(WMassP&I)

SPRINGFIELD—Determining the tax rate for commercial and residential properties is within the ambit of the City Council, but this year it became a rare display of municipal harmony. In a unanimous vote Monday night, the Council adopted rates recommended by the mayor, a special Council committee under the Finance Committee and the business community.

The new, lower rates will not translate into a tax break for most taxpayers as property values have risen according to city assessors. Still, higher values help the city climb out of a property tax revenue hole brought on by a fateful mix of the foreclosure crisis and Proposition 2 ½.

Richard Allen, Chairman of the Board of Assessors, presented the overall picture as good news, noting that increases in city’s overall property values allow the city to capture both its annual 2.5% property tax levy increase and $1.4 million in new growth. Another $3.6 million will not be collectable as property values did not rise enough.

Currently, the city values private property at $7.045 billion ($5.080 billion residential and $1.965 billion commercial). Allen’s office has projected the overall value of taxable property will rise to $7.276 billion ($5.226 billion residential and $2.051 billion commercial).

The recommended rates, which the Council approved, were $19.66 per $1000 in value for residential properties and $38.60 per $1000 in value for commercial properties.

Councilor Ken Shea in 2012. (WMassP&I)

Ward 6 Councilor Ken Shea, the Finance Committee chair, observed, “The recommendation that we have tries to balance the interests that we have every year,” namely commercial and residential owners.

Proposition 2 ½, a 1980 ballot initiative, effectively caps total amount of property taxes in a community at 2.5% of all taxable properties’ value. This is the “levy ceiling.” Communities can decide, by setting commercial and residential rates, who carries how much of that burden. The “levy limit” restricts year over year property tax revenue increase to 2.5%, plus new growth (renovations, new construction and redevelopments). Both are subordinate to the levy ceiling.

Allen said the property tax levy, or total property tax revenue, would be $181.9 million. He also noted, with a degree of satisfaction during his 29 years as a member of the Board of Assessors, “We’ve never been here for a classification vote in the month of November.” Rates are typically set in mid-December and sometimes as late as New Year’s Eve, the day before the first tax bills go out.

Jeffrey Ciuffreda (via uwpv.org)

Jeffrey Ciuffreda, Executive Director of the Affiliated Chambers of Commerce of Greater Springfield praised the new rates. He told the Council the rates reduce the gap between how much of commercial properties pay relative to their share of property values.

Declining commercial values and the greater political power of residential property owners have caused commercial property owners to carry a share of the overall levy disproportionate to their properties’ much smaller share of the value of all taxable property in the city. Such phenomena are common in ex-industrial cities like Springfield.

Ciuffreda called the new rate, “a TIF for those businesses that have been here for a good number of years,” he said referring to tax incremental financing agreements.

Ciuffreda also noted the need to pay attention to areas of the city where values has not yet recovered, such as the Eastfield shopping area centered along Boston Road. That prompted councilors to inquire about where the growth is in Springfield.

The Eastfield Mall has promised redevelopment is on the way, but the broader area needs help, too. (via mountdevelopment.com)

Allen conceded that values are weak in the Eastfield area, such as the former Circuit City location at the intersection of Parker Street and Boston Road. Bright spots included some downtown buildings, single-family residential homes, Balise’s auto dealership properties, and the new Hampton Inn hotel.

“The trajectory is a proper one, a welcome one,” Allen said.

After the meeting, Allen told WMassP&I that there was some growth in multifamily dwellings as well, particularly in the Forest Park area. Traditionally, low and/or falling values among multifamily homes, particularly those that include more than four units, has been a drag on residential property values.

While four councilors were absent, those present offered praise for the new rates. Ward 8 Councilor Orlando Ramos, who voted against the rates last year and whose ward includes the retail properties near and including the Eastfield Mall, said, “I think the recommendation will give us an opportunity to reduce the impact on the commercial side.”

The vote was unanimous. City financial officials indicated that improving rates offer the city a acushion in the budget as permit fees are expected to fall due to MGM’s delayed start of construction.

(WMassP&I)

Before the rate-setting meeting, the Council rejected changes to the rules of the road near MGM. Council President Michael Fenton also laid out the body’s process for reviewing and approving elements of MGM’s facility. That will begin next month, but most votes will take place after new councilors elected earlier this month are sworn in next year.