FXM and NOTOS Group Economic Data De-bunked

 The "data" accepted and repeated by the Wareham Selectmen, Finance Committee and Planning Board was built on a house of cards.


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REPORT ON WAREHAM RE-ZONING PLAN BY NOTOS GROUP Frederic B. Jennings, Jr., Ph.D. 30 March 2021 

Executive Summary of Findings and Opinions 

EconoLogistics was retained in March 2021 to examine and evaluate the NOTOS Group’s re-zoning proposal  of ecologically sensitive land in northeastern Wareham, MA from R-130 to a Hospitality, Recreational and  Entertainment Overlay District (HREOD). This proposed business development project is based on a claim that  current zoning and COVID-19 will unduly burden Wareham municipal budgets on a perpetual long-term basis.  A set of studies by FXM Associates has raised concerns for Wareham’s fiscal resilience, supporting this re-zoning  plan as a business solution. The present report examines this argument and the economic analyses on which it  rests.1 

Four reports reviewed were prepared by FXM Associates: “Wareham Economic Development Strategy”  (March 2019); “Assessment of Municipal Revenues and Costs of Potential New Residential Development in  Wareham: Executive Summary Report” (two versions, 16 November and 7 December 2020); and “Potential  Market Driven Economic and Fiscal Impacts to the Town of Wareham of the COVID-19 Pandemic” (December  2020). The last three of these four reports were prepared under contract for the NOTOS Group, the developer  proposing this re-zoning plan. Among other things, these reports suggest that the current R-130 zoning – on the  land designated by this re-zoning plan – threatens the fiscal stability of the Wareham municipal budget. 

FXM Associates projected the prospective financial losses to Wareham without the re-zoning using an invalid  series of economic arguments. 

  • First, the number of new homes is overstated; 90 homes cannot be placed on a  275-acre parcel zoned for 3-acre lots and still leave room for roads and other facilities. 
  • Second, taking the average  value of existing homes as a benchmark for the taxable value of new homes understates their tax revenue impacts.  
  • Third, the FXM analysis also exaggerated people per household to overstate their cost effects. 
  • Fourth, the scaling  up of average cost per student to determine the cost impact of new enrollments is only valid were there no fixed  costs in education! 
  • Fifth, excess capacity (from falling enrollments in Wareham’s schools) has inflated the  average cost per student (due to significant fixed costs and COVID-19), which has further biased these cost effects  upward. 
  • Sixth, the FXM measure of non-school costs, by scaling average residential use costs for municipal  services upward, suffers from the same mistake of assuming no fixed costs in the provision of town services, so  biases these costs upward as well. 

Assuming no fixed costs in education or municipal services inflates their cost effects. FXM also understates  the tax revenue impact of new homes. Consequently, the case for re-zoning this land rests upon an exaggeration  of costs and an understatement of tax revenues associated with the residential use of this land. 

Several other documents were also reviewed that were intended to guide decisions in Wareham on  environmental protection and business development proposals. Each is briefly described below. 

The 2017-2024 Wareham Open Space and Recreation Plan began with a Statement of Purpose: “The need  to protect open space, …[to] safeguard watershed areas, and protect river corridors, ponds, and coastlines is  widely recognized by Wareham’s residents.” The plan adds that: “protecting our natural water resources is very  important to the residents… The Plymouth-Carver … Aquifer … is quite vulnerable to contamination” and  “groundwater contaminants can quickly travel long distances, and affect a large area. Sound land management  policies are essential to produce development that minimizes adverse impacts on natural systems.” The plan  reviews state-level restrictions on protected lands such as Outstanding Resource Waters and Coldwater Fisheries  Resources like Red Brook, and addresses other wetlands conservation issues of sedimentation, road runoff,  nitrogen loading and sewage disposal, calling for “a collaborative effort of Wareham’s Town Administrator,  

  

1 Dr. Jennings, the author of this analysis, has served as an economic consultant for over 35 years. He has frequently testified as an  economic damages expert in court, a context that demands an exacting and rigorous care in one’s economic analysis and conclusions.

Board of Selectmen, Town Planner, the Conservation Commission, the Community Preservation Committee, the  Open Space Committee, the Commonwealth of Massachusetts, local, regional, and state conservation  organizations, and Wareham’s residents” to protect open space. The Wareham town leadership endorsed this  Open Space Plan with a unified and enthusiastic voice. 

The Wareham Zoning By-Laws, identified in the Open Space Plan as the town’s main source of environmental  protection, explain that a “Groundwater Protection Overlay District” – which “includes all areas within the  delineated MA DEP Zone II Wellhead Protection Area” – prohibits an array of uses including “wastewater  treatment facilities.” This Wellhead Protection Area seems to lie within the proposed HREOD zone that allows  “wastewater treatment facilities.” 

The Town of Wareham Master Plan thanks these entities for their support: the Planning Board; Board of  Selectmen; Town Administration; SRPEDD; and many others. The primary goals of this Master Plan include:  land use, open space and recreation; natural and cultural resources; etc., and the plan calls for “collaboration” and  “public participation.” Among its most important goals is “permanently protected open spaces” and the protection  of “watersheds, wetlands, salt marshes, rivers, bays, and ponds … for current and future use…” “Open Space  Goal 1” is to “Implement the 2017-2024 Wareham Open Space and Recreation Plan” and Goal 2 is to “prioritize  land conservation” with the help of the “Open Space Committee, Planning Department, Conservation  Commission.” The Master Plan also endorses two “Natural and Cultural Resources Goals … to increase climate  resilience in Wareham” and to “Protect Wareham’s Water Resources” by reducing “nitrogen pollution” along  with “fertilizer and pesticide use near flowing water.” 

The Town of Wareham Multi-Hazard Mitigation Plan warns: “Wareham’s natural environment and natural  resources are important to the Town’s identity and quality of life” because “large stretches of open space, forested  land, and upland … support the economy…” The plan expresses concern about wildfires, drought and extreme  temperatures, and about runoff and nutrient pollution that risk eutrophication which “affects the whole ecosystem”  and can disrupt “residential water supplies.” This plan stresses the importance of following “Town Plans and  Policies” on “land use, economic development … open space… natural and cultural resources [and] …climate  resilience.” 

This re-zoning proposal appears to conflict with the town’s ‘official position’ on environmental conservation in its land use priorities. The Wareham community has established a detailed set of standards and guidelines for  its economic development decisions. The claim that Wareham’s finances are at risk under current residential  zoning arrangements lacks any credible or substantive justification. There is no oncoming or imminent fiscal  crisis that this re-zoning proposal will solve. 

The carefully considered opinions presented in this economic analysis are valid to a reasonable degree of  economic certainty, based on my many years of experience as a professional economist. 

Signed: Date: 30 March 2021 Frederic B. Jennings, Jr., Ph.D.

CONTACT INFORMATION: EconoLogistics, P.O. Box 946, Ipswich, MA 01938-0946 Email: econologistics@yahoo.com; Phone: 978-356-2188.


Full report: http://bit.ly/warehamdata