Several types of bonds are expected to be used to help finance the redevelopment of a former naval air station south of Boston.
The Navy closed the South Weymouth Naval Air Station in 1997 and authorities plan to transform the site, located about 15 miles south of the city, into a 1,440-acre mixed-use community known as SouthField. The plan calls for 2,855 new housing units and two million square feet of retail and commercial space, along with an 18-hole golf course.
Major infrastructure upgrades will be necessary and Massachusetts lawmakers are working on a measure that would authorize the South Shore Tri-Town Development Corp., the authority overseeing the project, to sell debt out to 35 years.
Under current law, passed in 1998, Tri-Town has the power to set property taxes, along with betterment and special assessment fees, and to leverage those revenues to support capital improvements. The new legislation would push Tri-Town bonds out to 35 years from the 20-year maximum previously set. It would allow the corporation to sell not only debt backed by Tri-Town's full faith and credit and special assessment fees, but also bonds secured through a form of tax increment financing called district improvement financing. DIFs would enable Tri-Town to leverage a portion of future real-estate tax increases due to anticipated appreciation in the value of the land on which SouthField will be built.
"The initial legislation did have a version in there for issuing bonds but as we looked at the development, we found that sections of the legislation had to be amended to increase the amount of bonds that we could issue," said James W. Lavin, chairman of Tri-Town's five-member board of directors, which has municipal oversight of the development.
Tri-Town has yet to sell any bonds or notes for the project. It has a combined general obligation and DIF bonding capacity of $110 million. The new legislation would allow the authority to sell debt backed by betterment and/or special assessment fees, "which shall not be subject to any maximum dollar amount," according to the measure, H. 4586. The Tri-Town bill currently sits in the House Ways and Means Committee.
The new credit could be heading to the municipal market as early as late summer depending on the progress of the legislation, according to bond lawyer Robert Hale from Edwards, Angel, Palmer & Dodge LLP, Tri-Town's bond counsel.
He declined to estimate how much debt could be issued in total as officials are still working on the transaction's structure. The financing could include both GO and special assessment borrowing.
"It might be a combination," Hale said. "Special assessment certainly would probably be a part of it, and there may be a GO portion too - that hasn't yet been determined."
He said Banc of America Securities LLC will price the debt.
Tri-Town has the ability to sell GO bonds and notes because state lawmakers granted it taxing power on property within the SouthField redevelopment site and restricted the three towns that the former military base falls within - Abington, Rockland, and Weymouth -from taxing the land.
The new legislation would allocate any excess Tri-Town revenues to the three towns each year, with Weymouth receiving 46% of surplus revenue and Abington and Rockland gaining 42% and 12% , respectively. The revenue distribution is based on the ratio of the land area of each town located within the boundaries of the redevelopment site.
"Tri-Town acts and is empowered just like any city or town," Hale said. "It's like a sub-city inside these other three communities and that's why it's called Tri-Town. Property is in three communities, most of it is in Weymouth, but part of it is in two other communities, and this was set up as, in essence, a body politic incorporate and given many of the same powers as municipalities within its area. So, the property on the base is subject to taxation by Tri-Town but not by the other communities."
The proposed special assessment borrowing - which leverages fees that Tri-Town would charge property holders for improvements to the area - would be specific to SouthField. Currently Massachusetts municipalities cannot issue special assessment debt without the passage of specific legislation. Lawmakers last month shelved a special assessment bond bill, called 40T, for further review. The measure would allow special assessment borrowing throughout the state, yet officials believes the initiative needs additional evaluation.
Additional financing for the SouthField project will come from the state level. The Massachusetts Development Finance Agency will sell $45 million of debt on behalf of Tri-Town to help finance a major roadway project within SouthField, according to MassDevelopment spokesman, Adam Bickelman.
While MassDevelopment will be the conduit issuer on the deal, with Tri-Town as the borrower, the debt will carry the commonwealth's GO-pledge and the state will pay the debt service on the bonds through annual appropriation. The bond proceeds will help finance an east-west parkway through the site, which will add an additional entranceway into SouthField and help relieve traffic congestion in the area.
LNR Property Corp. is the major real estate developer working on the site. Redevelopment of the site will take 14 years and is based on a Smart Growth development plan that promotes walking or biking within the community as opposed to using cars. There is a commuter-rail station located in Weymouth that provides access to downtown Boston. The area will also reserve 72% of the former naval base - more than 1,000 acres - for open space and recreation, leaving 384 acres for housing and commercial development.
Construction will begin this fall on roughly 500 homes and apartments in SouthField Highlands, the first of five residential communities within the site. SouthField will offer a total of 2,855 housing units, with 25% set as affordable housing, according to Lavin.
The area will also contain a $30 million, 48-acre indoor/outdoor recreational center and an 18-hole public golf course that will be used as a winter park, along with forest areas and wetlands.
The master plan also includes a village center that will provide retail space and there will be office space throughout the site. Developers are also designing a 1.5-million-square-foot SouthField Science Center to house biotechnology and pharmaceutical companies.
Officials said the combination of residential, retail, and commercial development that would incorporate bio-tech industry will generate additional revenue growth for the area and for the Bay State. The redevelopment is expected to generate nearly 7,000 on-site construction jobs over a 12-year period, along with 3,000 permanent jobs within SouthField and another 7,500 regionally generated permanent positions, according to the development's Web site at www.southfield.com/index.aspx.
"I hate to use an old word, but it's going to be an economic boon to the South Shore region," said Tri-Town's Lavin.