinds of issues.
-Roland
Potentiality this property could see 75,000 – 80,000 sq.ft. The design that was on the board before showed that… what would be the tax benefit then. Rolland I’m glad you added the piece at the bottom the tax benefit from a big Pharmacy is calculated much lower than say a medical building or a R&D type of structure. But I do think it is a bit misleading. I would suggest that some of you actually go down to the assessors dept. at town hall and research these. The light on this may then shine ( to some of you ) a bit differently. The window to this property in this blog is not the view… it only allows a view. Every house I’ve ever built has more than one window.
What would you all like to see done with this property? How would you like to see it cleaned up? Who is going to clean it up? All I’ve read in this blog is what you don’t want. Tell us all what you do want… educate us all your ideas or plan for that. Take a look at your tax bill, its not going to come down, we are not ever ( because we spent money like drunken sailors in the 90’s ) see our taxes lowered. The rate may drop but values will be up. Trust me on this… it will get developed, it is a gate way to a much bigger piece, the 40B’s are still here in Mass. Lets plan and not react. Lets build something and not tear every idea to pieces.
David, Don’t always agree, but I love the different perspectives and discussion this kind of site affords. It takes a village. Re: what would you like to see? … workin’ on it, stay tuned.
-Roland
Personally, I’m not sure how an old run down service station adds to the town center. It would be great to have a nice restaurant and some small shops in that area. Create more of a downtown feel.