Open Letter

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Dear Representative Flynn:

Last week, Pew Research released its rankings of state governments. Unfortunately, Massachusetts received a D+ for the condition of our infrastructure. In addition to our transportation needs many of the thirty-five percent of homes in Massachusetts that rely on septic systems, require connection to common sewer systems. Several bond issues dealing with transportation and other infrastructure needs are before the legislature. This will help. However, the Pew Research study, also pointed out that the Commonwealth has the highest per capita debt of any state. Given the reluctance of Massachusetts taxpayers to accept increased State and local taxes, what are we to do?

Thirty-nine other states have been using a method to finance roads, water, sewer and other improvements without imposing additional tax burdens on state and local property tax payers. Last year, in excess of $10 billion in infrastructure financing was utilized by these states funded through special assessments or betterment fees placed on the real estate benefiting from such improvements. We are missing out on this source of capital for Massachusetts because our General Laws do not currently provide a usable framework to structure such financing. We have billions in unmet infrastructure needs. What can be done to access such new funding sources?

Fortunately, your Committee is reviewing H. 159 that would establish the MORE Infrastructure Program, designated as Chapter 40T. This would provide a totally optional method for our cities and towns, with the approval of property owners, to fund local and State infrastructure needs through special assessments placed only on the benefited property. A detailed Improvement Plan describing the nature of the improvements, the method of financing and assessing and other details must be submitted along with the petition to the municipality by the property owners. The city or town must hold a public hearing and can turn down the petition, for any reason, if it chooses to do so.

The use of betterments and assessments is certainly nothing new to Massachusetts. It is often used by our cities and towns to recoup the cost of new roads or the extension of water and sewer lines that benefit particular parcels. The problem is that our cities and town must issue bonds backed by the full faith and credit of the community to pay for the infrastructure. This may well impose financial risk on the municipality and limit its ability to fund other worthwhile public needs. Under the MORE Infrastructure Program, the city or town is relieved of any financial liability as the bonds would be issued by MassDevelopment or a Local Improvement District. The owner of the real estate is allowed to pay the betterment fee back over as long as 35 years as opposed to the 20 years provided in the General Laws.

It is expected that the primary users of the MORE Infrastructure Program, in consenting cities and towns, will be existing neighborhoods with deficient sewer and water systems and new real estate projects supported by the community. Given the current poor condition of our economy and State and local finances, property owners and communities must find new and imaginative methods to fund infrastructure needs. The MORE Infrastructure Program is one such method that should be enacted into law.

Sincerely,

Harold R. Davis, President
New England Economic Development, Corp.
80 Orange Street
Douglas, MA 01516
508-476-3900