Arlington Redevelopment Board - Dec 21st, 2020

Meeting conducted via remote participation. These notes cover one agenda item: a proposal for new zoning for the industrial districts. Meeting materials were available https://arlington.novusagenda.com/agendapublic/DisplayAgendaPDF.ashx?MeetingID=1240.

(Eric Halvorsen, RKG) RKG performed a market analysis in order to determine the demand for commercial space in the industrial districts. Higher education and research and development are expected to be the main areas of growth.

Arlington's home prices are escalating. On average, they've increased by $300,000 since 2008. Rents are expensive, but slightly lower than surrounding communities.

Jobs in the industrial district pay reasonably well, but some businesses struggle to pay the higher rents. Pressure on the housing market will continue, until better equilibrium is achieved.

(Emily Innes, Harriman) Ms. Innes says that one of the main questions is how to keep jobs, while dealing with high housing costs and limited land area. The proposed zoning changes contain a set of development standards that are tied to community goals like the Net Zero Action Plan.

Harriman is aware of the proximity to the Minuteman Bikeway, and cognizant of what standards might be applicable to property owners, and what standards might be applicable to tenants. There are height bonuses for standards that address net zero goals, avoid heat islands, or treat stormwater runoff on-site.

The basic standards include having buildings that are solar ready, have a smaller front yard setback, and use windows for ground floor transparency. They didn't want the standards to be prohibitive for small developers or tenants. In order to get the height bonus, the property owner will have to provide roof treatment (photovoltaic solar, high albedo surface, blue roof, etc) and treat all stormwater runoff on site.

The proposed changes would add self-service storage as a permitted industrial use.

There are screening standards along the minuteman bikeway. These are intended to prevent the bikeway from being closed off from the surrounding industrial zone properties.

The proposal allows residential in mixed-use buildings, in a stacked or vertical fashion. The principal ground floor must be commercial or industrial, and the residential floor area would be limited to 2x the floor area of commercial and industrial uses.

(Eric Halvorsen) RKG also performed a pro-forma analysis, using several plots and several redevelopment configurations. These attempt to answer the question of whether there'd be enough financial incentive to redevelop. The pro-formas assume a 10% profit margin for the developer.

Scenario 1: Mystic Street. This scenario would add two stories to the Tetragentics building. It makes financial sense in this case. However, this pro-forma assumed no additional land acquisition costs, which is a significant caveat. Such a redevelopment would add approximately $75k/year in property tax revenue.

Scenario 2: Ryder St. The scenario combines two parcels on Ryder Street and builds 26,000 square feet of flex/industrial space. This scenario came out $2.5M in the red (it lost money). Rents would not justify the costs for land acquisition and construction.

Scenario 3: Dudley St. This scenario combined 5 parcels and redeveloped them as a three-story commercial/industrial building (26' + 13' + 13'). This scenario also had a negative return, primarily due to a $5.3M land acquisition cost. If the land costs were reduced by 50%, this redevelopment scenario would probably work.

Scenario 4: Park Ave. This scenario involves a two-story building with 26' commercial/industrial and 13' residential. It's likely to perform well, due to high residential rents. RKG assumed slightly lower residential rents, since this would be residential over flex space.

In conclusion, it could be feasible to build on to existing industrial buildings, or to have to commercial/industrial + residential mixed use. Scenarios (2) and (3) appear less likely, due to land cost.

(Erin Zwirko, Planning Department) Ms. Zwirko believes the industrial district zoning could be brought to the annual town meeting,

The chair opens the hearing to public comment.

(John Worden) Mr. Worden says the draft bylaw changes that are being presented to the board are not something the zoning bylaw working group voted on. The zoning bylaw working group has been working on the industrial zoning but hasn't come to consensus. There was a lot of grumbling about this study during town meeting, until Al Tosti spoke in favor and said it would increase the tax base. Mr. Worden thinks there should be no residential uses allowed in the industrial district; someone who wants to live in the industrial district should go and buy one of the homes that are already there. He says the Miraks are taking the sleazy 40B route in order to build an apartment in the industrial district.

(Eric Halvorsen) Eric said he worked with the school district during the economic analysis to understand the cost of services associated with different housing types. Most residential cases came out tax positive, due to high assessed values for new construction.

