CITY OF NORTH ADAMS, MASSACHUSETTS

Office of the Mayor Richard J. Alcombright

November 23,2010

#95

The Honorable City Council North Adams, Massachusetts

Re: Tax Classification - FY 2011

Honorable Members:

10 Main Street • North Adams, Massachusetts 01247 (413) 662-3000

Tonight you will be voting on a Council Order establishing the CIP shift which establishes the percentages of tax levy for the different classes of property.

In doing so, you will be approving an increase in the tax rates for both residential and commercial taxpayers. As we have discussed at length throughout the year, the need for the increase in taxes is necessary to offset continued reductions in state aid as well as past fiscal years utilization of reserves to keep the budget balanced. Our FY 2011 budget included utilization of reserves as well as increases in fees and taxes to assure continuity in services to include public safety, public services and of course, our schools.

As we set this rate tonight, we are assuring our community that we will be able to provide services that they have all come to expect. Unfortunately and despite all of our best efforts, the reality and resulting fiscal chaos brought on by this recession will come down on this community hard and heavy in FY 2012. The Massachusetts Taxpayers Foundation as well as the Massachusetts Municipal Association are both predicting deep cuts in state aid for the next fiscal year. For North Adams, that spells trouble at many levels as our dependency on state aid is very high and our cash position and reserves are very low.

I am predicting a $2-3 million dollar budget shortfall in FY 2012. This will certainly result in very difficult decisions with respect to potential losses in programming and services throughout the city. As we did this fiscal year, we will look once again at both sides of the budget to include both expenses and revenues. We will be examining further ways to create efficiencies however that alone will not be able to close such a large gap.

I will continue to meet with department heads, the city's financial team and the DOR on a very regular basis over the next several months on a variety of levels to:

• Keep a very close eye on city revenues to be certain we are on target.

• Closely monitor city expense accounts.

• Assess month end numbers and if necessary, place a spending freeze on all departments.

• Meet with bargaining units to effectively settle contracts that will have minimal impact on the budget helping to preserve current staffing levels.

Additionally, I will be meeting regularly with the council's finance committee to keep it up to date on all fiscal matters.

Until the Governor announces his FY 2012 budget, we can only monitor and speculate. In early January, I will be giving a "State of the City" address. I am hoping to have better indications of what lies ahead at that time. Until then, I assure you and this community that I am doing everything in my power to control costs, monitor revenue, review processes to create efficiencies and working hard to plan for the brighter days that I know are coming.

10 Main Street • North Adams, Massachusetts 01247 (413) 662-3000

Sincerely,

Mayor

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November 23, 2010

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Class 1 - Residential Class 2 - Open Space Class 3 - Commercial Class 4- Industrial

Class 5 - Personal Property

60.0365 0.0000 25.7241 6.2143 8.0251

That the Board of Assessors be and is herby authorized to establish the following percentages of tax levy for the following classes of property for Fiscal Year 2011 :

AND BE IT FURTHER ORDERED: That a residential factor of77.8041 % be employed.

DEPARTMENT OF REVENUE BUREAU OF ACCOUNTS CLASSIFICATION TAX ALLOCATION

NORTH ADAMS City/Town/District

Return to: Bureau of Accounts, Boston, Springfield, Worcester

1 . The selected Residential Factor is - - - - - - - - - - - - - - --

0.778041

If you desire each class to maintain 100% of its full value tax share, indicate a residential factor of "1" and go to question 3.

3. Was a residential exemption adopted?

Yes

No

x

2. In computing your residential factor, was a discount granted to Open Space?

Yes No X

If Yes, what is the percentage discount?

If Yes, please complete the following:

Class I Total Assessed Value

=

X =

Selected Res. Residential

Class I Total Parcel Count*

Exemption %

Exemption

* Include all parcels with a Mixed-Use Residential designation

Applicable number of parcels to receive exemption

4. Was a small commercial exemption adopted?

Yes % Selected

No

X

If Yes, please complete the following:

No. of parcels eligible

Total value of parcels

Total value to be exempted

5. The following information was derived from the LA-7. Please indicate in column 0 percentages (accurate to 4 digits to the right of the decimal point) which result from your selected residential factor. (If a residential factor of "1" has been selected, you may leave Column 0 blank.)

