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I-Cubed Again

by Dave Atkins

Expect a fast track and mad scramble on all fronts as life is breathed back into the Westwood Station project following Governor Patrick's announcement that the state is ready to spend up to $55 million to thaw the snow from the frozen mounds of dirt on University Ave.

Part of the funding now depends on Cabot, Cabot, and Forbes pursuing I-Cubed financing--which will require authorization from Town Meeting. The meeting warrant was closed on January 4, but the Board of Selectmen placed several "placeholder" articles in the warrant to allow for possible future Westwood Station-related issues. These will likely be updated to include whatever is necessary.

Last night's Finance Commission meeting began to consider annual town meeting warrant articles, but tonight, in addition to a Library presentation, the Commission will hear an update on Westwood Station. Future meetings will provide an opportunity to more fully discuss whatever measures come foward. At this point, CC&F must still re-apply for the funding, so discussion remains speculative at best...

Submitted by Dave Atkins on January 26, 2010 - 6:00am
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Comments

I-Cubed Funding

Submitted by Joanie Morgan on January 26, 2010 - 9:27am.

Dave,

I remember a brief discussion at a meeting last year regarding I-Cubed funding.  I believe it was a fincom meeting and the discussion was brief.  Do you have more information about I-Cubed?  I was under the impression that the town would have to assume the debt not the developer.  And if anything happened, the town would be responsible.  This is all new to me and I could be totally mistaken.  Do you have a different understanding of the issue? 

Joanie

risks of I-Cubed

Submitted by Dave Atkins on January 26, 2010 - 10:42am.

My understanding of I-Cubed (follow link to legal analysis of the program) is that it is a financing program (construction bonds issued by the state to provide cash to the developer) that is based on the idea that the planned development will generate state tax revenue. Initially, the state covers the debt servicing. Once the project is up and running, and generating state tax revenue, the state continues to service the debt because the overall economic benefits exceed the cost of debt servicing. But if the project fails to generate revenue, the local municipality is responsible for servicing the debt. The developer can choose to cover this expense.

So what could go wrong? Worst case scenario...station is built, nobody comes. Whatever amount of financing came from I-Cubed...Town of Westwood is on the hook to pay. So agreeing to participate is somewhat like passing a low-probability debt exclusion override. It's unlikely the Town would ever have to pay anything, but the possibility exists. Consider also it's a double-whammy for the Town, since presumably a failed Westwood Station project is not effectively taxable either--the hoped for revenues to the Town are not materializing AND the Town is paying for part of the failed investment.

Can we simply ask CC&F to bear that burden? It's not clear if that's possible under the program since, in a worst case scenario, the developer is probably unable to pay and that would leave the state on the hook for everything.

But this is a worst-case scenario. A less speculative, more predictable possible future is what happens if the project were to die completely. I will not play the "sky is falling" argument that comes up at Town Meetings on every Westwood Station article, but let's put the different options in context and not just reject everything based on what might happen if everything goes bad.

It seems like there is an opportunity to make something work here. I really think an open, transparent process would help. I'm sure we will hear more about the real risks as the discussion unfolds over the coming months.

FinCom Meeting 2009

Submitted by Joanie Morgan on January 26, 2010 - 3:43pm.

Dave,

 

 This information is from the FinCom minutes of January 2009.  I will look for additional information but here they comment on putting town at risk.. 

 

 

 

o An article to consider supporting the Westwood Station developer’s application 

for state infrastructure funding pertains to the state’s I-Cubed Program.  

Discussion tonight focused on the current language of the program which could 

potentially put the Town at risk should they support the developer’s application.  

 Under no circumstances will the Selectmen put the Town at risk.  

I am not suggesting the sky is falling or that I-Cubed is wrong.  I was just wondering if you had more information.   I remember Phil Shapiro trying to explain I-Cubed to FinCom and the discussion ending quite quickly.  Mostly because they did not have all the facts.  I hope we can get all the facts before voting as a town.

 

On another topic, any feedback about the blog design?  Do people like it?

 

Joanie

And what about Canton?

Submitted by Dave Atkins on January 27, 2010 - 11:46pm.

Here is something to consider...according to the Canton Citizen, most of the infrastructure improvements the state will be financing under any I-Cubed component to Westwood State...are in Canton. In the event the project fails to generate revenue...for either the state or Westwood...and since the only remaining benefit from the project would be to Canton...doesn't it make sense that Canton should be sharing some risk too? I am being a bit facetious here, I know. Maybe in a world where all parties had worked together cooperatively from the beginning...