The Town's Financial Analysis for the Capital Groups Project is Wildly Incorrect

The Finance Committee's "Financial Analysis" should be withdrawn

Over the weekend the town released a "Financial Analysis" of the Capital Group's project in North Lancaster.   It is not just wrong, it's absurd.  Compared to a reasonable estimate it overstates the "Education Costs" that would result from "No" votes by around $3.5 Million.

The "Analysis" attempts to project the impact the impact of our approval (or disapproval) of the marquee warrant articles at the November 14th Special Town Meeting.   It projects that "Yes" votes to approve the expansion of the "Enterprise Zone" and creation of a 40R district would improve the town budget by $3,553,668.00, and "No" votes would cost the town $734,426 per year.

The most conspicuous numbers on the "Analysis" sheet are the education costs for the two scenarios.   The assumption behind the projection is that a "Yes" vote will lead to 146 units of housing in a 40R development, and a "No" vote will usher in a 200 unit 40B.   The projected education costs for the 200 units of 40R housing are asserted to be 500% the projected education costs for the 146 units of 40B housing -- that demands a closer look.

The source data for the "Analysis" is available from the town's finance director.  After a quick look at that, everything quickly unravels.    The eyepopping education costs come from some 

1.  The analysis assumes that "No" votes at town meeting would lead not just to one 200-unit 40B project in North Lancaster, but also a second 200-unit 40B project.    

2.  The analysis uses incorrect school-aged-children multipliers to project 258 students in those 400 units of 40B housing.  If we test that methodology by applying it to the existing town, it estimates that we currently have at least 2,788 students in town.  We had 1,049 students as of last month -- the multipliers are not reliable.

The methodology used in the finance committee's analysis would project our towns current education costs to be $45 Million: twice our entire annual town budget.

Outside of education costs, the projected impacts for the two outcomes vary by less than 10%.  

Where did the Finance Committee's crazy student projection come from?

I first requested the background calculations for the "Analysis" on October 13th and I was a bit unnerved to be faced with something labled the "RKG/Williston Student Matrix."    The matrix provides a multiplier for projecting the number of school-age children that would result from different housing units.

"RKG" refers to a study conducted by RKG for the Economic Development Committee last year.   ("Williston" I think refers to me, for some reason.)     The RKG study did include these School-Aged Children multipliers:

In their study, RKG is frank that they created these multipliers on their own, by looking at "..nearly 1,460 units in total with 24% designated as affordable. The sample 35% as one-bedroom, 58% as two-bedroom and 7% as three-bedroom."    That's a pretty small sample -- in some cases likely based on an observation of less than 25 units.

The RKG multipliers were also intended strictly for rental units; they should never have been used for the for-sale condos that the Capital Group lists in it's proposed 40B project.

Where can we find accurate School-Aged-Children multipliers?

An economist for the North American Builders Association conducted a similar study using 2015 "American Community Survey" data.  (Carmel Ford, "Only 41 Children for Every 100 Housing Units in the US, on Average")   She had a much larger sample size to work with, and calculated multipliers for rental and for-sale units, for new units and older, and for new households and established.

Her top number -- across all types of housing, an estimate of 41 students/100 housing units -- accurately predicts the actual number of students in our existing town.   Lancaster has roughly 2788 existing housing units, and 41 students per 100 units produces an estimate of 1,143 -- much closer to the 1,049 students actually enrolled last month.

Econsult Solutions, Inc produced a Massachusetts-specific study based on the same 2015 "American Community Survey" data.   (ESI, "Who Moves Into Massachusetts Housing?", November 2017)  The results were very similar: across all housing types, it projects 38.3 students/100 housing units.  If we check that by multiplying 38.3 student/100 units by our 2788 existing housing units, we'd project 1067 students in Lancaster -- almost a bullseye our actual 1049 student enrollment last month.

How much would accurate School-Age Children multipliers change the Finance Committees "Analysis"?

Using the NAHB School-Aged Children multipliers, for new construction rental and owner-occupied multifamily housing, the "40R" housing would yield 30 school-aged children, rather than 52.    The 40B housing would yield 44 school-aged children per 200 unit project, rather than 129.  

Using the marginal student cost of $16,141 that the Finance Committees projected used, the new education costs would be:

                    145 Unit 40R:    $484,230  in education costs for 30 school-aged children
                    200 Unit 40B:    $710,204  in education costs for 44 school-aged children