Budget and Finance Subcommittee

RECEIVED By City Clerk at 4:58 pm, 2/10/22 AMESBURY CITY HALL 62 Friend Street Amesbury, MA 01913 City Council Finance Committee Meeting Minutes Tuesday, November 23, 2021 at 7:00 PM Virtual Meeting Finance Committee Chair Stanganelli called the meeting to order at 7:08 PM. Roll Call was taken Present were: Councilor Einson, Councilor Gilday, Councilor Hogg, Councilor Lennon, Councilor Rinaldi, Councilor Wheeler and Councilor Stanganelli Absent were: Councilor Kisieleski and Councilor Mandeville *Councilor Mandeville joined the meeting at 7:11 PM Minutes for Approval: none at this time Communications & Updates  Chief Financial Officer, Angel Wills, gave her monthly financial update: o The appropriation budget expenditures trending on target. o The snow and ice season has not started yet, so that is good news. o There is $200,000.00 in the reserve fund. o The free cash was certified last month at the highest level since 2016. The certification was for 1.9 million dollars.  The goal is to only touch the free cash for snow and ice if necessary. We would like to keep building our reserves and possibly use it for small capital for FY23. o There has been a steady increase in areas that were hit by the pandemic:  Hotels excise  Meals excise  Motor vehicle is going up o We’re at the tail end of getting the tax rate finalized. Discussion of FY2023 Proposed Operating and Capital Budget Priorities  Councilor Stanganelli noted shortly before the meeting he circulated a memo of things to discuss pertaining to the FY23 budget season. Public Comment: None 2021-147 An Order to request the City Council vote to increase the exemptions amount of qualified applicants. – Mayor Sponsor  Chief Assessor, Todd Laramie and Board of Assessor’s member, Michelle Branciforte spoke about the bill. o Todd stated this is a local option that every municipality has the option to adopt. o There is a caveat, the number cannot go lower than what was paid last year. o In FY21 there were 150 tax exemptions granted, totaling $195,085.15 abated.  Councilor Stanganelli asked what the categories for the exemptions were.  Todd replied, there were 61 veteran exemptions granted, 12 blind people’s exemptions, 22 surviving spouses of veterans and 21 senior exemptions and 24 separate senior qualification. o Councilor Stanganelli clarified that what this bill would do is double the exemption amounts allowed by state law. o Michelle stated these exemptions are very helpful to the people they serve.  Councilor Einson asked: o To clarify if this is covered by the overlay.  Michelle answered, yes. o If Todd could generalize the amount of each exemption or is it all over the board.  Todd responded that it is pretty generalized; between $500.00 to $1,000.00 is a standard amount. o Councilor Einson asked if this is a deduction on their properties assessed value or a reduction on their tax bill.  Todd answered, a reduction on their tax bill.  Councilor Rinaldi asked if there are a lot of rejections because of income. o Todd responded, yes. There are a lot of rejections due to income and assets.  Councilor Stanganelli asked about a program that was discussed with the previous Assessor, Jason Discipio that would raise the asset limit. He recalled that if that was adopted it would put other programs similar to this in jeopardy. o Todd responded by saying he is not familiar with what he is talking about. o Councilor Rinaldi said it was 41 C and a half. Councilor Einson motioned to send order 2021-147 back to City Council with a positive recommendation. Councilor Wheeler seconded the motion. Roll call was taken, all members present voted in favor (8). Motion passed. 2021-148 An Order to request the City Council vote to hold the annual classification hearing to vote on four (4) separate items in order to establish the tax burdens for each class of property. – Mayor Sponsor  Todd Laramie began by explaining: o Amesbury is in a reevaluation year, which occurs every five years. o Land and housing values have gone up. o The average proposed evaluation for FY22 [$406,021.00] went up 5% from FY21 [$384,045.00]. o With a factor of 1, the tax rate would be set at $17.84  with a [split tax rate] shift of 5% the residential rate would be $17.70 with a CIP [commercial industrial and personal] rate of $18.73   Todd read the recommendations from the Classification Sheet (see attachment #1)  Councilor Wheeler asked if the council were to choose a different rate would they have to be in 5% increments. o Michelle responded by saying the 5% increments were for the examples. The Council could look to see what the rates would be like with different percentages. But as you can see from the shift, as you are taking the burden off of the residential value and moving it onto the CIP it make a big difference in the burden as you shift the factor. This is why the Board of Assessor’s recommends a single tax rate.  