City Council

HEARING BEFORE THE CITY COUNCIL, FEBRUARY 8, 2006 Hearing opened at 7:30 P.M. with Councillor Rosa, Chair of the Finance Committee presiding. All members present. Present at the hearing was Chief Assessor Walter Poirier, Assessors James Dillon and Norman Melanson, Treasurer, David Laplante, and City Comptroller, John Richard. The following COMMUNICATION was the subject of the hearing. C-54 Relative to determining the factor to be used in setting the Fiscal Year 2006 tax rate. (Finance) Mr. Poirier apologized for the delay but said it was unavoidable. Mr. Poirier said that this will be the last classification hearing for Mr. Melanson as he is retiring at the end of the month. Mr. Poirier said Mr. Melanson has been with the City for twenty- one years and wanted to thank him for his service. Mr. Poirier said that the most notable thing that has happened is the valuations have gone up. He said the residential value has gone up 14% – 15% instead of 20%. Mr. Poirier said the actual increase due to revaluation is about 10% overall. He said the average single family home has gone up to approximately $268,000.00 from $232,000.00 last year which is about a 15% increase. Mr. Poirier said the big news is that for the very first time, since growth has been tracked in Leominster, we have more Commercial, Industrial and Personal Property growth than we have Residential growth. Mr. Poirier said that the values this year were based on the calendar year of 2004 sales. He said based upon the increase in value for this year and what is proposed to be raised, using the single factor tax rate, the rate would be $10.79, which is a $.97 reduction. Councillor Rosa said that it has been a trend over the years that as the values rise the taxes drop and asked if this is correct. Mr. Poirier said it is dependent upon appropriation, but if you stay within the confines of proposition 2 ½ and raise the growth, generally the tax rate will drop. Councillor Rosa asked if Open Space is included in the Residential Factor. Mr. Poirier said that Open Space does fall under that category. He said we have very little Open Space, only valued at approximately $704,000.00, and it is restricted in all respects. Councillor Rosa asked if this year’s “New Growth” is more than last years. Mr. Poirier said this years new growth is the highest it has ever been. The real increase in residential growth has been additions, garages, second story additions, remodeling kitchens, adding bathrooms and finishing basements. He said anything that adds value to the home is considered residential growth. Mr. Poirier said large commercial buildings have added a big increase in new growth. Councillor Rosa asked if we didn’t have a healthy new growth, where would the money come from. John Richard said the money would come from the existing tax payers. He said that over the last ten years the tax levy has grown by over 12 million dollars and 60% of that was paid by new growth and 40% by tax increases. Councillor Rosa asked the panel to explain levy capacity and excess levy limit. HEARING BEFORE THE CITY COUNCIL, FEBRUARY 8, 2006, continued. John Richard said Proposition 2 ½ is an aggregate law and doesn’t effect the individual tax payer. He said each individual could be plus or minus their last years taxes by 2 ½ %. He said Leominster has a levy limit which they have chosen not to raise the whole amount. Mr. Richard said it is unusual and Leominster is one of the few in the state with excess levy capacity at the percentage we have. Councillor Nickel asked why a building that changes from an apartment to a condo, goes up considerably in value? Mr. Poirier said that an apartment only has one owner and is income property, which is looked at differently. He said an apartment owner has to pay for all the units whereas in a condo, each owner pays just for his own unit. Mr. Poirier also said apartment owners can fluctuate their rents according to the market. Councillor Nickel asked about Industrial property and where we have gone in terms of growth. Mr. Poirier said that we have had some growth, the old Tucker building has been the biggest growth. Mr. Poirier said that that building was totally rehabbed. He said they still do not have any tenants yet. Mr. Poirier said that they got $4,000,000.00 in growth out of that building. Mr. Poirier said the industrial buildings were built for a specific type of industry, and that industry is struggling right now, so there is a lot more vacancy. Councillor Nickel asked how our $10.79 tax rate compares to Worcester’s tax rate. Mr. Poirier said our single rate is lower than Worcester’s split residential rate. He said Fitchburg also has a higher rate than us. Councillor Dombrowski said that our tax rate this year is being reduced by $.97 and asked if the reason for that is because of the growth. Mr. Poirier said the reason for that is a combination of growth and increased value. Councillor Dombrowski said that it seems there is a definite trend that the cities in the Commonwealth have a dual tax rate and the towns have a single tax rate. Mr. Poirier said generally the cities that are east of Route 495 have a dual tax rate. Councillor Dombrowski asked why Leominster would be different from the other cities, is it the proximity to Boston? Mr. Poirier said that a lot of the businesses are owned by natives of Leominster. Councillor Dombrowski asked why the state law doesn’t distinguish between Commercial and Industrial. Mr. Poirier said that it is non-discriminatory and that they came up with different classes which are Residential-Open Space and Commercial-Industrial-Personal Property and the only way to change that is through the legislature. Councillor Rowlands said that there was a ninety three million dollar increase and asked what percentage of that came from new growth. Mr. Poirier said there were twenty nine million dollars in new growth and sixty four million dollars in revaluation. Councillor Rowlands said that since 1999, the Commercial Tax Levy has only increased $232,000.00 in eight years and with the new growth of $345,000.00, the Commercial taxes have actually gone done since 1999. Mr. Richard said that the valuations of Residential properties have grown at a faster rate than that of Commercial and Industrial. Councillor Rowlands said that the model we have for the single tax rate says that if a home increases in assessed value faster than a business, the business gets a tax decrease and the homeowner gets a tax increase. He said that on the charts, the existing businesses prior to the new growth this year, are paying less in