Cost of Development Analysis

There is an ongoing community discussion as to whether new development pays more in taxes than it demands in municipal services. This web page is designed to help inform this discussion.

It is clear from the literature and the limited Northampton data:
1. Overall, private farms and forests pay relatively low taxes but consume even less in the way of municipal services, creating positive municipal fiscal benefits. Farms and forests also have positive economic impacts on the community that further help the economy. This applies both for those parcels without any use restrictions and those with permanent conservation or agriculture preservation restriction.
2. Protected open spaces in public or non-profit hands pay no taxes, but they consume so little in terms of public services, enhance the property values of surrounding parcels, and contribute to the quality of the community that their net municipal fiscal benefit is clearly positive.
3. Generally, commercial and industrial uses contribute more in taxes then they consume in services, largely because they do not directly create a demand on schools.
4. The AVERAGE residential property apparently consumes more in services then it pays in taxes, primarily because of school costs.
5. Many, but not all, new residential projects pay more in taxes than they consume in services because the cost of housing is so high. We do not know what this "tipping point" is of when the community makes money. Because of the issues spelled out in the next paragraph, so far it has not been worth the investment of time and money to make this calculation.
6. Simple direct municipal fiscal impact calculations leave out several critical factors, which are difficult to calculate but critical to Northampton's economy. Having enough housing to house Northampton's work force is critical to Northampton's sustainability (this is referred to as a jobs-housing balance). This housing reduces traffic congestion (because people who work here don't have to drive) and to the economy, because employers know that their workers can be housed.

• Housing the Commonwealth's School-Age Children The Implications of Multi-Family Housing Development for Municipal and School Expenditures, prepared by Community Opportunities Group and Connery Associates for the Citizens' Housing and Planning Association, is an attempt to better understand the fiscal impacts of multifamily housing.
• Review of Fiscal Impact Studies This study, prepared for the Highland Community Initiative by the American Farmland Trust, focuses on studies relevant the the hilltowns west of Northampton. Much of the work is relevant to Northampton
• Fiscal Impact of New Housing Development in Massachusetts This sutdy, prepared by the University of Massachusetts and their Donahue Insitute, is an attempt at an unbiased review of the fiscal impacts of development
• Massachusetts General Laws Chapter 40S The Commonwealth of Massachusetts has responded, in part, to the debate about whether housing pays its own way or not. When communities adopt "Smart Growth Overlay Districts" to enourage more residential development close to urban ares, the Commonwealth has agreed to pay the costs of education that are not covered by the tax benefits of that growth, if any.