Over the past fifty years, conventional wisdom in Burlington has been that continued development would contribute significantly to the tax base and result in the community having its cake and eating it too. Classification would allow a shift of a major part of the tax burden to the commercial sector and result in services of every kind without fees and a low residential tax rate.
Since 2002 that thinking has not been born out. In fact it has been just the opposite. The commercial industrial value of the town in 2002 was $1,473,890,731 and the commercial sector of the community paid 64.74% of the total tax levy. As of fiscal year 2007 the value has dropped over 100 millions dollars to $1,361,394,435 and the commercial sector pays 54.96% of the tax burden. This despite the fact that we have allowed a great deal more development during that period. These figures are taken exactly from the town assessor Russell Washburn's tax history chart on the towns web page.
Since the events of 2001, the region and the country enjoyed a significant economic boom yet our commercial values fell while our residential values skyrocketed. This combination of events resulted in a residential tax increase of 24% three years ago. What can be the reason for this phenomena and what does it bode for the future?
The only explanation that I can arrive at is that we have simply put on so much space that we are now driving down our own commercial values and income by virtue of over supply and the tremendous competition for commercial tenants.
This can be born out again in an analysis of the hotels in town by looking at the revenue stream from the hotel tax. What follows is a list by year of the town's receipts from the hotel tax beginning in fiscal year 1999.
1999.......$1,032,514
2000....... 1,344,562
2001........1,534,562
2002....... 1,191,603
2003......... 956,453
2004..........903,362
2005..........989,502
2006....... 1,049,991
2007....... 1,344,911
2008....... 1,432,492
The most distressing aspect of this is that the town added the following inventory of rooms. In 1999 came Summerfield Suites with 151 rooms, in 2000, Homestead with 141rooms, Staybridge in 2002 with 142 rooms and finally Candlewood in 2002 adding 149 rooms for a total of 583 new rooms added to the inventory.
The net result is that since 2000 we have almost doubled the number of available room rentals in the town yet we have not equaled the same of amount of tax revenue that we got in 2001 with half as many rooms. That can only be explained by the glut of hotel competition that was put on during that time in Burlington and the adjacent communities.
This can also be born out in the value of these hotel properties. The old Sheraton FourPoints/Wyndham Gardens/Holiday Inn on Wheeler Road was reportedly sold for 14 million dollars in 2000 but changed hands again four years later when it went out of business and was sold for $6,480,000. This, despite the fact that nearly 2 million dollars had been spent in renovations. As you can imagine, this kind of drop in value also resulted in a corresponding drop in taxes.
A complete and exhaustive analysis should be done on our projected revenue before we make any more changes to our zoning bylaw or before we allow any additional Planned Development Districts that allow increased square footage beyond what the current zoning bylaws allow. In addition, the Board of Selectmen should inform the Board of Appeals that any circumventing of the FAR by law (foot area ratio) by the Board of Appeals will be brought to court. An iron clad prohibition on hotels should be implemented unless the applicant can prove that a new hotel will increase revenue and not put one or more of our existing hotels out of business.
The reasons for this are very simple.The town has made enormous commitments already to developments that are the very cornerstone of our income. The total amount of space approved but not built or rented according to the Landlocked Parcel Study Committee is 3,997,000 square feet consisting of the following:
Trammel Crow .......227,000
Wheeler Road .........250,000
Burlington Woods ..100,000
Wall Street ..............170,000
Palomar ..................200,000
Sun Microsystems .300,000
Northwest Park ..2,150,000
South Ave ...............600,000
These numbers are a staggering addition to the in place commercial space in the town. It could take as much as 10 to 15 years to absorb this space into the market. This letter is not a call to institute any kind of a moratorium or restrict the legitimate rights of land holders. It is however, a suggestion that the town has reached a point of diminishing returns and would be foolish to pass any more zoning changes that gives away enormous increases in density. More excess supply only reduces our current values. The old argument that it is good for the residents by lowering the tax rate simply cannot be justified.
