Massachusetts Lawmakers Sit on Special Assessment Bill

Special assessment bond financing will have to wait in Massachusetts, as a bill that would allow such borrowing throughout the state continues to rest in committee. The Joint Committee on Bonding, Capital Expenditures, and State Assets has been working on the special assessment bill since June 25, and could hold a public hearing on the initiative in January or February, according to Rep. David Flynn, D-Bridgewater, co-chairman of the committee. Over the past few months, Gov. Deval Patrick has filed five bond bills totaling $6.5 billion, keeping lawmakers busy with capital planning issues.“There’s just no way we can get to it until the first of the year,” Flynn said.Along with the various borrowing initiatives, officials say the special assessment bond financing bill is a very complex measure that lawmakers need to study carefully before moving forward. The legislation, called 40T, would allow local governments and the Massachusetts Development Finance Agency to issue special assessment debt and give municipalities another financing tool for capital projects. That type of financing enables issuers to fund infrastructure upgrades by leveraging special assessment fees paid for by the homeowners and private businesses that benefit from the enhancements. As of now, local communities use general obligation debt or tax increment financing, which is known as district-improvement financing, or DIFs, in Massachusetts. But as drafted, 40T could allow private companies to access the tax-exempt bond market, an issue that the committee continues to evaluate.“That’s a touchy subject and I’m not really at liberty to say what the final decisions mean because we do have to certainly face the legalities of that,” Flynn said. “And that has really, in my opinion as chairman, caused a temporary hold on it until we know that we can go forth with the due diligence to overcome what might be a barrier at the present time.”MassDevelopment will designate proposed improvement plans as an economic development project, which the authority will then issue bonds for, or deem the zone a local improvement district. With local improvement districts, a five-member panel, called a prudential committee and comprised of real estate owners within the affected area, would oversee the bond issuance. The property owners could include business owners as well as homeowners, and 40T currently does not restrict or limit the number of commercial owners on the prudential committee.Hal Davis, a bond lawyer at Davis, Malm & D’Agostine PC and president of New England Economic Development, helped craft 40T and has said that having commercial property owners on the committee, and thereby controlling the borrowing process, is common practice in special assessment bonding in 30 to 35 other states. In addition, property owners on 80% of a zone’s acreage as well as 80% of the tax parcels within the zone must all agree to forming a special assessment district before presenting a proposal to MassDevelopment.