Councilor Einson wanted to know what factors went in to the originally projected tax rate of $18.03. o Angel stated that the tax rate went down because the average single family home value went up the overall estimation for the average single family home was slightly higher. o She said that discussions with the Mayor’s office lead to the proposal of using excess revenue to supplement the tax burden on all the citizens.  Councilor Einson asked, if the tax rate is being driven by one particular style of home. o Todd answered that it is across the board that values went up. Councilor Wheeler motioned to recommend adoption of a factor of 1 as recommended by the Assessor’s Office. Councilor Hogg seconded the motion. Roll call was taken, all members present voted in favor (8). Motion passed. Councilor Wheeler motioned to recommend not adopting an Open Space Discount as recommended by the Assessor’s Office. Councilor Gilday seconded the motion. Roll call was taken, 7 out of 8 members voted in favor, one not in favor (Lennon). Motion passed. Councilor Gilday motioned to send item three, residential exemption, with the suggested option of no. Councilor Wheeler seconded the motion. Roll call was taken, all members present voted in favor (8). Motion passed. Councilor Einson motioned to return item 4 (commercial exemption) back to the council as recommended by the Assessor with no exemption. Councilor Hogg seconded this motion. Roll call was taken, all members present voted in favor (8). Motion passed. Councilor Lennon motioned to send order 2021-148 back to City Council with a positive recommendation. Councilor Gilday seconded this motion. Roll call was taken, 7 out of 8 members voted in favor, one not in favor (Lennon). Motion passed. 2021-149 An Order to adopt M.G.L. Chapter 200A, Section 9A, relating to the disposition of unclaimed property by a city or town. – Mayor Sponsor  Angel stated that the purpose of this bill is to make the process easier. She said she charged the Treasurer’s Office with cleaning up tailings that have been sitting on the balance sheets for several, several, years. o She said it is not a lot of money, the balance is around $10,600.00.  This statute from the state would make it easier to streamline the process. There would still be the notifications and attempts at delivering the funds.   Councilor Einson asked for clarification on the language “several attempts” o Angel said the statute is specific with their rules.  For checks under $100.00 the Treasurer must mail a notice to the owner, information must be posted in a conspicuous space for at least 60 days and/or on the City website.  For checks over $100.00 the Treasurer also has to make a publishing in the newspaper similar to what the state does.  After one year of this process the city can take it in as general fund revenue.  Councilor Lennon recommended that the initial attempt of contacting through the mail should be through certified mail. That way there is a record of the date of when the timeline had begun. o Angel stated that is a good recommendation. o Councilor Stanganelli asked if the certified mail comes back undeliverable because the person has moved and there is no forwarding information, what happens then.  Angel responded, then we will need to follow through the other procedures. o Councilor Stanganelli stated his concern for people who has passed. Their next of kin may not read Amesbury newspaper, or stop into the City Hall.  Councilor Gilday asked what the procedure is now. o Angel replied that the money has been sitting on the balance sheet dormant for some time. There was the attempt to return it back when they originated. But with no follow-up and no one to claim it the funds remained as a liability on the balance sheet. o Angel said she asked the Treasurer’s office to attempt to reach out one last time before the funds go into the general fund.  Councilor Wheeler wanted to note that this order is not to change the law, but it is adopting a different law that MGL provides.  