I have read the report to the Board of Selectmen by the Devens Economic Analysis Team and their analysis of Vicksburg Square. I have spoken out against the information presented in the report and will now expound upon my opinions.
My background is in real estate analysis with more than 20 years’ experience. It is this knowledge and experience I bring to bear on the DEAT analysis, which is long on words and short on facts. Real estate cannot be examined in a vacuum, but that is exactly what the DEAT report presents. They have conveniently missed the following facts:
DEAT states that with a 75 percent ownership and 25 percent affordable ownership project, individual units will sell at $195,000 restricted as affordable. This is incorrect based on the following market data:
- The last Devens income-restricted (15C) townhouse condominium sold for $98,700 in August 2011.
- The last Ayer income-restricted townhouse condominium (5C Bayberry) sold for $182,000 in December 2009. It is 1,764 square feet in size.
- Shirley has no new income-restricted condominium units presently.
- The last new income-restricted unit at Trailside Ridge in Harvard sold for $163,000 July 2009.
- New income-restricted units at Harvard Common are offered at $163,000.
- New income-restricted units at the proposed Pine Hill Village in Harvard are projected to sell at $171,000.
These sales show that there is nothing in the current market to demonstrate that any restricted/affordable units, of a garden style, would be able to sell at any price near $195,200. This is important because it makes a portion of the 75/25 ownership scenario impossible and financially infeasible.
The same type of analysis is presented for market rate prices. The 75/25 ownership scenario requires market rate units to sell at an average of $385,500 each. This is incorrect based on the following facts:
- The last Devens townhouse condominium (5D Elm) sold for $235,000 July 2011.
- The last Devens garden style unit (27D Elm) sold for $255,000 June 2008.
- The last Devens four bedroom colonial sold for $400,000 September 2011. This is only $15,000 higher than proposed sales price for market rate garden style units.
- Unit Sales in the Willows (Ayer) offer new, detached condominium units at $334,900.
- Townhouse sales at the Willows generally run from $269,900 to $289,900, depending on size and amenities.
- Duplex style units in Shirley (age restricted) are offered at $224,900.
- The last market unit in Harvard’s Trail Ridge, 15C, sold for $345,000 July 2011.
- New units at Harvard Common are offered at $325,000 to $425,000. These prices have been reduced $200,000 since they were first offered to the market. There have been no sales and none are pending. This includes affordable units.
Therefore, there is no market evidence demonstrating garden style units at Vicksburg Square could achieve average prices at $385,500. While Victor Normand publicly stated this figure is only for analysis purposes, the huge discrepancy between what garden style units at Vicksburg Square could achieve in this market and the overreaching sales prices proposed by the DEAT remains the basis for the fictional tax difference.
I understand the reason for placing sales prices at these inflated figures; it is required in order to recover all of the investment to renovate Vicksburg Square. The fact that sale prices cannot even come close to these DEAT figures is a significant reason why the 75/25 ownership scenario is not economically feasible.
Clearly, the $83 million cost for renovation cannot be recouped under this 75/25 ownership scenario. By the same rationale, the reported tax income would also be incorrect and therefore DEAT greatly overstates the possible tax revenue. The entire scenario asserted by DEAT is contrived fiction proven false by clear market data.
One additional fact not considered by the DEAT analysis is the fact that if Vicksburg Square were converted into an ownership project instead of rentals, it would have a higher number of children. Renters do not start families, owners do. And any tax savings based on having increased taxes under the 75/25 plan would evaporate and be overwhelmed by larger number of children generated.
One major error of DEAT omission is the fact that the new apartment project under construction in Harvard behind Dunkin’ Donuts is being built with the same type of affordable housing credits as proposed for Vicksburg Square. It is the height of hypocrisy to have an active project under construction in Harvard using the same affordable housing credits, while presenting a report slamming Vicksburg Square for their use. There was no rational reason why this information was not included by DEAT as market evidence.
Finally, the DEAT analysis cites reported evidence that nobody from Harvard would be eligible to rent an apartment even with the high percentage of affordable units. The reason for this is Harvard median income is much higher than surrounding Ayer and Shirley and likely a major reason why Harvard was not considered a primary market for potential tenants.
- Per 2009 preliminary census data, Ayer’s median household income is $55,529.
- Per 2009 preliminary census data, Harvard’s median household income is $138,893.
- Per 2009 preliminary census data, Shirley’s median household income is $72,530.
There is a huge income difference among Harvard, Shirley, and Ayer. Harvard has economic blinders on, asserting that there is no demand for affordable housing in this market. Harvard’s median income level is almost three times the median income for Ayer and almost twice that for Shirley. The commonwealth has a significant shortage of affordable housing and the DEAT analysis fails to present any argument otherwise.
Harvard has created little affordable housing over the last 30 years and should be held accountable. The entire DEAT analysis is based on providing inflammatory statements without factual basis in order to scare voters.
Instead of spending so much time and effort on a clearly biased report, why doesn’t DEAT actually analyze something that might save Harvard residents money? They should investigate the possibility of joining Devens Utilities and saving money with a local utility company. This would benefit everyone in Harvard.
Vicksburg Square is an opportunity to increase Harvard’s number of affordable units without incurring any immediate, near-term or even long-term costs to the town. Another missing fact from the DEAT report is there is no timeframe presented for when Harvard would actually assert jurisdiction. With the Joint Boards of Selectmen barely hanging on, it could easily be 2033 before any costs from Vicksburg Square land on Harvard’s door. Harvard should ask itself, what are we so afraid of?
Rick Bernklow lives on Walnut Street in Devens and is a member of the Devens Citizens Advisory Committee.
