Economic Planning and Real Estate Consultants

IMPACT ASSESSMENT: PROPOSED HIGH POINT HOSPITAL FACILITY MIDDLEBOROUGH, MASSACHUSETTS DECEMBER 2013

Prepared for:

Middleborough Zoning Board of Appeals 20 Center Street, 2nd Floor Middleboro, MA 02346 Eric Priestly, Chair

Prepared by:

RKG Associates, Inc. Economic, Planning and Real Estate Consultants 634 Central Avenue Dover, New Hampshire 03820 Tel: 603-953-0202 FAX: 603-9653-0032 and 300 Montgomery Street, Suite 203 Alexandria, Virginia 22314-1590 Tel: 703-739-0965 FAX: 703-739-0979

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TABLE OF CONTENTS

I. Summary of Impacts .................................................................................. ii II. Introduction ................................................................................................ 1 A. Project Description ................................................................................................. 1 B. State Licensure Requirements .................................................................................... 2 1. DMH Licensure ....................................................................................................................... 2 2. Other Licenses, Approvals, and Certifications ................................................................. 3 C. McLean Hospital .................................................................................................... 3 III. Impact Assessment ................................................................................. 4 A. Fiscal Impact Overview ......................................................................................... 4 1. What does it mean? ............................................................................................................. 4 2. Models, assumptions, and limitations ................................................................................. 4 B. Context: Middleborough Profile ................................................................................ 6 C. Fiscal Impact of High Point .................................................................................... 9 1. Police and Fire Departments ............................................................................................... 9 2. Proportional Valuation ....................................................................................................... 12 3. Employment Anticipation (EA) Model .............................................................................. 13 4. Impact on Surrounding Property Values ......................................................................... 13 D. Economic Impact .................................................................................................. 14 1. Construction-Phase Impacts ............................................................................................... 14 2. Permanent Jobs and Wages ............................................................................................ 15

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I. SUMMARY OF IMPACTS

High Point Treatment Center (“High Point” or “Applicant”) proposes to redevelop the former Saint Luke’s Hospital at 52 Oak Street in Middleborough for a 72-bed psychiatric hospital. The property consists of 3.5± acres and 65,000 sq. ft. of usable floor space located at the edge of Downtown Middleborough in the Business District. RKG estimates that at project completion, the proposed project will have the following fiscal and economic impacts:

∎ High Point’s 72-bed facility will generate a low-high range of 66 to 150 calls to the Middleborough Police Department each year, and 33 to 86 calls to the Middleborough Fire Department. Similarly, a 50-bed facility that McLean Hospital plans to open on Isaac Street could generate 40 to 50 police calls and about 25 fire calls per year. These estimates are based on data obtained from police and fire departments in a sample of other Massachusetts towns with psychiatric hospitals similar to those proposed by High Point and McLean. ∎ Public safety services provided to High Point by the Middleborough Police and Fire Departments will cost the Town of Middleborough $91,100 to $97,100 per year. Unless the Town and High Point reach agreement about a payment in lieu of taxes or other means to offset these costs, the project will have a negative impact on Town finances. High Point is a non-profit charitable organization that is exempt from property taxes under state law. RKG understands that McLean is leasing the property on Isaac Street and the property owner will continue to pay taxes to the Town.

∎ High Point will have a favorable impact on employment and the economy. During the construction phase of High Point’s $10 million redevelopment project, the project will create sixty-three construction jobs with an indirect benefit of forty-four jobs, for a combined construction-phase employment impact of 107 jobs. The net increase in wages is $6.5 million (rounded), including direct and indirect wages during construction.

∎ At project completion and when fully operational, High Point’s facility will generate net employment growth. The hospital’s direct employment of 130.15 full-time equivalent (FTE) positions and 70.36 FTE indirect jobs will culminate in a total of 201.5 FTE jobs. The total annual wage impact, including direct and indirect wages, is approximately $10.1 million. These estimates exclude the jobs and wages that will transfer to Middleborough from High Point’s existing facility in Plymouth.