Councilor Stanganelli stated that his understanding is if the city turned the funds over to the state’s unclaimed property account, and three years went by and nothing was claimed, Amesbury would receive that money back. o Councilor Wheeler said his understanding is similar however, Amesbury would not receive the funds back if turned over, they would go to the State’s general fund. o Angel said she was unsure but would like to clarify the procedure. Councilor Lennon motioned to send order 2021-149 back to City Council with a positive recommendation with the included suggestion that the Treasurer’s Office do their due diligence to send their initial notification by certified mail. Councilor Einson seconded this motion. Roll call was taken, 7 out of 8 members voted in favor, one abstention (Stanganelli). Motion passed. 2021-150 An Order to authorize the Mayor to expend a FY22 community One Stop for Growth, Community Planning grant from the Commonwealth of Massachusetts Department of Housing & Community Development (DHCD). – Mayor Sponsor  Director of the Office of Community and Economic Development, Angela Cleveland, began by saying the city has been exploring the possibility of creating a smart growth  district in the East End neighborhood, which is the junction of Elm Street and Clark’s Road. o She said this would be a good opportunity to look at the sewer impacts, the water impacts, traffic impacts and a full list of impacts and benefits. o With this grant we will hire a consultant that would go through a scenario planning exercise where we would go through a variety of different criteria, through public engagement. o These efforts would complement the IAMesbury 2030.  Councilor Lennon stated she did not see the grant application and would like to know what the scope is when talking about the East End. o Angela said she would be happy to send a report of the grant application as well as the map they submitted of what they consider the East End.  Councilor Lennon wanted to note that the recommendation on number 2 for order 2021- 148 the open space discount.  Councilor Stanganelli asked about matching. o Angela replied, no. Councilor Gilday motioned to send order 2021-150 back to City Council with a positive recommendation. Councilor Lennon seconded this motion. Roll call was taken, all members present voted in favor (8). Motion passed. 2021-151 An Order to authorize the Mayor to expend an Economic Development Administration (EDA) grant from the United States Department of Commerce. – Mayor Sponsor  Angela Cleveland explained that this a companion to the ULI (Urban Land Institute) visioning session that we did for the upper mill yard. These were originally meant to go in tandem, but we are happy that the ULI project finished first because the results of that visioning session can now be incorporated into this project. o The work for this project has already been started, the funding was awarded in September and the bill missed the October Council meeting. o A taskforce has been created which includes some businesses from downtown, the chamber of commerce as well as Seabrook, NH and Merrimack Valley Planning. o This will be a yearlong project. Councilor Lennon motioned to send order 2021-151 back to City Council with a positive recommendation. Councilor Wheeler seconded this motion. Roll call was taken, all members present voted in favor (8). Motion passed. Councilor Lennon motioned to adjourn. Councilor Wheeler seconded this motion. Roll call was taken, all members present voted in favor (8). Motion passed. Adjourn @ 8:27pm Respectfully Submitted, Ellie Andersen, November 17th, 2021  *Attachment 1 Todd Laramie, Chief Assessor Amesbury Tel: (978) 388-8102 City Hall, 62 Friend Street Email: laramiet@amesburyma.gov Amesbury, MA 01913 Honorable Kassandra Gove President Mathew Einson Members of the City Council Amesbury, MA 01913 Dear City Officials: Chapter 369 of the Acts of 1982 requires that the decision to shift the property tax burden from one class to another be determined by the City Council and the Mayor after a public hearing is held. At the completion of such a hearing, the City Council shall vote on four separate items in order to establish the tax burdens for each class of property. 1) THE SELECTION OF A RESIDENTIAL FACTOR The minimum residential factor is .921 This factor is calculated at 150%. A vote for a factor of 1 will establish a single tax rate for all classes of property. Chapter 200 of the Acts of 1988 allows certain communities at local option to shift just as much of the tax burden to commercial, industrial and personal properties so as to maintain the most favored residential share since the City’s adoption of a classified tax system. 