CMA 2016 #187 · Agenda item attachment · Jun 20 2016

1 June 15, 2016 Mr. Richard C. Rossi, City Manager City of Cambridge 795 Massachusetts Avenue Cambridge, MA 02139 RE: North Point I-Cubed Dear Mr. Manager: On behalf of Efekta House, Inc. (“EF Education First”), DW NP Property LLC (“DivcoWest”) and the HYM Investment Group, thank you for all the time and effort you and City staff have invested in the North Point I-Cubed proposal. Since 2013, we have worked in partnership on an Infrastructure Investment Incentive (I-Cubed) Proposal for the North Point area, which would apply the new state tax revenue generated from EF’s North American Headquarters campus to a $25 million bond to finance critical public infrastructure improvements in the North Point area. In accordance with the Statute and I-Cubed Regulations codified at 801 CMR 51.10, we formally request that you favorably recommend to the City Council an approval by the City of Cambridge for the following: a) the Economic Development Proposal to be submitted to the City of Cambridge in a form substantially similar to the Preliminary Economic Development Proposal submitted by the Developer, acknowledging all of the City’s financial obligations in connection with the proposal; b) all actions necessary in connection with the creation of a Municipal Liquidity Reserve; c) to authorize the City Council and the City Treasurer of the City, in the name of and on behalf of the City, to execute, deliver, and record such agreements with the Developer, the Commonwealth of Massachusetts, and the Massachusetts Development Finance Agency as necessary to implement the proposal; d) to approve the acquisition or acceptance of any property interests in the Public Infrastructure Improvements to be conveyed to the Municipality upon completion; and e) to take, approve and/or authorize all other City actions necessary to implement the proposal.

2 During the last three and a half years, several major milestones have occurred to get us to this point:  2011 – 2013: EF expanded in Massachusetts based on the promise of infrastructure assistance from the Commonwealth; North Point development team started working on I-Cubed proposal;  April 2013: Initiated I-Cubed proposal and created City Working Group;  May 2014: Presented to East Cambridge Planning Team;  July 2014: City Council unanimously approved I-Cubed submittal to Commonwealth; EF and HYM submitted Preliminary EDP to Commonwealth;  January 2015: Received Preliminary Approval from Commonwealth;  August 2015: DivcoWest acquired NorthPoint project; EF, DivcoWest and HYM started working with Baker Administration;  Feb. 2016: Submitted amended and restated Preliminary EDP to Commonwealth;  May 2016: Received Updated Preliminary Approval from Commonwealth and obtained Certificates of Approval from DOR and MassDevelopment;  June 2016: Presented to East Cambridge Planning Team; and  June 2016: Participated in a City Manager’s Public Hearing. If we are successful in receiving a favorable City Council vote, we anticipate a Commonwealth approval and bond issuance by early fall 2016, allowing construction to start on the remaining infrastructure improvements immediately. The infrastructure planned for North Point will not only benefit current employees, students and residents, but also serve as a catalyst for the overall North Point area. The I- Cubed Program provides an innovative financing mechanism to fast-track public infrastructure improvements in a way that poses little risk to the City and Commonwealth, while benefitting the greater East Cambridge area. As the City has thoroughly examined, due to EF’s current employment numbers and consistent annual job growth, EF is now generating approximately $3.3 million in new State income tax revenues annually as a result of its employment growth. The $25 million bond is projected to be fully paid off by FY 2023 – a six-year payoff on a typical 30-year bond. Although the debt service on the bonds is funded by income tax revenue, the Commonwealth requires the City to be responsible in the rare and unlikely event of a revenue shortfall. In this case, there is little to no risk to the City of Cambridge due to the sizeable revenue surplus available at bond issuance (at least $6.3 million) and the anticipated consistent annual state income tax revenue from EF.

3 As further security, the NorthPoint developers have agreed to fund a municipal liquidity reserve as well as agreed to an assessment plan that permits the City to lien on certain undeveloped parcels in the rare case of a revenue shortfall. Therefore, we respectfully request a favorable vote from the City Council to allow the I-Cubed application to move forward in the Commonwealth’s review process. Thank you again and we look forward to continuing to work together on this important project. Sincerely, EF Education First and the NorthPoint Development Team