Quantifying the Economic and Fiscal Impacts of Potential Development in Wenham, MA
Quantifying and understanding the economic and fiscal impacts of potential development is crucial for communities to evaluate and compare the effects on their economy and budget. Cambridge Econometrics developed an interactive dashboard tool to assess the fiscal and economic impact of different development types and growth scenarios in Wenham, MA. We evaluated the scale of development that would be required for the town to achieve its tax revenue benchmarks and how different types of development can contribute to net fiscal impact gains for the town.
Building on our work with JM Goldson on the Wenham Master Plan, the town of Wenham, MA, was interested in an economic and fiscal analysis to understand how new commercial development would impact the town’s reliance on residential tax revenues. Currently, commercial, industrial, and personal property levies only contribute about two percent of the town’s total property tax revenue, with residential properties accounting for the remaining 98 percent. To explore ways to shift this tax burden, Wenham’s Master Plan Advisory Committee requested an illustrative benchmark assessment of fiscal impacts if net revenues from new commercial and industrial properties grew to make up 5 to 10 percent of the total current property tax revenue.
Our Approach
The Interactive dashboard tool developed by Cambridge Econometrics analyzed the net impacts Wenham can expect from different scales and types of development, showing the amount of commercial development needed for the town to achieve its 5 and 10 percent benchmarks, including:
- Mixed use (first floor commercial, upper story residential)
- Research lab and office
- Industrial (warehousing or manufacturing)
- Single-family residential
The tool uses a combination of town-specific data (such as assessed value and property tax rates) and project-specific inputs (including square footage of development and mix of uses) to generate impact metrics. These metrics include gross property tax revenue, net revenue impacts (accounting for increased expenditures from growth), housing units, population, jobs, and more. The tool allows users to select development parameters, such as building size and use and estimates net fiscal impact results based on these inputs.
Below is an example of the tool’s outputs from a mixed-use development project:
Findings
- To achieve the ambitious benchmarks of net revenues from new commercial developments making up 5 to 10 percent of the total current property tax revenue, new commercial developments would have to earn a net fiscal impact of between $1 million and $2 million per year.
- Research lab and office development have the highest net fiscal impact (up to $275,000 annually). This development type would also support about 380 high quality employment opportunities. Even so, this development would achieve less than one-third of the town’s low range benchmark.
- Multiple or larger developments would be necessary to fully meet the town’s benchmarks. For example, doubling the size of the research lab space would lead to a net fiscal impact of $550,000. If the town pursued that larger development, plus a mixed use and two industrial/warehouse developments, that would more or less achieve the low range target.
- We also worked with the town to identify potential development sites and assessed the next steps necessary to advance these sites towards market ready opportunities that could attract private investment.