2) OPEN SPACE DISCOUNT The establishment of this class of property is the responsibility of the Assessors. At this time, our community does not have any properties classified as such. 3) RESIDENTIAL EXEMPTION The average residential valuation for Fiscal Year 2022 is $406,021. This average includes condos, one family, two family, three family, apartments, miscellaneous residential properties as well as 60 mixed use parcels and vacant land. This exemption would allow a reduction in valuation of each qualifying residential parcel of up to (35% of average residential valuation) $142,107. Because the adoption of such a factor is to be borne within the residential class, the net effect of the Residential Exemption is to lower tax bills for all residential property valued less than the average valuation and increase tax bills for all residential property valued greater than the average valuation. Such an exemption is difficult to apply due to the legal requirement that the exemption be applied only to the principal residence of the taxpayer. The Board of Assessors does not recommend this exemption. 4) COMMERCIAL EXEMPTION This legislation adds an option, the small commercial exemption, to the property tax classification law. Under General Laws Chapter 59, Section 5I, the Mayor, with the approval of the City Council, may now decide annually to exempt up to 10 percent (10 %), of the value of Class 3, Commercial, parcels that are occupied by businesses with an average employment of no more than ten people at all locations during the previous calendar year, as certified by the commissioner of the Department of Employment & Training, and valuations of less than a million dollars. Similar to the residential exemption it results in reducing property taxes on properties occupied by small businesses and shifting those taxes onto other commercial and industrial properties. This exemption is based on a percentage of an eligible parcel’s valuation, rather than a fixed dollar amount. If this exemption is granted our office must determine the eligible parcels, reduce their valuation by the selected percentage and set the tax rate using the reduced value. This exemption will result in a higher rate for the Commercial and Industrial classes than for Personal Property. The Board of Assessors does not recommend this exemption. AVERAGE VALUE FOR INFORMATION PURPOSES # OF PARCELS FY 2022 VALUE FY 2021 VALUE % CHANGE SINGLE FAMILY 3,508 454,107.10 420,916.59 7.89% CONDO 1,651 261,791.52 255,000.00 2.66% TWO FAMILY 326 435,048.16 442,263.11 -1.63% THREE FAMILY 66 550,077.27 519,951.52 5.79% APARTMENT 59 2,399,455.93 2,321,276.27 3.37% COMMERCIAL 217 751,036.64 712,274.79 5.44% INDUSTRIAL 84 1,303,286.90 1,260,879.76 3.36% PERS PROP. 267 333,989.25 265,712.84 25.70% THE NEW GROWTH IS BROKEN DOWN AS FOLLOWS RESIDENTIAL TOTALS $16,642,200 = $303,720 C.I.P. TOTALS $7,851,021 = $143,281 GRAND TOTAL $447,001 The following data is submitted in order to exemplify the ESTIMATED TAX RATES for the Residential vs. Commercial, Industrial and Personal Property (CIP) with the use of different tax factors. CIP TAX RESIDENTIAL RESIDENTIAL CIP FACTOR FACTOR RATE RATE 1.00 1.0000 $17.84 $17.84 1.05 .9921 $17.70 $18.73 1.10 .9842 $17.56 $19.62 1.15 .9763 $17.42 $20.51 1.20 .9684 $17.27 $21.41 1.25 .9605 $17.13 $22.30 1.30 .9526 $16.99 $23.19 1.35 .9447 $16.85 $24.08 1.40 .9368 $16.71 $24.97  1.45 .9289 $16.57 $25.87 1.50 .9210 $16.43 $26.76 AT A FACTOR OF 1 The average single family property tax will increase by approximately $461.63 At a factor of 1.00 the average Residential property tax will increase by approximately $419.54 The average single family bill will be $8,101.27 The average condo bill will be $4,670.36 GENERAL INFORMATION – FY 2022 AT A TAX RATE OF $17.84 PER THOUSAND FY 2022 LEVY SHARE 22 FY 2021 LEVY SHARE 21 DIFFERENCE RESIDENTIAL 2,430,439,839 44,112,483 2,267,787,037 41,160,335 2,952,148 COMMERCIAL 180,794,247 3,281,416 172,343,258 3,128,030 153,386 INDUSTRIAL 114,106,425 2,071,032 111,301,550 2,020,123 50,909 PERS PROP. 89,264,009 1,620,142 69,351,050 1,258,722 361,420 TOTAL 2,814,604,520 51,085,072 2,620,782,895 47,567,210 3,517,862 FISCAL YEAR 2022 LEVY CALCULATIONS PLUS 2.5% 1,226,392 PLUS FY22 NEW GROWTH 447,001 TOTAL 2022 LEVY LIMIT 50,729,081 PLUS DEBT EXCLUSION 2,330,756 TOTAL LEVY CAPACITY 53,059,837 ESTIMATED LEVY 50,208,785 EXCESS LEVY CAPACITY 2,851,052