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Pittsfield Council Approves Tax Rate Cut
By Andy McKeever, iBerkshires Staff
02:27AM / Wednesday, November 14, 2018
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Assessor Paula King detailed the tax options on Tuesday.


The city councilors easily approve the plan put forth by the administration on Tuesday.
PITTSFIELD, Mass. — Tax cuts make for more agreeable City Council meetings.
 
The council easily approved a plan to lower property taxes across the board -- both on the average bill and on the rate.
 
For the average single-family homeowner, the bill reduction may be small, at $9.48, but it is the first reduction to the property tax bill in 25 years. The reduction for commercial properties is much more dramatic with a $367.38 reduction for the median commercial property.
 
"I think it is important that we take a small win when we can," Councilor at Large Earl Persip said.
 
It is not just the average bill going down either, but the tax rate is going down for the first time since 2007. The residential tax rate is dropping from $20.01 per $1,000 to $19.42 per $1,000 and the commercial rate is dropping from $39.98 per thousand to $39.94 per thousand. 
 
Meanwhile, single-family property values have continued to increase while commercial properties have taken a small dip in value. The City Council approved a shift factor of 1.656, a measurement determining which type of taxpayer pays more of the tax burden, residents or businesses. The shift is slightly more in favor of residential homeowners than last year, who saw property values increase -- and bucks a trend of the city shifting more toward a single rate each year recently, putting the city more in line with where the shift was two or three years ago.
 
According to Assessor Paul King, single-family homes have increased by 3 percent, a determination based mostly on sales during 2017. The residential housing market has been trending upward.
 
"This is attributed mostly to the robust market we are seeing," King said.
 
The condominium and two- and three-family homes have shown similar trends -- at 2.9 percent, 3 percent, and 2.9 percent, respectively. Apartments, however, haven't been as in demand with values rising at a much more moderate rate of 1.2 percent. King attributes part of that staggering in multi-unit apartment buildings to the condition of the aging stock.
 
"I think that is something the city needs to recognize with code enforcement," Council Vice President John Krol said of the apartment building market.
 
Meanwhile, commercial properties saw a 2 percent decline -- which translates to $7.7 million in reduced value. Industrial and power plants have shown fairly flat growths of .4 percent and .5 percent. 
 
But single-family homes still make up the majority of the city's property. There are 11,332 single-family homes among the 19,000 or so taxable parcels. Overall, the city's total taxable value is up by $75.4 million. 
 
King said personal property values are significantly up. She said there has been a 12.4 percent increase in personal property values. Much of that has come from commercial enterprises including a $9 million investment in the former SABIC property and investments from Spectrum Cable, NStar, Western Massachusetts Electric, and Berkshire Gas. New solar arrays have been a driver of a 16.5 percent increase in electrical generating. Overall, there is $27.5 more taxable values in personal property.
 
King also highlighted new additions to the tax rolls as well. There has been a total of $5,209,695 of taxable value added to the residential market with the building of new homes, additions, or the building of such things as garages. She said there is $4,049,290 worth of new value for commercial driven by such things as U-Haul's renovation to the strip mall on West Housatonic Street, the Itam Club returning to the tax rolls, a new marijuana facility on Dalton Avenue, the new O'Reilly's Auto Parts building, and levels of tax increment finance packages such as with Hotel on North paying in more.
 
The industrial sector saw $1,329,046 added to the values with such things as the Green Apple taking over the former Tire Warehouse, a solar array on East Street, and TIFs adding a greater percentage from Ice River Springs, Interprint, and LTI Smartglass. 
 
Personal property taxes saw a large increase in new taxable entities such as the ones cited above contributing to the overall growth of values. 
 
"It is the first time we've had this large of new growth in over a decade," King said.
 
Perhaps what is the biggest driver of the tax plan is unanticipated revenues. The city saw a $2.5 million increase in state aid and local revenues are up by about $100,000. Mayor Linda Tyer has also proposed using $1 million in free cash for the budget, which combined outpaces the $2.8 million increase to the budget. 
 
The city's budget, which is set in the spring, is $168,521,252.06. Of that, revenues outside of taxes are expected to come in at $82,140,175.16, leaving $86,381,076.90 to come from taxpayers. This year makes back to back years of the city increasing its distance between the levy ceiling -- the most it can tax -- and the actual levy being used. Just a few years ago, the city had to make a significant number of layoffs to keep under that total.
 
When it all shakes out, the average single-family home now valued at $186,600, an increase from $181,571 last year, will pay $9.48 less oin taxes while the median commercial enterprise, now valued at $189,000, a decrease from $198,000 last year, will see a decrease of $367.38. The average single-family tax bill will be $3,633.25 while the median commercial property's bill will be $7,548.66.
 
King pointed out that not everybody has the average home and in some cases values increased more but most of the city's residents and commercial owners will see a decrease in taxes. King said about 2,800 homes could see an increase.
 
"The majority of the single-family homes will be seeing a decreased," she said.
 
The first decrease in years led to little discussion among the council Tuesday night. The debates over tax rates have gotten heated as each year the taxes have gone up fairly steadily. Since fiscal 2014, the average single-family home's tax bill has gone up by $584. Last year, the average single-family homeowner saw its tax bill increase by $176.24.
 
As those numbers have gone up, Ward 4 Councilor Christopher Connell had been pushing for budget reductions in the spring and then the use of more free cash to offset the tax rate in the fall. However, the administration has been moving away from using free cash to offset the tax rate, following the auditor's advice that it should be used to build reserves or for one-time expenses.
 
Connell sees it differently, saying free cash is mostly money taxpayers paid into the city and should be given back to them.
 
"When it comes to free cash, I've said this over and over and over again, free cash is not free. It is the excess dollar amount the residents have paid last year that we didn't spend," Connell said.
 
Connell pushed in the spring for more free cash to be used but the mayor stuck to the $1 million figure. Connell tried to get $500,000 more used, saying a tax lien auction -- which was done -- would replenish the additional amount used. 
 
He'd still like to have increased the amount of free cash used, Connell said, but he didn't have the votes in the spring and two of his closest allies -- Melissa Mazzeo and Kevin Morandi -- were absent from Tuesday's meeting. 
 
"Yes we are going down, but in reality, it is almost a wash, a few dollars difference," he said of the mayor's plan.
 
Connell doesn't want the council to become complacent and believes that the administration could have done more to keep expenses down.
 
"If we have an opportunity to save the residents some money on what they pay in taxes, I think we should explore those options," Connell said.
 
Ward 7 Councilor Anthony Simonelli made a point to question the new Taconic High School. One of the most frequent comments made after Tyer revealed her tax plan was questioning whether or not a big hit to the rate was coming down the road to pay for the new school.
 
Director of Finance Matthew Kerwood said there is no big hit on the way. He said $40 million of the $46 million the city is expected to pay for the school has already been bonded and is included in the budget. He said the debt for the school has been structured so that the biggest hit comes in 2021, at the same time debt expires from school projects 20 years ago so it balances out. He said his goal has been to keep the city's debt balanced as projects come on and off the city's budget.
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