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Fiscal & Economic Impact Assessment: High Point Psychiatric Facility December 9, 2013

II. INTRODUCTION

A. Project Description

High Point Treatment Center (“High Point” or “Applicant”) proposes to redevelop the former Saint Luke’s Hospital at 52 Oak Street in Middleborough for a 72-bed psychiatric hospital. The property consists of 3.5± acres and 65,000 sq. ft. of usable floor space located at the edge of Downtown Middleborough in the Business District. Built in 1925, Saint Luke’s Hospital was acquired by Cardinal Cushing General Hospital ca. 1990 and operated for several years by Cranberry Specialty Hospital, a long-term acute care facility that eventually converted to outpatient-only services and closed in the late 1990s. The Middleborough Zoning Board of Appeals (ZBA) has retained RKG Associates, Inc., to estimate the fiscal and economic impact of High Point’s proposal on the Town of Middleborough. The project requires a special permit from the ZBA because the facility exceeds 10,000 sq. ft. of floor area.

High Point operates under the umbrella of Southeast Regional Network, Inc., a non-profit organization that owns several drug and alcohol treatment centers, inpatient and outpatient mental health facilities, residential recovery programs, and emergency shelter facilities in Southeastern Massachusetts. Its flagship hospital is High Point’s Plymouth campus. There, High Point operates a multi-purpose 105-bed facility with detoxification and substance abuse treatment programs, a program for patients with behavioral health and substance abuse problems, a psychiatric unit licensed by the Massachusetts Department of Mental Health (DMH) under G.L. c. 123, § 12 (“Section 12”), and outpatient services. The proposed facility in Middleborough would offer behavioral health care services, also with DMH licensure. According to High Point’s representatives, the existing sixteen psychiatric beds in Plymouth will be transferred to the new facility in Middleborough.

Section 12 provides for involuntary commitment of people believed to be at risk of serious harm due to mental illness. A physician, licensed psychologist, licensed social worker, or other qualified professional has to determine whether such a risk exists. If so, the person at risk can be committed involuntarily to a DMH-licensed hospital for up to three days. During that three- day period, the hospital must determine whether the client needs longer-term inpatient care. Unless the hospital petitions a court for an extended commitment period, the client must be allowed to leave after three days. In addition, the hospital is required to offer the person the option of voluntary self-admission. According to High Point, clients opting for voluntary admission cannot leave before the end of the same three-day period. High Point reports that over the past few years, the average length of stay for clients admitted under Section 12 (both involuntary and voluntary) has been six to 6.5 days.

Upon discharge, clients admitted under Section 12 may leave the hospital on their own, with family members or friends, or with transportation assistance from High Point staff. High Point officials say that clients typically leave the hospital with an after-care plan for services in their own community, and prescriptions (if needed) to be filled at a pharmacy of their choice. RKG heard similar descriptions of the Section 12 discharge process from other psychiatric hospitals.

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B. State Licensure Requirements

1. DMH Licensure By state law, DMH has authority to license privately owned and operated psychiatric hospitals and psychiatric units in general hospitals. Today, the Commonwealth has sixty-two private hospitals with DMH licenses for a combined total capacity of 2,560 beds. While psychiatric hospitals provide the vast majority of these beds, over half of the hospitals with DMH licenses are actually general medical/acute care hospitals, e.g., Morton Hospital in Taunton or Jordan Hospital in Plymouth. There are eight classes of DMH licensure for inpatient psychiatric facilities, and all but one authorize some type of involuntary commitment. The licenses include:

∎ Class II: diagnosis and treatment of adults with voluntary admissions under G.L. c. 123,

§ 10.

∎ Class III: diagnosis and treatment of adults with conditional voluntary admissions under G.L. c. 123, §§ 10 and 11, and on involuntary committed status under G.L. c. 123, §§ 7 and 8, and to use restraint and seclusion. ∎ Class IV: diagnosis and treatment of adults on involuntary committed status under

M.G.L. c. 123, § 12, and to use restraint and seclusion. ∎ Class V: evaluation, diagnosis, and treatment of people committed by a criminal court to determine competency to stand trial under G.L. c. 123, §§ 15, 16, 17 and 18, and to use restraint and seclusion.

