Newton staff present consolidated economic development policy draft; commission asks for clearer ROI, abatement matrix and fee rules

City staff presented a consolidated draft economic development policy at a work session focused on standardizing how Newton evaluates and administers tax abatements, fee waivers and other incentives.

Rebecca, a city staff member leading the presentation, told the commission staff had pulled existing, older policies into a single, modern draft to make the processes easier to find and apply. She said the draft currently uses a break-even return-on-investment (ROI) of 1.0 but that the International Economic Development Council’s common practice is 1.3. “One recommendation would [be] to bring up that ROI when we get those calculations back to a 1.3 to bring us closer to that standard,” Rebecca said.

Commissioners and staff pressed for clarity on how ROI would be calculated and who would perform the analysis. Staff said the city has used a contracted firm and an accompanying data sheet (used with CDR/CBR) and recommended continuing with that contractor while sharing the data sheet in the policy for transparency. Staff noted an EDC service runs cost-benefit analyses at about $600 per run and that running three scenarios would cost roughly $1,800.

On abatements, staff proposed a matrix model that scores projects to determine the length and percentage of an abatement rather than leaving “up to” language open to ad hoc interpretation. The matrix is intended to make awards more consistent and to allow smaller businesses to qualify. “I think it helps support, you know, smaller bids. It doesn’t just highlight one large business,” said Beth Shelton of the EDC during the discussion.

The draft also would codify annual compliance reporting and verification. Staff asked whether the commission wanted to leverage the EDC to perform those annual reviews and present compliance updates. Beth said the EDC provides similar services to other communities and could perform those checks and reporting.

Policy questions on fee waivers drew sustained discussion. The draft retains fee-waiver language for nonprofit housing (for example, Habitat for Humanity) and for certain economic development projects where no other tax abatement is offered. Staff recalled an earlier waiver package described as $25,000 for a Mennonite Housing project; another staff member said the figure referenced in state testimony was $80,000, reflecting differences in how past waivers and related fees were tallied.

Staff also introduced a new Reinvestment Housing Incentive District (RHID) section to reflect recent program expansion. The RHID language in the draft is broad; staff asked whether commissioners want usage restrictions tied to a housing needs analysis (for example, prioritizing low- or moderate-income units or excluding luxury housing). Commissioners asked staff to return examples from other cities and noted the city has a housing study planned for next year that could inform RHID rules.

Other topics included allowing conditional abatements for speculative buildings — for example, abating only the initial years or conditioning abatements on lease-up triggers — and the possibility of charging application or annual review fees for exemptions (IRBs, EDX, sales tax exemptions). Commissioners asked staff to research peer-city fee amounts; one peer example discussed during the session was a Park City fee described in the packet as roughly 3% of project value.

Staff reviewed public-improvement financing language and how the city has historically split infrastructure costs — for example, the city typically pays incremental costs for arterial widening while benefit districts cover standard residential street widths. Staff cited examples such as lift-station upgrades and developer cost-sharing arrangements used in Fox Ridge and other projects.

The commission did not take formal action at the work session. Staff was asked to circulate the slide deck and the older policy materials, produce ROI calculations and data-sheet documentation, gather sample language from peer cities on RHID restrictions and application fees, and return for a follow-up work session. The commission and staff agreed to meet again on Jan. 14 at 5:30 p.m. to continue the discussion.