(Carl Wagner) Mr. Wagner says he was a town meeting member when the money for the industrial district study was appropriated. He wants to see more industrial uses in the industrial district. He's disappointed to see residential uses and height bonuses. Mr. Wagner believes that adding residential would raise the cost of living in Arlington, and preventing new residential would be the anti-racist thing to do. He wants to see new businesses and tells the consultants go back and re-write their proposal.

(Emily Innes) Ms. Innes says that proposed zoning was designed to prevent residential uses from dominating. The ground floor is always commercial or industrial. Above that, you can have residential or office space; that's where the height bonus comes in. The height bonus allows an additional floor, if the property owner gives something back to the town; in this case, the bonus requires things that are tied to the net zero action plan. Although we'd allow higher buildings, there are limits on the shadows they could cast.

(Steve Revilak) Mr. Revilak is a member of the zoning bylaw working group, but he's speaking as an individual. Mr. Revilak would like to set expectations. About 5.5% of Arlington's acreage is zoned for commercial and industrial uses, and by coincidence, these happen to generate about 5.5% of the town's property tax revenue. Industrial is a subset of that; about 1% of the town's acreage is zoned for industrial, and that happens to generate about 1% of the property tax revenue. Expanding the tax base in the industrial district is a perfectly fine thing to do, but that 1% is a very narrow slice of the pie. Even if we make it wider, it will still be a very narrow slice of the tax revenue top line.

On the other hand, the proposed zoning allows for more uses. Arlington may finally be able to get a brewery, and Mr. Revilak thinks that would be pretty cool. He also likes the way the proposal embeds some of our values. For example, bonus provisions that are tied to the net zero plan, sustainability, and stormwater management. He thinks that bonuses are a reasonable way to negotiate for these things: ask for what you want, and be prepared to give something in return.

(Erin Zwirko) Ms. Zwirko notes that the town might have to make additional policy changes in order to support a brewery.

(Stuart) Stuart likes the idea a lot. He says that Work Bar is oversubscribed, and there seems to be a demand for co-working space. He has a question about the redevelopment scenarios that failed because of land cost, and asks if allowing residential had driven the land cost up.

(Eric Halvorsen) Eric says that land costs were based on the 2020 property assessments. Those assessments are based on current zoning, which does not allow new residential uses in the industrial districts.

(Stuart) Stuart says that taxation could help make some of these decisions.

(Don Seltzer) Mr Seltzer cites a figure from the economic analysis of the industrial districts: that 93% of Arlington's working population commutes out of town for work. He believes we could use the industrial districts for high-paying jobs. In May, there was a recommendation that residential be prohibited from industrial mixed use. The industrial district survey said that residential uses don't belong in the industrial districts. Later, residential use was added as a footnote, and then the footnote was moved into a paragraph. He believes this will invite developers to build residential, and we'll see more things like the Mirak 40B. He feels this is completely inconsistent with the master plan.

(Emily Innes) Ms. Innes says there was a lot of confusion over the May draft's table of uses. Current zoning has a `D' footnote that prohibits residential in industrial mixed use; the May draft replaced the `D' with an `E' that allowed it. The next draft moved the language to a numbered paragraph.

(Chris Loretti) Regarding the pro-formas, Mr. Loretti believes that RKG didn't take dimensional regulations like floor area ratio (FAR) into account. He's having trouble swallowing the economic analysis. He believes the Dudley St. lots were expensive because some of them currently have apartment buildings. He says this will drive up land prices. He thinks rezoning those properties from industrial to residential would be a better way to go. The industrial zones are too limited for large scale uses. He doesn't object to allowing residential in the industrial zone, but he feels like it's being snuck in.

(Emily Innes) Ms. Innes says the language should be clarified; the intent was to allow new residential only as part of mixed use. Industrial uses are most likely to happen on the ground floor. Once you've built that, you have the air rights above the ground floor for other uses.

(Eric Halvorsen) Mr. Halvorsen says that Mr. Loretti's point about FAR is valid. The Tetragentics site was a hypothetical. Some of the Dudley Street parcels are currently residential, and that scenario would have penciled out if the land costs were reduced by half.

(Jenny Raitt, Planning Director) The Park Avenue site was also considered as part of the Arlington Heights master plan. Ms. Raitt believes the industrial zone assessment is consistent with the town's 2015 Master Plan. The master plan says that the current industrial zoning doesn't reflect contemporary industrial uses, and recommends that the zoning be revisited.

