Cushing Square Redevelopment Proposal

1. Cushing Square Redevelopment Proposal Advance Planning Needed for Town to Mitigate Key Financial, Environmental, and Performance Risks March 31, 2010

2. Benefits of redevelopment will not materialize without careful mitigation of project risks • Impacts of excessive scale on neighborhood and development path of the town. • Development team corporate structure and financial risks. • Phasing plan links to site-related commitments. • Reliability of project costs and benefits presented by development team. 2

3. Risk: Excess density will harm abutter property values; establish negative precedent in other overlay areas • Overview • Maximizing project value for development team can harm property values of neighbors. • Despite claims by Oaktree that abutter values always benefit from their projects, they have not provided requested supporting data. • Project density approved in Starr areas will be replicated in other corners of Cushing, Waverly, etc. This will expand regions subject to property value losses. • Belmont Comprehensive plan may relax zoning on houses now used as businesses (“transition areas”, p. 17), greatly increasing this risk as overlay-district density levels migrate out into residential areas. • Risk Mitigation • PB implementation of design standards should be primary driver of acceptable projects. • At least for future projects, PB should adjust maximum allowable FAR from 3.0 to 2.5 or below. Adjustment would be in line with state guidance that did not exist at the time the Cushing Overlay was passed. • PB needs to present empirical data on impacts of density increases on adjacent areas; and to clarify intent on transitional area zoning. • Any negative impacts on property, or increases in town costs, need to be deducted from project property tax claims. 3

4. Risk: Corporate structure of development creates financial and performance risks to the town • Overview • Numerous LLCs related to this development (see next page). • Risk segregation • Starr has separated contaminated sites from family; likely to reduce liability risk. • Each parcel is a separate corporation, often domiciled in DE. Use of Series LLCs suggest more corporate structures are planned, perhaps for different stages of the development processs. • Project easy to truncate on a parcel-specific basis; Town would have little recourse to attach profitable phases to cover unmet promises on abandoned phases. • LLC structure is murky • Nested holdings; some only Starr; others with Oaktree; some service others for a fee. • Ultimate owners, sources of funding not visible. • Financial strength of LLC members unclear. • Weak RE market increases risks of uncompleted project phases. • Oaktree: many demands on time and finances; Lexington property had high vacancies as of last month. • Starr: limited development track record. • Mitigation options • Greater transparency on deal structure and responsible parties. • Performance bonding or other financial guarantees or liens linked to parking lot sale, phasing, and permit approvals. 4

5. Corporate Structure Overview of Proposed Cushing Square Development 5

6. Risk: Delivery of high cost elements in later phases increases Town risk of non-performance • Overview: • Initial proposed phase: develop flat, uncontaminated municipal parking lot site. • Four main risks: incomplete environmental remediation; continuing blighted sites on Common St.; unmet promises on low-income housing; inadequate replacement of municipal parking spots. • Conversion of Tops site to parking lot could also allow Starr to meet lower environmental cleanup standards and sell the parcel. • Risk mitigation • Formalize Starr’s verbal commitments for completed cleanup within 2 years. • Establish performance bonding at time of initial sale or permitting to ensure key project commitments are met. • Ensure bonding commitments follow parcel in case Starr’s team decides to sell some lots rather than complete last phases. • Require pro-rata low income units in each phase. 6

7. Risk: Project benefits overstated • Overview • Property tax claims (~$825k/year) are inflated • Double-counting payments from existing property uses. • Much higher assume tax/rentable sf than in Oaktree’s Lexington property (which has higher tax rate, better location). • Netting existing tax, assuming same tax/sf as Lexington results in MUCH lower net property taxes: less than $200k/year. Developers have not provided clarification on this issue. • Parking claims inflated by reporting gross spaces • Net of spaces on streets, Muni lot, Starbucks lot and new tenants appears to leave ~20 new spaces for 26k square feet of new retail. • Risk mitigation • Town must develop and use independent values to use when assessing project costs and benefits. 7

8. Risk: Project costs understated • Private costs ignored to date • Property value risks to abutters. • Property damage risk to abutters if significant bedrock must be removed. • Demand on town services has been poorly characterized. • Claims of few children in the units does not comply with inhabitants of other apartments or condos in Belmont; ignores convenience of apartment living. • If only one of every five of the proposed new units has one school-age child, educational costs will offset all net property tax gains. • Impact of development on town-owned utility services has not been assessed; underground lot will truncate Horne Road connections. • Risk mitigation • Require separate insurance policies during bedrock removal to cover damages to abutters; work with neighbors on engineering study & plan. • Few options may exist to constrain growth of demands on school system; cost-benefit evaluations need to assess a wider range of scenarios than the developers have been claiming. 8