taxes than in 1999. Mr. Richard said yes that is true and it is because the constitution says that the tax levy is based on the value of property, not based on how successful the business may or may not be. Councillor Rowlands said that the Commercial, Industrial and Personal Property has had a 3.1% increase in taxes and the Residential, Open Space has had a 54% increase in taxes in the last eight years. He said that it should be shared more evenly across all categories. Councillor Freda and asked if they would agree if the partnership between the state and local government has severely eroded over the past few years and that has caused a lot of our problems. Mr. Poirier said that every community in Massachusetts has suffered over the last three years. He said the state is not giving us our full share of the lottery money and Chapter 70 money was cut back in some communities. He said the Legislature has to make up their minds on the local aid formula. Mr. Poirier said that this city is in much better shape than most communities in Massachusetts. Councillor Freda said she calculated the different taxes between the single tax rate and dual tax rate of businesses in her ward. She said that the shift doesn’t make that much difference on the residential side but has a much greater affect on the business side. She said it could seriously hurt the small business owner. Councillor Freda said that we, as tax payers, get a lot for our tax money in this city. HEARING BEFORE THE CITY COUNCIL, FEBRUARY 8, 2006, continued. Councillor Salvatelli said that they continually talk about some taxes going up and some taxes going down and he said he has never talked to anyone whose taxes have gone down. Councillor Salvatelli asked who is getting the tax break. Mr. Poirier said he cannot give specific parcels or areas that got a tax break off the top of his head. Councillor Dombrowski asked Mr. Poirier to explain the small business exemption. Mr. Poirier said that it is a very limited exemption. He said that the qualifications are that the parcel in which the business or businesses sits cannot be worth more than $1,000,000.00 and cannot have more than ten employees. If they fall into those qualifications, the business can get a 10% tax break. Robert Fitzgibbons, 7 Winter Street, said he read in the Boston Globe that Boston’s tax rate is based on $11.15 for residential and $30.75 for commercial tax rates. He said they keep their valuations under control. He said the valuations of a single family home only went up 5%, valuation on a two-family home went up 7% and the valuation on a three-family home went up 8%. Christopher Paquette, 14 Caspian Way, and the Economic Developer for the city, said he is in favor of the single rate tax factor. He said it has helped businesses in this city so far. Mr. Paquette said a shift in taxes would hurt the small businesses in this community. Edward Gagne, 29 North Meadow Road, is in favor of the single rate tax factor. Mr. Gagne talked about the Searstown district and the growth they have seen. Dick Quinlin, 721 Goodrich Street, Lunenburg, MA, is in favor of the single tax rate factor. He said he feels the dual tax rate factor would really hurt businesses in the community and that other communities are loosing businesses because of the dual tax rate. Louis Casey, 15 Penney Lane, said he feels the tax rate should be based on the cost of running the city. Mr. Casey is in favor of the single tax rate factor. Pelino Masciangioli, 129 Bayberry Hill Lane, said that he feels all residents and businesses should be in a partnership to support the community. He said he is not in favor one way or the other on the tax rate, but feels the City Council should look at the process of the valuation of property to see how it is being done. Phil Porter, 125 Wilder Road, spoke in favor of the single tax rate for the following reasons; 1) Economic: no one prospers unless someone produces 2) Psychological: no one produces without incentive and 3) Sociological: profit side of a society is the business sector. Bob Bray, 511 Prospect Street, is in favor of the dual tax rate. David McKeon, President of North Central MA Chamber of Commerce, said that the City of Leominster has the lowest tax rate around, single or dual rate. He said the budget and city has been run well. He said he is in favor of the factor of 1 tax rate. Mr. McKeon said that once you go to dual tax rate, it is hard to get back to a single tax rate. Mayor Mazzarella said that nobody is wrong in this matter; he feels everybody is a little bit right. He said that residential property values have taken off while the values in commercial and industrial have been left behind. He said the values are based on sales, and sales have gone up over 100%. Mayor Mazzarella said there were a lot of vacancies in commercial buildings over the past years, and now most areas are full. He said the question is whether the values placed on the properties are fair and are they properly assessed? Mayor Mazzarella said that if your bill doesn’t reflect what you think your property was worth last year, file an abatement. He said it is about fairness. Mayor Mazzarella said he is in favor of the single tax rate. Councillor Nickel asked when people can file abatements. Mr. Poirier said that you can file an abatement from the time when the bills go out until May 1, 2006. HEARING ADJOURNED: 10:02 P.M. Lynn A. Bouchard, City Clerk and Clerk of the City Council REGULAR MEETING OF THE CITY COUNCIL, February 8, 2006 Meeting called to order at 8:01 P.M. Attendance was taken by roll call vote; all members present. A recess was called at 8:03 P.M. to continue the Public Hearing Meeting reconvened at 10:12 P.M. REGULAR MEETING OF THE CITY COUNCIL, FEBRUARY 8, 2006, continued. Upon recommendation of the FINANCE COMMITTEE, the following COMMUNICATION was GRANTED. Vt. 8 “yeas” and 1 “nay”; Councillor Rowlands opposed. C-54 Relative to determining the factor to be used in setting the Fiscal Year 2006 tax rate. Granted to adopt a factor of one. Under Old Business Councillor Rowlands said he had been mislead on the Moonosnock land and that there were going to be 14+ homes being built on that land. He said he thought that that land is an important piece of property for the city to have for open space. Councillor Rowlands said we should contact the Mayor with updated information saying that the City Council is interested in that piece of property. Council President Salvatelli asked that a letter be sent to the Mayor asking him to further in the possibility of purchasing that property. MEETING ADJOURNED: 10:50 P.M.