According to the Town of Lexington’s 2017 Annual Report, Lexington continues to maintain a very positive financial standing, sustaining our Aaa rating from bond agencies, which results in a very low cost of debt. However, residential property taxes are growing much faster than commercial tax revenue. The bottom line is that commercial property values aren’t keeping pace with residential property values. The Town’s 1987 Annual Report shows commercial properties provided 31% of our tax revenue, while commercial properties now only provide 17% of our tax revenue.
About 30 years ago, the Town passed restrictive commercial zoning by-laws that discouraged commercial property investment. That action discouraged investment in our commercial properties, making those properties less desirable.
For the last three years, as part of the Getting to Net Zero Emissions task force, I’ve had the opportunity to work with three of the largest commercial property owners in Lexington to understand their needs and desires. Our larger commercial property owners are looking for Lexington to provide mixed use zoning that would allow for restaurants, coffee shops, and retail stores to be sited within walking distance of their properties. This would also reduce traffic flow in and out as employees wouldn’t have to leave the area for lunch or errands. With the addition of more public transportation while addressing traffic flow issues in and around the area, mixed use zoning could be a win-win-win for everyone, increasing the desirability of our commercial property, improving our tax revenue, while reducing traffic. Plus our largest commercial property owners have expressed a willingness to invest in energy efficiency and renewable energy for their buildings as part of a broader revitalization of our commercial districts.
Our priority should be to attract more biotech and pharmaceutical companies to the area, companies that pay double the taxes per square foot compared to normal office space tenants, while employing dramatically fewer employees per square foot. Our Economic Development Advisory Committee has been working on these issues for several years now. With reasonable zoning changes it should be possible to double the square feet of commercial office space while doubling the tax revenue per square foot and keeping the traffic in and out of the area at a stable level. Accomplishing those goals could raise enough money to pay for our new high school.
We also need to consider what steps are necessary to revitalize our retail business districts in Lexington in the center and throughout the town. Many residents have expressed their desire for a more vibrant downtown area that would support a broader range of shops. The harsh reality is that retail shops aren’t getting the foot traffic they need to pay their rent.
One way of addressing that issue would be to consider increasing the height restrictions on buildings in the center of town. Landlords would then have new sources of revenue for their properties – from the upper floor tenants. This could potentially allow lower rents for retail store fronts, and those new upper floor tenants could become new sources of foot traffic and revenue for the shops in town. Our economic development office has done trendsetting work on creating parklets in the center, like the pop up sidewalk cafe each spring, summer and fall outside of the Ride Studio Café that make it very attractive to stop and linger in the center. That is just the kind of thinking we need.
In other areas of town, like East Lexington, we might be able to take some of these ideas and work with local businesses to create attractive parklets along the bike path, making those retail districts more of a destination than a drive through area.