∎ Class VI: diagnosis and treatment of minors on voluntary or conditional voluntary admission status under G.L. c. 123, §§ 10 and 11, and on involuntarily committed status under G.L. c. 123, §§ 7, 8 and 12, and to use restraint and seclusion. ∎ Limited Class VI: diagnosis and treatment of minors age 16 and 17 on adult units on voluntary or conditional voluntary admission status under G.L. c. 123, §§ 10 and 11, and on involuntarily committed status under G.L. c. 123, §§7, 8 and 12, and to use restraint and seclusion. ∎ Class VII: Diagnosis and treatment of adolescents in a residential treatment program or on conditional voluntary admission status under G.L. c. 123, §§ 10 and 11, and on involuntarily committed status under G.L. c. 123, §§ 7 and 8, and to use restraint and seclusion.

∎ Class VIII: License to administer electroconvulsive treatment.

According to High Point representatives, the Middleborough facility will have DMH Class III, IV, and VI licenses. Information obtained from DMH indicates that High Point’s Plymouth campus has the same licenses. All of these license classes include authority to accept involuntary commitments under Section 12.

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2. Other Licenses, Approvals, and Certifications High Point’s facility is a hospital, so it will require other licenses and approvals in addition to Section 12 licensure from DMH and zoning approvals from the Town. According to High Point’s representatives, the Middleborough campus will be subject to licensure by the Department of Public Health (DPH) as a Primary Care, Mental Health and Substance Abuse Clinic. The Middleborough campus will have a pharmacy, too, and it will require licenses both from DPH and the federal Drug Enforcement Administration (DEA). Finally, the Middleborough campus may require a license from DPH for dual diagnosis treatment services.

In addition to a building permit from and periodic inspections by the Middleborough Building Inspector, High Point’s project will require licenses and/or approvals and periodic inspections from the Board of Health and Fire Department.

High Point’s flagship hospital in Plymouth and its inpatient and outpatient facilities in Brockton, Taunton, and New Bedford are accredited by The Joint Commission, the non-profit organization that accredits and certifies health care facilities throughout the U.S.

C. McLean Hospital

At approximately the same time that High Point announced plans to open a psychiatric facility at the former St. Luke’s site, McLean Hospital received approval to open a satellite campus at the former Greenery rehabilitation (long-term care) center off Forest Street. The McLean project involves relocating an existing 45-bed facility for adults and adolescents from Brockton to Middleborough. McLean, a private non-profit hospital affiliated with Harvard and Massachusetts General Hospital, operates psychiatric and substance abuse treatment facilities in other cities and towns in Eastern and Central Massachusetts. Its Middleborough program is expected to have DMH licensure similar to High Point’s – including authority to accept Section 12 admissions – but according to information RKG received for this review, most of the clients at McLean are voluntary.

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III. IMPACT ASSESSMENT

A. Fiscal Impact Overview

1. What does it mean? In studies conducted for units of local government, “fiscal impact” refers to the relationship between the amount of revenue generated by a given land use and its associated community service costs. The relationship is expressed as a ratio of municipal and school service costs to revenue, known simply as a “cost-revenue ratio.” A land use qualifies as “revenue positive” if it generates more revenue than the cost of the demands it places on municipal and school services, i.e., a ratio <1.00, or a low cost-revenue ratio. A “revenue neutral” land use represents the break-even point (1.00), and a “revenue negative” land use costs more in community services than the amount of revenue it produces (>1.00). Five factors tend to influence the net fiscal impact of new growth:

∎ The population changes associated with a particular land use;

∎ Rate of new growth;

∎ Location of new growth; ∎ The existing land use pattern in the receiving city or town; and ∎ The existing fiscal condition of the receiving city or town.