A B C 0
,
Class Certified Full and Percentage Full Value New Percentage
i=!:Iir r.!:Ic::h \/!:III IA Sharas of.Total T::JY . Sharas. nf T_otal
1. Residential 551,223,772 77.1637% 60.0365%
2. Open Space 0 0.0000% 0.0000%
3. Commercial 105,006,719 14.6995% 25.7241%
4. Industrial 25,366,412 3.5510% 6.2143%
5. Personal Property 32,759,040 4.5858% 8.0251%
Totals 714,355,943 100.0000% 100.0000% 6. I hereby attest that notice was given to taxpayers that a public hearing on the issue of

adopting the tax levy percentages for fiscal year 2011 would be held on (date),

(time), at (place), by

________________________ (describe type of notice).

City/Town/District Clerk

7. We hereby attest that on (date) (time), at

(place) a public hearing was held on the issue of adopting the

percentages for fiscal year 2011, that the Board of Assessors presented information and data relevant to making such determination and the fiscal effect of the available alternatives at the hearing and that the

percentages set forth above were duly adopted in public session on (date).

8. We have been informed by the Assessors of excess levy capacity

$776.13

For cities: City Councilors, Aldermen, Mayor For towns: Board of Selectmen

For districts: Prudential Committee or Commissioners

(LA-5)

THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF REVENUE

FISCAL 2011 TAX LEVY LIMITATION FOR

NORTH ADAMS

FOR BUDGET PLANNING PURPOSES

A. FY2011 Levy Limit from II.

B. FY2011 Debt Exclusion(s)

C. FY2011 Capital Expenditure Exclusion(s;;;.l.) _

D. FY2011 Other Adjustment

E. FY2011 Water / Sewer

I. TO CALCULATE THE FY2010 LEVY LIMIT

A. FY2009 Levy Limit

A 1 ADD Amended FY2009 Growth

B. ADD (IA + IA 1 ) X 2.5%

C. ADD FY2010 New Growth

D. ADD FY2010 Override

E. FY2010 Subtotal

F. FY2010 Levy Ceiling

II. TO CALCULATE THE FY2011 LEVY LIMIT A. FY2010 Levy Limit from I.

A 1 ADD Amended FY2010 Growth

B. ADD (IIA + IIA1 ) X 2.5%

C. ADD FY2011 New Growth

D. ADD FY2011 Override

E. FY2011 Subtotal

F. FY2011 Levy Ceiling

III. TO CALCULATE THE FY2011 MAXIMUM ALLOWABLE LEVY

F. FY2011 Maximum Allowable Levy

12,059,380

o

301,485

88,026

o

12,448,891

1.1$ 12,448,891 1

FY2010 Levy Limit

18,179,587

12,448,891

o

311,222

94,828

12,854,941

11.1$'

·12,854,941 1

17,858,899

FY2011 Levy Limit

12,854,941

o

1$ 12,854,941 1

11/13/20108:51 AM

SETTING THE TAX RATE

The process of setting the tax rate involves a number of steps. Assessors first determine the value of each parcel of property and classify all property into four classes of real and personal property. The classes of real property are residential, open space, commercial and industrial. Once Assessors have calculated the total assessed value of all real and personal property, they submit the Total Valuation of all property (FORM LA-4) to the Division of Local Services. The Division determines and computes the minimum residential factor for the community. This information is sent to the Board of Assessors on the Minimum Residential Factor Computation Form (FORM LA-7) with a blank copy of the Tax Allocation Form (FORM LA-5). There must then be a public hearing to decide whether or not all classes of property should be taxed at the same rate.

-1-

Chapter 40, Section 56 allows communities to tax commercial and industrial real property and personal property at a higher rate than residential and open space real property. At the public hearing, the Board of Assessors presents information on the fiscal effects of the various alternatives. After input from interested citizens, the Board of Selectmen, Town Council, or the City Council, with approval from the Mayor, makes the decision of whether to tax all classes of property at the same rate.

Chapter 3 of the Acts of 2004 provides relief for those communities in which the maximum shift results in a residential share which is larger than that of the prior year. For those communities, the limits have been raised. They may increase the C.I.P. share of the levy by 175.000% if the residential class is not reduced to less than 50% of its share. This new residential share cannot be less than the residential share in any year since the community's values were first certified at full and fair cash value.

