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Letter Excerpts on 40T sent to Legislators Click here for Testimony of Shirley Kressel – Feb. 13th, 2008
Chapter 40-T would establish private sub-cities in which residents are taxed not only by city, state, and federal government, but also by real estate speculators to repay their construction debts. Citizens have recourse over city, state, and federal taxes via their elected officials, but they would have no recourse over 40-T taxes – or "assessments," because the developers whose debts the citizens must repay remain essentially accountable to no one.

The legislation was drafted to sound harmless and fair – in fact, to sound irresistible. It is not.In fact, here’s what Chapter 40-T really does:
  • 40-T turns over parks, streets, utilities, and the public realm to real estate speculators.
  • 40-T lets speculators take over public property without public consent, and take over private property for their project use, without the due process and compensation of eminent domain.
  • 40-T grants governmental powers to sub-cities, but with little transparency, and virtually no accountability, regulation, or oversight.
  • 40-T finances development projects with bonds that residents must spend decades repaying, in addition to all customary city, state, and federal taxes.
  • 40-T imposes sub-cities upon citizens who do not expect or want them, places liens on their property for developer debts that they did not incur, and forecloses upon homeowners who don’t repay those speculator debts.
  • 40-T debt payments never decrease, even when economies sour or property values decline, as long as bond service continues.
  • 40-T relieves developers from complying with many of the laws created to protect the public regarding government records, open bidding, prevailing wage, conflict of interest, and public liability.
  • 40-T and to allows real estate developers to govern districts in which they aren’t residents, and where they are not elected, but self-appointed for self-specified terms.
  • 40-T has no modification or repeal mechanism for 40-T sub-cities that fail.
The claimed advantages of 40-T — faster permitting, cheaper development — benefit no one except the bond industry and the speculators who borrow through it. . The claimed benefits of "free" infrastructure and "free" growth do not exist, because residents must spend decades paying for that infrastructure and growth, but with none of the accountability that citizens are entitled to under democratic government.

The Commonwealth made a mistake nearly one half century ago that is nearly identical to 40-T, and everyone is still paying the price. Today, decades after the state toll road was paid for, the Massachusetts Turnpike Authority continues to perpetuate its own existence by taking on more debt, operating in secrecy, and ignoring mandates for reform. For over half a decade, our Turnpike has proven expensive to operate, difficult to manage, impossible to dissolve, and answerable to no one.

Chapter 40-T includes even worse flaws, so I urge you to not repeat these errors, and reject this reckless financing scheme.

Boston, MA

From: Citizens for Limited Taxation Post Office Box 1147 Marblehead, Massachusetts 01945 [email protected] www.cltg.org
Barbara Anderson (781) 639-0096 Chip Ford (781) 631-6842 Chip Faulkner (508) 384-0100

To: The Joint Committee on Bonding, Capital Expenditures & State Assets
February 13, 2008

Re: Proposed Chapter 40T, HB.159/S.B 146

CLT hopes that the Legislature will not create more “independent” entities until the Commonwealth has found a way to deal with the fiscal problems of the existing “independent” agencies like the Mass Turnpike Authority and the MBTA.

We understand the original reason for creating “independent”authorities: to let elected officials wash their hands of responsibility when things go wrong. But we suspect citizens see it all as one big government that so often doesn’t work, and the governor and legislators as its most visible representatives.

The 40T District “developers in lieu of government” exist outside of the voter-controlled local government system, issuing tax-exempt bonds and collecting “assessments” from those who buy homes in their district. While it is true that the buyers should know what they are getting into, we have noticed that “caveat emptor” didn’t work with the sub-prime mortgage market.

We appreciate that the “eminent domain” language was removed from the original stealth legislation, and that we are now getting public hearings and more legislative input. But we find it hard to trust people who would even think of putting it in there and quietly slipping the bill through, in the first place. Eventually, we suspect, they will get the eminent domain power they wanted, and the homeowners abutting the new development will be threatened. Even with the present legislation, the minority property owners – the 20% that do not want to be included in this “quasi government” – will be assessed despite their objections and, as nearly as we can tell, could lose their homes if the developers default.

There are already provisions to get betterment payments for services that benefit only a limited area of property owners, keeping the process in the hands of elected local officials.

With the current market, there is no need to make this legislation a priority. Regardless if who is elected President, we are already experiencing “change” – and it’s happening too fast for most of us to control. Let’s not “change” the structure of local government until we are sure we haven’t passed another law of unintended results.

…I am already suffering under the burden of yearly increases of my property taxes to keep my city functional. This bill will increase property taxes – whatever they are called — purely for the benefit of private developers. Would you kindly put this bill to rest for good and let us think of creative ways to develop our cities and towns for the benefit of all residents. Medford, MA
… This legislation would create uncharted new forms of private governance, without critical public interest protections like transparency, accountability, and public participation in decision-making.

