Richard Howe Substack: Dec 17, 2023

The Lowell City Council met Tuesday night. Councilor Corey Robinson participated in this meeting via Zoom. He had two motions on the agenda. As they did last week, his colleagues voted to table Robinson’s motions which means no action was taken on them. Other than speaking on a point of personal privilege after the tabling of his motions, I don’t recall Robinson speaking during the meeting although he cast his vote whenever there was a roll call.

Robinson has three motions on the agenda for this coming Tuesday night’s meeting, which will be the final Lowell City Council meeting of this term. (The Council voted to cancel the December 26 meeting). The next gathering of the Council will be Inauguration Day which I think will be Tuesday, January 2, 2023. At that time John Descoteaux will join the Council which will also elect a new Mayor.

In media coverage of Councilor Robinson’s criminal case, the Lowell Sun had a story on Tuesday (“Councilor Robinson rejects calls for his resignation”) that revealed in the weeks leading up to his arrest, Robinson and the alleged victim each made calls to the police accusing the other of misbehavior in what the Sun article described as the “deepened complexity of Robinson’s ongoing personal issues . . .”

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A presentation by Aaron Fox, the director of Lowell’s Wastewater Utility, took up a big part of Tuesday’s meeting. The topic was the cost and consequences of “combined sewer overflow.” More than a century ago, Lowell installed a municipal sewerage system which was a great innovation that improved the lives and health of city residents. However, much of the infrastructure installed back then is still in place now, and as the city’s population increased, so did the volume of wastewater flowing into the sewerage system.

The way the system was designed, wastewater from homes and businesses and rainwater from storm drains in the streets all flowed into the same sewerage pipes. Back then, the pipes released it directly into the river but perhaps a half century ago the city built a sewage treatment plant to clean the wastewater before it was released into the river. All the sewerage pipes were redirected to the treatment plant.

This system worked and continues to work OK until it rains heavily. When that happens, the volume of water going into the sewers via the storm drains overwhelms the capacity of the sewage treatment plant which causes the excess water to “overflow” into the river without being treated. Because the sewers are “combined” the overflow includes raw sewage.

In last week’s newsletter, I cited a report from the Merrimack River Watershed Alliance that said increased rain fall from climate change makes these “overflows” occur more often. That report also cited evidence that in the days following such overflow discharges, the number of Merrimack Valley residents seeking medical treatment for gastrointestinal illnesses increases.

For several decades, the Federal government has required municipalities to “separate” their sewer systems so that one branch carries only wastewater to the treatment facility and the other branch carries storm water. In a separated system, I believe storm water bypasses the treatment facility, particularly when there is a surge of runoff after a rainstorm. This is seen as an acceptable solution since there is not as much pollution in storm water as there is in wastewater.

But separating sewers is expensive. The current plan, as described by Mr. Fox, will cost between $150 million and $200 million and that will only be a portion of what is needed overall. Doing this is not optional. The Environmental Protection Agency requires it. In fact, the city must pay $200,000 to that agency for not getting this done quickly enough.

The discussion Tuesday night was exclusively about sewer separation, likely because the consent decree between the city and the EPA was being voted on by the Council. But separating wastewater from storm water is only part of the solution. “Green infrastructure” is a better approach when available and feasible. By requiring permeable pavement and emphasizing the use of soil and plant system to retain water, the city can cut down on the volume of storm water runoff.

This is particularly important because storm water is itself polluted, just not at the level of wastewater. On its path from the sky to the storm drain, rainwater picks up herbicides and pesticides that are liberally applied to area lawns, pet and animal waste, motor oil, and all the other things that reside on our sidewalks and streets.

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Councilor Vesna Nuon gave a report on the Economic Development Subcommittee meeting that was held on December 5, 2023, and which focused primarily on the Hamilton Canal Innovation District. Among other things, Nuon addressed the five parcels that were sold to the Lupoli Companies several years ago.