(Len Diggins) Mr. Diggins says this is exciting, and that we can do anything we decide to. He'd like the Golds Gym site to have a gym on the first floor, a few floors of office space above that, and a few floors of apartments above that. He says we have to build up. Mr. Diggins asks if there were any targets set for the industrial district.

(Eric Halvorsen) Mr. Halvorsen says they made projections rather than establishing targets. RKG looked that the number of jobs created in Middlesex county over the last 10 years, and estimated what Arlington's share could be. At that rate, Arlington could get around 240,000 square feet of new growth. Mr. Halvorsen says that biotech is starting to percolate into the suburbs, especially for manufacturing. However, growth in Arlington is more likely to be more smaller scale and incremental.

(Christian Klein) Mr. Klein has a question about section 5.9.10. He asks if it would be possible to do residential over commercial, as well as residential over industrial.

(Emily Innes) Ms. Innes says yes.

(Christian Klein) Mr. Klein asks if any commercial or industrial uses would be excluded from a mixed use building that contains residential.

(Emily Innes) Ms. Innes says there aren't any use prohibitions based on the presence of residential.

(Elizabeth Dray) Ms. Dray has a question about the pro-forma scenarios. She asks why there were four scenarios on four different sites rather than four scenarios on one site.

(Emily Innes) Ms. Innes says that Harriman did several fit studies. The goal was to take a few parcels and see what would fit in; it's just testing the rules. They chose several sites to see how things worked in different areas.

(Eric Halvorsen) Mr. Halvorsen said he wanted to test pro-formas in different districts. But, they could have done all four scenarios on one parcel.

(Elizabeth Dray) Ms. Dray asks if the two unviable scenarios could work on other sites.

(Eric Halvorsen) Mr. Halvorsen says that the land value would have to come down, or the development would have to be more intensive. With lower land costs, they would have worked.

(Al Tosti) Mr. Tosti is concerned with allowing residential uses in the industrial district. He thinks the Mirak 40B is a huge disappointment. He's concerned that builders will focus on residential, and commercial/industrial will be an afterthought. He'd rather keep the current industrial zoning rather than change it and allow residential. He'd prefer to add jobs rather than bedrooms.

(Stuart) Stuart says there's a strong desire for industrial and commercial development, but the land cost and economics don't work out. He suggests figuring out what would tip the balance in favor of commercial and industrial. Perhaps tax incentives.

There are no further comments from the public, and now we have comments from the board.

(Kin Lau) Mr. Lau likes the bonus structure in the proposed bylaw. To encourage more commercial and industrial, he thinks we should ask why companies or developers would want to build here. He says we can't control land values, but we might be able to influence the decision with things like transit. Or, we could allow more height. But we should try to find things that would make people want to work here.

(David Watson) Mr. Watson says the economic analysis was illuminating, and he'd like to see more scenarios. Arlington has lost commercial and industrial lots to residential during the last few decades. He understands that allowing residential would make redevelopment more feasible, but he doesn't want to see that become dominant.

(Eugene Benson) Mr. Benson hopes we can get a new structure for the industrial zones, though this will require action from other town bodies. He's glad to see that some of the incentives worked in other places. He's not opposed to allowing residential in the industrial zone, but doesn't want it to overwhelm commercial and industrial. New residential uses are likely to trigger inclusionary zoning, which would add affordable housing. He asks if there's a way to incentivize artist live/work spaces.

(Erin Zwirko) Ms. Zwirko notes that artist live/work space would be an allowed use.

(Emily Innes) Ms. Innes says that artist live/work space is allowed, but not incentivized. There's needs to be a separate structure to verify that the artists really are artists. She'll think about ways this could be incentivized.

(Eugene Benson) Mr. Benson likes the environmental considerations. He thinks that "solar ready" should cover more than photo-voltaic solar panels. He'd prefer mandatory electric vehicle charging stations. Also, we may need to consider contamination on some of the old industrial sites.

(Erin Zwirko) Ms. Zwirko says there haven't been any studies of contamination, but that concern has been brought up.

(Eugene Benson) Mr. Benson say the town will need processes to address other things, like transportation. The reduction in MBTA services kind of works against this.

(Katie Levine Einstein) Ms. Levine Einstein thinks there's a compelling case for why we need more commercial development, but we should also consider the need for housing. She suggests looking at what other communities have done, because we're not the only one in this situation.

(Rachel Zsembery) Ms. Zsembery would like to think more about identifying the workforce. She'd favor limits on the amount of residential, and would prefer more commercial and industrial development.