…Giving private parties these governmental powers would diminish our democratic rights and safeguards. It would also open the door to taxation without representation, especially for any tenants within these development districts. Unaccountable financing schemes are causing much of the economic problems we are currently facing, and this law promises to leave tenants and homeowners footing the bills for private development projects.

… seek solutions for the infrastructure and financing needs of the Commonwealth through existing laws, which already have provisions for special development districts.

… speak to House Speaker DiMasi and Senate President Murray, and ask them to defeat this privatization effort, once and for all.

Wrentham, MA

… purports to enable a "local improvement district", which in fact is not a piece of geography, but rather a for-profit corporation having many of the same powers as a local government, including:
  • levying special assessments for public infrastructure;
  • raising money by issuing bonds, to be paid off by homeowners;
  • tax exemption.
Unlike other public bodies, this local improvement corporation … can apparently escape from various public strictures, like public bidding and prevailing wage.  It has seemingly broad powers to buy, sell, and build on property, both within its defined "development zone", and also outside the zone, if it makes the case that such exterior interventions are necessary and appropriate to the goals and purposes of the zone. It can over-ride local laws and zoning ordinances with which it conflicts. … It does not seem likely to me that the 40T entity can simply take over a public park within the zone and have its way with it. However, it can certainly enter into "agreements" with the rightful local or state owner regarding said public lands, since it is a quasi-public entity, then perhaps argue that an office park plaza, or its roof garden, is an authentic public space, just like the local greenspace it replaced….

Cambridge, MA
…Chapter 40T is a move in the wrong direction in our state to create new forms of private governance, without critical public interest protections like transparency, accountability, and public participation in decision-making. I’m sure we can imagine better ways of developing the commonwealth than this. Ashfield, MA
… the effort to pass Chapter 40T has used whatever means available to sneak this bill by the citizens of the Commonwealth. After passing through the State

Legislature in 2006 attached to the Economic Stimulus Bill, the bill was vetoed by the Governor. The State House overrode the Governor’s veto, though thankfully the State Senate never took up the veto override. The bill’s authors then took out some of the most

inflammatory language, including explicit powers of eminent domain, and have been working to get the new bill approved….

… dangerous steps toward uncharted private governance. The powers that 40T grants to private sub-municipalities and their unelected "prudential committees" are extensive, and bear too close a resemblance to municipal government, without any of the public interest protections we demand of municipal governments. The proponents of the bill try to justify it based on needs that can be adequately addressed by existing law, and are currently overreaching their rights as private developers.

…a leap into this new form of private governance … implications of this bill are frightening, and I fear its intended consequences as well as any unintended consequences

… seek solutions for the infrastructure and financing needs of the Commonwealth through existing law…

… speak to House Speaker DiMasi and Senate President Murray, and ask them to defeat this privatization effort, once and for all.

Cambridge, MA
… seems to create city-like cities within already defined cities, allow private developers raise funds through "municipal bonds" and to make rules that could affect already existing cities and neighborhoods….

….many obligations for infrastructure … would remain undefined and carry a risk of no one being responsible for implementing these services….

…another business venture that would not benefit all citizens.

Brighton, MA
… would allow developers to form their own municipalities, sell tax-exempt bonds for project infrastructure, and collect assessments from the new property buyers to pay the bonds. Such ill-advised legislation would create more problems that it would solve by (1) creating a parallel governmental body with absolutely no accountability, (2) potentially saddling unsuspecting buyers with significant loan debt, and (3) including public land in private development zones without the consent of taxpayers.

Boston, MA
… we have infrastructure needs that we are hard-pressed to meet, but we know that "creative" financing often comes with costs and trade-offs can make these "solutions" less than ideal.

… the legislation is extremely complex… communities will have a difficult time assessing its costs and benefits…. calls for transferring public infrastructure planning, funding and implementation responsibilities to developers, together with many heretofore public powers.

…creates an entity that mirrors many public responsibilities, but without the same public controls and accountability…

…makes landowners subject to "taxation" from separate entities, one public, the other private, that will make it more difficult for municipalities to tax the same landowners to meet needs that have broader public benefit…

…will accelerate municipal growth by making it easier for developers to fund large projects, while continuing to relieve them of any of other burdens of growth, such as schools.

… there are other funding mechanisms that accomplish much of what is proposed here, and that could be amended to meet many of the same needs 40T attempts to address…explore these options before embarking on this piece of complex bonding legislation.

Plymouth, MA
… essentially private governments without voter control.

…giving private parties these governmental powers would diminish our

democratic rights and safeguards. It would also open the door to

taxation without representation, especially for any tenants within

these development districts.

…Unaccountable financing schemes are causing much of the economic problems we are currently facing, and this law promises to leave tenants and homeowners footing the bills for private development projects.

… seek solutions for the infrastructure and financing needs of the Commonwealth through existing laws, which already have provisions for special development districts.
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