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CITY OF NORTH ADAMS, MASSACHUSETTS Office of the Mayor Richard J. Alcombright November 23, 2010 495 ‘The Honorable City Council North Adams, Massachusetts Re: Tax Classification - FY 2011 Honorable Members: 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 inthe 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 hhigh and our cash position and reserves are very low. 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. 10 Main Street + North Adams, Massachusetts 01247 413) 662-3000 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 iff 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. Iam 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. Sincerely, 10 Main Street + North Adams, Massachusetts 01247 413) 662-3000 City of North Adams In City Council November 23, 2010 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: Class 1 - Residential 60.0365 Class 2 - Open Space 0.0000 Class 3 - Commercial 25.7241 Class 4 Industrial 6.2143 Class 5 - Personal Property 8.0251 AND BE IT FURTHER ORDERED: That a residential factor of 77.8041% be employed. DEPARTMENT OF REVENUE BUREAU OF ACCOUNTS CLASSIFICATION TAX ALLOCATION NORTH ADAMS City/TownDistrict Retum to: Bureau of Accounts, Boston, Springfield, Worcester 4, 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. 2. In computing your residential factor, was a discount granted to Open Space? Yes No x If Yes, what is the percentage discount? 3. Was a residential exemption adopted? Yes No If Yes, please complete the following: Class | Total Assessed Value = x = Class | Total Parcel Count* Selected Res. _Ressidential 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 No x % Selected If Yes, please complete the following: No. of parcels eligible Total value of parcels Total value to be exempted 6. The following information was derived from the LA-7. Please indicate in column D percentages (accurate to 4 digits to the right of the decimal point) which resuit from your selected residential factor. (If a residential factor of "1" has been selected, you may leave Column D blank.) A B c D ca Cerified Full and | Percentage Full Value | New Percentage Eaic Cash Val hares of Total Tax | Shares of Total_| 1. Residential 551,223,772 77.1637%| 60.0365%| 12. Open Space o 0.0000%| 0.0000%| 13. Commercial 105,006,719 14,6995%| 25.7241%| J4. 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. [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). CityTown/District Clerk 7. We hereby attest that on (ate) (time), at (place) @ 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 (LAS) THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF REVENUE FISCAL 2011 TAX LEVY LIMITATION FOR NORTH ADAMS. FOR BUDGET PLANNING PURPOSES 1. TO CALCULATE THE FY2010 LEVY LIMIT A. FY2009 Levy Limit 12,059,380 1 ADD Amended FY2009 Growth 0 B. ADD (IA+IA1)X2.5% 301,485, C. ADD FY2010 New Growth 88,026 D. ADD FY2010 Override 0 E. FY2010 Subtotal 12,448,891 F. FY2010 Levy Ceiling 18,179,587. Il. TO CALCULATE THE FY2011 LEVY LIMIT A. FY2010 Levy Limit from 1. 12,448,891 At ADD Amended FY2010 Growth o B. ADD (IIA+IA1)X2.5% 311,222 C. ADD FY2011 New Growth 94,828 D. ADD FY2011 Override E. FY2011 Subtotal 12,854,941 $ 12,448,891 FY2010 Levy Limit F. FY2011 Levy 17,858,899 Ill, TO CALCULATE THE FY2011 MAXIMUM ALLOWABLE LEVY A, FY2011 Levy Limit from IL. 12,854,941 B. FY2011 Debt Exclusion(s) 0 C. FY2011 Capital Expenditure Exclusion(s) D. FY2011 Other Adjustment E. FY2011 Water / Sewer F. FY2011 Maximum Allowable Levy $12,854,941 u| $ 12,854,941 FY2011 Levy Limit 11/13/2010 8:51 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, 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.LP. 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. -l- TAX RATES SINCE FISCAL 2001 FISCAL, YEAR R&O CAP. 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 & O= RESIDENTIAL AND OPEN SPACE C.LP. = COMMERCIAL, INDUSTRIAL AND PERSONAL PROPERTY IF A SINGLE TAX RATE WERE CHOSEN FOR FY 2011 IT WOULD BE $17.99 TAX BASE GROWTH SUMMARY - FISCAL 2011 New construction, additions, alternations and business improvements. Allowable Value X Adjustments ___Tax Rate Residential $ 839,400 $ 35,322 Open Space $ - : Commercial $ 617,700 $ 17,246 Industrial $ 102,700 $ 2,867 Personal Property $ 1,410,933 $ 39,393 JOTALNEWGROWTH $ — 4,970,733 $ 94,828 New growth value based upon FY2010 tax rates of $12.44 for R & O and $27.92 for C.1.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. EXCESS LEVY CAPACITY: $ $ 12,854,941 12,854,165 776 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 $ 862,104,232 $ 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 2014 Class 1 Residential $ 509,623,146 $ 568,828,343 $ 569,989,276 $ 562,104,232 $ 551,223,772 Class 2 Open Space * $ - $8 - 8 - 8 - 8 - Class 3 Commercial $ 96,497,096 $ 99,356,409 $ 102,130,248 $ 105,965,641 $ 105,006,719 Class 4 Industrial $ 27,475,520 $ 27,994,580 $ 27,677,280 $ 25,040,412 $ 25,366,412 Class 5 Personal Property $ 25,656,142 $ 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 Hof 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 s - 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 2014 354 $ 32,759,040 Totals for FY 2010 365, $ 33,173,180 Difference “14 $ (414,140)