“Population changes” can include anything from total population growth or decline to a change in the make-up of the population, e.g., growth or change in the household population or the total population in group quarters, such as hospitals, group homes, nursing homes, and so forth. It also includes changes in the make-up or size of the daytime population, e.g., changes in the number of people working in a community from day to day.

2. Models, assumptions, and limitations Since local governments depend on property taxes to finance municipal and school services, fiscal impact studies have become a popular tool for development review. However, fiscal impact analysis is not confined to a single “tool” because practitioners have several models or methodologies from which to choose. A model is an organized, systematic way of analyzing data, making inferences and drawing conclusions. All of the prevailing fiscal impact models have been field-tested and reviewed by academic and practicing peers, and from time to time new field tests lead to a change in assumptions. For example, many of the demographic assumptions used by fiscal impact analysts thirty years ago have been modified to reflect national changes in household sizes and types.

Fiscal impact analysis focuses on General Fund revenue because the question ultimately addressed by any of these studies is whether a land use will have a positive or negative impact on the tax rate. To answer that question, a fiscal impact analyst has to rely on known factors – historic revenue and expenditure trends, existing conditions, and the demographic characteristics of a community – to predict the “unknown” outcome of a future land use change.

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On this note, most of the prevailing fiscal impact models share some common ingredients. For example:

∎ Near-term community service expenditures per capita may be used to forecast changes in spending as the local population grows if today’s average cost per capita is adjusted to simulate the impacts of large and small amounts of new growth. A significant amount of population and household growth in a short period is more likely to cause accelerated growth in service costs. By contrast, a low or stable rate of population growth usually triggers little change in the overall rate of growth in service, measured on a per capita basis.

∎ Nearly all fiscal impact models assume that for a given nonresidential land use, the ratio of a development’s assessed value to aggregate value of properties in the same use class (two “knowns”) can be used to estimate the same development’s proportional share of total community service costs (an “unknown”).

Fiscal impact studies have limitations and for a variety of reasons, they should be used with caution. While fiscal impact estimates can help communities plan for change, they should not be the sole basis – or even the primary basis – for major public policy decisions. In our experience, the following conditions tend to affect the accuracy and utility of fiscal impact studies:

∎ No fiscal impact model adequately accounts for a municipality’s existing fiscal condition, yet the real impacts of a project are largely determined by context: the demographic, economic and fiscal characteristics of the receiving community. ∎ Not all local government costs change as a direct result of population growth, and some costs change in the absence of population growth – such as health insurance costs for municipal employees, energy costs for public buildings, and fuel costs for public safety and public works. ∎ Revenue ratio studies rely on present costs and revenues to describe the fiscal outcome of a development that is not yet built. However, changes in the economy, federalism, public policy, population demographics and technology result in a fluctuating fiscal position for many land uses. ∎ In isolation, cost-revenue ratios convey an incomplete picture of a development’s fiscal outcome. A land use may seem advantageous because it produces a positive cost-to- revenue ratio, but the amount surplus revenue it generates (in dollars) may be strikingly low. In our experience, this kind of outcome is usually associated with low-intensity land uses, particularly low-intensity commercial uses.

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B. Context: Middleborough Profile

Middleborough is the Commonwealth’s third largest town in total area and second largest in land area.

1

Due to the size and shape of the town, Middleborough’s boundaries touch nine other communities in southeastern Massachusetts. A very low-density town in terms of its existing development pattern, Middleborough is growing at a moderately fast pace. Regional planners estimate that Middleborough will continue to gain population for at least the next two decades. Nevertheless, Middleborough already exceeds the most recently published projections for 2020 and 2030.