The Lupoli-owned parking garage on one of those parcels (adjacent to the Kiernan Judicial Center) has looked like it is days from opening for about eight months now, but the subcommittee was told that its opening is “imminent.” The other four parcels were covered by a “land disposition agreement” between the city and Lupoli that was executed in December 2020. In it, Lupoli agreed that the property would be devoted “only to the uses specified in the JAM Plan” and “only to the uses specified in the HCID Master Plan.” Construction of one of the two buildings that were to be constructed on those lots was to have commenced by June 30, 2023, although that has not happened yet.

Throughout this fall there have been mentions at Council meetings that Lupoli has proposed changes to the land disposition agreement and that the Department of Planning and Development has been negotiating with the developer on those changes. Councilor Nuon said that those negotiations seem to be reaching a conclusion and that he expects DPD to make a presentation to the Council in February on proposed revisions to the agreement. At that point, the Council will be able to vote for the changes or to reject them.

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These days, every developer (and every homeowner) is plagued by high interest rates. “High” is a relative term since today’s 7% mortgage would look pretty good compared to the all-time high of 18% in 1981. However, compared to the 3% being charged just a couple of years ago, today’s rate can be a deal-stopper.

That situation is reflected in the recording statistics at the Middlesex North Registry of Deeds which is on pace to record fewer documents this year than in any other year since 1983. Taking the actual statistics from January 1 through December 15, and using them to project for the final two weeks of the year, we will record 38,806 documents. Last year, we recorded 52,819, which was the fewest in any year since 1991. For context, at the peak of the last real estate bubble in 2003, we recorded 146,956 documents.

However, the recording volume drop is almost entirely due to a drastic decline in the number of mortgages being recorded. These dropped 37% from 2022 to 2023. All other indicators – the number of deeds, the prices stated on deeds, and the low number of foreclosures – all point to a healthy real estate market. Consequently, as soon as interest rates begin to drop, as the Federal Reserve recently announced they would do in 2024, the mortgage market should not only bounce back but the pent-up demand should create a healthy boom in real estate activity, even if rates don’t drop all the way back down to where they were a few years ago.

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The slowdown in recording volume also affects state revenue. The registry of deeds produces revenue through recording fees and the deeds excise tax which is based on the sales price of property. With less volume, there is less revenue. For instance, in 2022, the Middlesex North Registry of Deeds collected $14.8 million in deeds excise tax. This year, the projection is $10.6 million. In 2022, recording fee revenue was $4.1 million; this year it is $2.8 million.

While this is just a minuscule fragment of all state revenue, it is emblematic of what is happening across the state. Unemployment has remained low and wages have risen, so revenue from withholding taxes is likely up, but the stock market was way down earlier this year and is only now starting to rebound. So capital gains taxes, which produce a significant portion of state tax revenue, are likely down significantly.

Governor Maura Healey hinted at this situation in a recent interview she gave to the Politico Massachusetts online news site:

QUESTION FROM POLITICO: “Given the state’s fiscal picture, do you anticipate having to either level-fund your next budget or make any cuts from this fiscal year’s spending levels?”

ANSWER FROM GOVERNOR HEALEY: “The fundamentals [stabilization fund, bond rating] are strong. Are we seeing a dip in revenue? We are. But we’re monitoring that and we’ll manage that through the budget process. And [we’ll] take what steps are necessary to account for it.”

(If you’re interested in Massachusetts state politics and don’t already subscribe to the free daily newsletter from Politico Massachusetts, you can sign up on their website.)

Fiscal year 2025 begins in Massachusetts on July 1, 2024. The Governor usually releases their budget recommendation for the next fiscal year early in the spring, but the state legislature doesn’t finalize the budget until the end of the current fiscal year or even weeks into the new one. However, Healey’s comment sounds ominous for entities like the city of Lowell and especially the Lowell School Department which are heavily dependent on state funding to maintain operations.

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