A neighbor's view of dirt pile at Symmes.

Treasurer clarifies bond cost, saving, says past taxes paid

The pile of dirt rising above Arlington that once was Symmes Hospital was supposed to have pricy apartments by last summer, offering views of Boston and returning tax revenue to the town by now, but the national economy stopped in its tracks the largest potential development project in town history. Instead, the site is producing a pile of bills and no income for the town. Still, given a struggling economy, the town treasurer says he has control of a tough situation.

Told that some in town believe a $6 million to $7 million Symmes payment is due this year, Gilligan said in an interview in July, "Nope, that's not true."

The amount paid on bonds for the site this month was $456,393, $99,393 of that interest. Another $70,975, all interest, is to be paid in February.

No Symmes costs have yet hit the town's tax levy, according to town officials who reviewed the issue for Charles Foskett, chairman of the town's Capital Planning Committee.

Aug. 15: Planners keep pushing
May 24: The neighbors' view

The total amount of the general obligation urban-renewal bonds is $5,262,000. The principal is to be paid in slightly increasing amounts through June 2022.

The situation could have been worse, Gilligan said. A bond deal Gilligan secured last December will save the town $5 million to $10 million in interest, he said.

The 18-acre site the town bought in April 2002 for about $14 million so it could control development has been owned since 2007, in part, by a now-bankrupt but still-functioning builder, JPI.

Facing a hefty tax lien for 2009-10, JPI in July paid $208,879.17 in taxes for the site's large parcel and $11,214.68 for the small, Gilligan wrote July 29.

The payments kept the town from going to Land Court to foreclose this year, and the tax lien was rescinded in July, he said.

The total to be paid for the Symmes site through next February is $527,368, not a much larger amount that some imagine. But with no money coming for the project, how are the payments budgeted?

A review of town budget records available online turn up two references to Symmes. Both turn out to refer to the same amount for Symmes, $100,000. The references are:

1.) $700,000 in the May 2010 Capital Planning Committee report to Town Meeting (.PDF)

2.) $100,000 in the Finance Committee Report to the 2010 Town Meeting (.PDF, p. 49)

Asked about No. 1, Gilligan wrote July 29: "Debt service (borrowing) is paid from the capital budget, which shows the previous debt as well as the new debt. The Symmes bond is paid for out of the capital budget."

He referred YourArlington to Allan Tosti, chairman of the Finance Committee, "as it’s his budget, or Carol Kowalski since the Planning Dept. has direct control of the Symmes project."

Tosti explained the $700,000 in e-mail July 29: "That $700,000 is mostly other. It consists of $500,000 for the snow and ice deficit, $100,000 for court judgments and $100,000 from Symmes taxes to pay for outstanding Symmes debt."

As for No. 2, Foskett, head of the Capital Planning Committee, offered more detail. In an e-mail Aug. 11, he provided an explanation compiled from responses by Adam Chapdelaine, the assistant town manager, who "garnered most of this information from various sources, including [town Comptroller] Ruth Lewis and the treasurer's office." Foskett said he also spoke with Fred Fantini, the assistant treasurer, and added his own historical perspective.

Contradicting Gilligan, Foskett wrote that the bond payments are not included in the capital budget, and Symmes expenditures have never been included in the capital budget or operating budget.

Following a vote at a Special Town Meeting in January 2002, he wrote Aug. 11, "the town created an Urban Renewal Plan project for Symmes which was to collect all the costs and expenses of Symmes, and, if possible, keep the expenses off the Arlington budget (that is no cost to the taxpayer) by using income from rental and sales of Symmes assets, and taxes on the Symmes property to pay the cost of funds.

"As I understand it, and this is an unaudited statement by a layman/citizen volunteer, not a Town Official," Foskett wrote, referring to himself, "through FY2010, no Symmes costs have hit the tax levy."

He offered this history: "You may remember the Symmes bonds were debt excluded." On March 31, 2001, in a townwide referendum, voters approved the acquisition of the Symmes Hospital campus via a debt-excluded financing by a margin of 59 percent to 33 percent.

"You may also remember that at one time, when the authorization for the bonds was passed, there was a caveat in the vote (at my recommendation at Town Meeting) that required that any tax revenues from Symmes would first be used to pay the financing costs (bonds) of the project.

"This may have been adjusted by [Town Meeting] to also cover any direct incremental town expenses incurred as a result of Symmes. But the general idea was that the income from capital sales, rents or leases and taxes would be used to protect the taxpayer from an additional tax burden."

Foskett went on to explain that a characteristic of an urban renewal project -- that income from the project can be used to pay the expenses of the project.

"In my mind it acts a little bit like a separate corporation or authority, except that at the end of the day, it is guaranteed by the town."

Until last year, the Symmes project had only short-term debt -- bond-anticipation notes, or BANs 
Last December, Gilligan, the town treasurer, issued $5,260,000 general obligation bonds for Symmes to take advantage of low interest rates.

A booklet from First Southwest provided by Gilligan shows interest rates on the AAA bonds for 2010 and 2011 at 2 percent. The rate rises to 3 in 2012 and falls back to 2 the next year. The highest rate is 4 percent in 2020 and 2021.

Eventually, Foskett wrote, the state would require us to convert the BANs into bonds.

"As I understand it," Foskett wrote, "approximately $488,000 remained in the urban renewal project account at the end of FY2010.

"In addition, at Town Meeting, TM created a $100,000 tax reserve (these are allocated funds -- along with snow/ice [budgets] and court judgments -- a total of $700,000) to flow from tax income on Symmes to the bond payments. This is summarized in the bottom right-hand corner of Exhibit C, page C1 of the Finance Committee Report to the FY 2010 Town Meeting (p. 49).

"So if the town collects $100,000 (actually, at least $45,495), the Symmes bond expense will not hit the tax levy in FY2011.

Looking ahead to 2012, Foskett wrote that "unless the project is developed ... the taxes collected will probably not exceed the bond payments. In that event, any debt service not covered by Symmes asset income will be added to the exempt tax rolls, and need to be voted as part of the town exempt debt service in the Capital Plan."

Any time a city or town does not vote enough money to pay its debt service, the state Department of Revenue will automatically add it to the tax recapitulation and require the assessors to raise taxes to pay the amounts, he explained.

Symmes background links

Q&A about financing, 2007 

Symmes portal, town Web site Symmes link