TAX RATES SINCE FISCAL 2001
FISCAL
YEAR· R&O C.I.P.
2001 (Reval Year) 13.99 28.12
2002 14.33 28.31
2003 14.69 28.22
2004 (Reval Year) 13.28 27.50
2005 12.22 28.76
2006 11.57 28.98
2007 (Reval Year) 11.13 26.62
2008 11.32 26.72
2009 11.71 27.03
2010 (Reval Year) 12.44 27.92
2011 14.00 31.49
R & 0 = RESIDENTIAL AND OPEN SPACE IF A SINGLE TAX RATE WERE CHOSEN FOR FY 2011 IT WOULD BE $17.99

C.I.P. = COMMERCIAL, INDUSTRIAL AND PERSONAL PROPERTY

TAX BASE GROWTH SUMMARY - FISCAL 2011

New construction, additions, alternations and business improvements.

Allowable Value X
Adjustments Tax Rate
Residential $ 2,839,400 $ 35,322
Open Space $ $
Commercial $ 617,700 $ 17,246
Industrial $ 102,700 $ 2,867
Personal Property $ 1,410,933 $ 39,393
TOTAL NEW GROWTH $ 4,970,733 $ 94,828 New growth value based upon FY2010 tax rates of $12.44 for R & 0 and $27.92 for C.I.P.

EXCESS LEVY CAPACITY: FISCAL YEAR 2011

FY 2011 Maximum Allowable Tax Levy:

$

Net amount to be raised by taxation as appears on Page 1, Item 1 - d of State Tax Form 31C. Tax Rate Recapitulation Sheet.

$

12,854,941

12,854,165

EXCESS LEVY CAPACITY:

776

$

YEAR OVER YEAR COMPARISON OF VALUATIONS & TAX LEVIES SINCE 2001

YEAR VALUATION TAX LEVY
2001 $ 437,428,330 $ 7,712,300
2002 $ 439,771,350 $ 7,906,485
2003 $ 445,769,750 $ 8,155,380
2004 $ 507,137,872 $ 8,555,000
2005 $ 553,363,255 $ 8,856,420
2006 $ 598,703,101 $ 9,199,382
2007 $ 659,151,904 $ 9,652,561
2008 $ 722,842,694 $ 10,552,561
2009 $ 731,941,734 $ 11,052,561
2010 $ 727,183,465 $ 11,601,589
2011 $ 714,355,943 $ 12,854,165 ASSESSED VALUATIONS - FY2010 VS. FY2011
INCR!
FY10 FY11 DECR
Class 1 Residential $ 562,104,232 $ 551,223,772 $ (10,880,460)
Class 2 Open Space $ $ $
Class 3 Commercial $ 105,965,641 $ 105,006,719 $ (958,922)
Class 4 Industrial $ 25,940,412 $ 25,366,412 $ (574,000)
Class 5 Personal Property $ 33,173,180 $ 32,759,040 $ (414,140) TOTAL

$

727,183,465 $ 714,355,943 $ (12,827,522)

VALUATION BASE SINCE 2007
CLASS: 2007 2008 2009 2010 2011
Class 1 Residential $ 509,623,146 $ 568,828,343 $ 569,989,276 $ 562,104,232 $ 551,223,772
Class 2 Open Space * $ $ $ $ $
Class 3 Commercial $ 96,497,096 $ 99,356,499 $ 102,130,248 $ 105,965,641 $ 105,006,719
Class 4 Industrial $ 27,475,520 $ 27,994,580 $ 27,677,280 $ 25,940,412 $ 25,366,412
Class 5 Personal Property $ 25,556,142 $ 26,663,272 $ 32,144,930 $ 33,173,180 $ 32,759,040
TOTAL $ 659,151,904 $ 722,842,694 $ 731,941,734 $ 727,183,465 $ 714,355,943 * Because North Adams has not adopted formal guidelines for the designation of Open Space the DOR has requested the City consolidate the land into other land classification codes. For the purpose of this report, commencing with FY 2007, Open Space values have been consolidated to Class 1 Residential values.

PERSONAL PROPERT TAX CODE SUMMARY REPORT FY 2011
Tax # of Total
Code Description Accounts Value

501 Individual, Partnerships, Trusts 148 $ 6,868,820
502 Corporations (Domestic & Foreign) 198 $ 7,694,740
503 Manufacturing Corporations 0 $
504 Locally Assessed Utilities 3 $ 14,092,250
505 DOR Assessed Telephone Co. 2 $ 3,853,100
506 DOR Assessed Gas Pipeline Co. 1 $ 94,200
508 Locally Assessed Wireless Co. 3 $ 155,930 Totals for FY 2011 Totals for FY 2010

$ $

32,759,040 33,173,180

354 365

Difference

$

(414,140)

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