2

Table 1. Population Growth

Total Population (Actual) Community 1980 1990 2000 2010 Pct. Change 2000-2010 MIDDLEBOROUGH 16,404 17,867 19,941 23,116 15.9% Bridgewater 17,202 21,249 25,185 26,563 5.5% Carver 6,988 10,590 11,163 11,509 3.1% Halifax 5,513 6,526 7,500 7,518 0.2% Lakeville 5,931 7,785 9,821 10,602 8.0% Plympton 1,974 2,384 2,637 2,820 6.9% Raynham 9,085 9,867 11,739 13,383 14.0% Rochester 3,205 3,921 4,581 5,232 14.2% Taunton 45,001 49,832 55,976 55,874 -0.2% Wareham 18,457 19,232 20,335 21,822 7.3% Source: U.S. Census Bureau, RKG Associates.

Like most of the surrounding communities, Middleborough has a predominantly white population. Almost 94 percent of the people living in Middleborough today are white, non- Hispanic, and African Americans comprise the town’s largest minority group. Less than 2 percent of Middleborough’s residents are Hispanic or Latino, including all races. Although its foreign-born population is small, about 5 percent of the total population speaks more than one language, mainly Portuguese or Spanish in addition to English.

Middleborough’s population is fairly stable, for the vast majority of its residents have lived in town for at least one year. There is evidence of more turnover in neighboring Taunton and Wareham, which have relatively large inventories of rental housing, and Raynham, which has experienced considerable population and household growth. Much like the region as a whole, Middleborough has more families than non-family households, but it does have a larger percentage of non-family households than its small rural neighbors, e.g., Rochester and Plympton. It has more renter households, too (about 18 percent). These factors play a part in Middleborough’s comparatively low household incomes, for the median household income is higher in most neighboring towns, excluding Wareham, Taunton, and Carver.

1 U.S. Department of Commerce, Bureau of the Census, Geographic Data Files. 2 Metropolitan Area Planning Council, Regional Growth Projections, MetroFuture 2030 Projections. Although Middleborough is in the Southeastern Regional Planning and Economic Development District (SRPEDD), MAPC has developed detailed population and household projections for most of eastern Massachusetts, including non- MAPC communities like Middleborough.

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Table 2. Population by Minority Status and Nativity Community Population (2010)

Minority Population (Race and Hispanic or Latino)

Foreign Born Population

MIDDLEBOROUGH 23,116 6.3% 3.3% Bridgewater 26,563 11.6% 4.4% Carver 11,509 4.1% 3.1% Halifax 7,518 5.9% 0.8% Lakeville 10,602 7.5% 4.8% Plympton 2,820 1.9% 2.1% Raynham 13,383 8.4% 4.2% Rochester 5,232 7.9% 6.2% Taunton 55,874 15.9% 11.0% Wareham 21,822 10.5% 3.4% Source: Census 2010, 2007-2001 American Community Survey, RKG Associates.

Table 3. Households and Household Incomes by Type

Community

Total Households

Family Households

Median Household Income

Median Family Income

Median Nonfamily Income

MIDDLEBOROUGH 8,059 5,895 $73,490 $85,769 $46,400 Bridgewater 7,927 5,760 $88,697 $101,641 $44,519 Carver 4,286 3,051 $70,608 $85,996 $41,110 Halifax 2,798 1,945 $83,522 $89,456 $55,662 Lakeville 3,586 2,830 $93,260 $104,416 $35,385 Plympton 991 786 $93,882 $102,773 $42,063 Raynham 4,739 3,542 $82,855 $96,190 $46,406 Rochester 1,699 1,411 $98,728 $104,496 $39,327 Taunton 21,799 14,333 $53,401 $67,447 $33,372 Wareham 9,176 5,581 $52,556 $64,891 $31,532 Source: 2007-2001 American Community Survey.

Middleborough is a fairly affordable town. Its home values and rents are low relative to other communities and to the incomes of its own homeowners and renters. According to the Census Bureau, Middleborough’s median home value falls at the regional midpoint and its monthly rents are among the region’s lowest. Middleborough’s affordability to its residents is attributable in part to the cost of community services. In FY 2012, its average single-family tax bill was well below the mid-point for the ten-town area. Total non-school spending seems high compared with that of surrounding communities, but when viewed against spending by other towns serving populations of similar size, Middleborough’s expenditures per capita are actually quite low.

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