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MINUTES - Special - 12/1/2005 284 CITY OF SALEM DECEMBER 1, 2005 PUBLIC HEARING OF THE CITY COUNCIL A Public Hearing of the City Council was held in the Council Chamber on Thursday, December 1, 2005 at 6.00 P.M. for the purpose of taking action on matters relating to setting the tax rate, as well as matters relating to the Salem Transfer Station. Notice of this meeting was posted on November 23, 2005 at 2.03 P.M. and advertised in the Salem Evening News on November 23, and 30t" 2005. Councillors Harvey, Bencal, and Corchado were absent. Councillors O'Keefe and Sargent arrived late at 6.20 P.M. Senior Member Leonard F. O'Leary presided. Councillor O'Leary then turned the Public Hearing over to the Director of Assessing Frank Kulik. Mr. Kulik welcomed everyone to the Classification Hearing. He discussed the shift in Tax burden from residential to commercial and if it was equalized we would not need to be here tonight. Mr. Kulik gave a power point presentation with handouts of the presentation. He went on to say that the spread sheet starts with equalized rate in colume one. The levy starts in 1983. The Budget is adopted in June then the receipts and revenues are deducted from the total. This figure is $59,292,238.00 is what is needed to be raised by taxes. The Power Plant is not affected by the Tax Rate. Councillor O'Keefe asked to return to 1983-2006 Tax Rate History Mr. Kulik stated that this used to be evaluated every 3 years which reflects spikes on the chart. Councillor Veno asked what actually goes down. Mr. Kulik introduced his staff and the members of the Board of Assessors Joe Murphy, Deb Jackson employees Damian Johnson, Donald Bates, and Richard Jagolta members of the Board of Assessors This concluded the presentation. Councillor O'Keefe asked about homeowners looking up on the City's website Patriot Properties has last years assessments. CITY OF SALEM 285 DECEMBER 1, 2005 PUBLIC HEARING OF THE CITY COUNCIL Councillor Veno asked Mr. Kulik isn't there a different way in which commercial and residential are assessed. Mr. Kulik stated that income producing properties and single family use on multi residential property sales and market are also criteria. It's the value of property not the business worth. Market is basis for values of property. Sales information is shown on graphs. D.O.R. requires + or— 5% Councillor Veno stated there is a flaw in tax classification. If you're basing on return on investment when tax rate on commercial goes up the value depreciates. Councillor Sosnowski asked if Salem is to be competitive with surrounding communities what's needed to attract more business. Mr. Kulik responded control over the 59 million and if they can make more profit. Taxes are an expense. Lots of factors like parking, accessibility, a high commercial industrial tax rate, scares people away. Councillor Furey stated that Salem has one of the highest commercial rates. Can we make a token drop? What would the impact be on the residential? Mr. Kulik We don't have a lot of flexibility. Councillor Veno reduction would have S6.00 for single reduction .13 cents on commercial. Councillor Sargent stated that residential has been raised. The bills are what people look at not the rate. Mr. Kulik all over the commonwealth it's a residential realestate market. Councillor Sargent stated that last year we considered 1.75 their bill would have gone down in favor of keeping it the same. The discussion was opened to the audience. Robert Blenkhorn — resident of 498 Loring Avenue, the city already dispersed the money we have an emergency financial crisis. Go back and cut budget. 286 CITY OF SALEM DECEMBER 1, 2005 PUBLIC HEARING OF THE CITY COUNCIL Don Johnson — resident of Salem, there is an agreement with Salem Harbor Station under Harrington once sold we can renegotiate. It's now Dominion we need to make a new agreement. Richard Pabich —resident Winter Island Road, state he is a homeowner and businessman. The new administration will go in and renegotiate. You have to look at volume decrease commercial and change on resident is only $6.00 a year. We're trying to attract a commercial base here. Patricia Murphy — resident and homeowner, stated her husband is disabled and that she works but they have a limited income. We see the tax rate go up every year and it's getting harder and harder. May come to the point that we'll have to move out of Salem. I hope there are cuts in the budget. Julie Lederhouse — manager of the Hawthorne Hotel and resident of Salem is passionate about doing business in Salem. Her concerns are about businesses closing and moving away. A lot of properties are being converted to residential. My concerns are about sending the right message to new businesses that are thinking of coming here. Would like to see it one to one like Newburyport. Mike Allen — Homeowner and business owner. Owns the Red Lion Smoke Shop on Washington Street. Every year my business tax increases. I would like to see it 1-1. But 1.75 would decrease my residential. I urge you to fund it at 1.65. Jim Crosby — Business owner, Crosby's Market, if this were the only place we were doing business we wouldn't be in business. Consider a 5 year plan to get control over it. Hold it at 1.65 and look to get it down. Rinus Oosthoek Executive Director - Salem Chamber of Commerce state he enjoyed the business speakers and would like the equal tax rate of 1-1. We all want new business in Salem. Please consider reducing the tax rate 1 point. It's a small step in the right direction. We need to do what is best for Salem. Biff Michaud — Owner of the Witch Museum. Celebrating 25t" year of running the museum. We need 3% cut. I've been pleased to do business in Salem. With a new Mayor coming in that's willing to work with the Council on this very difficult time we need to tell the State and negotiate with them and send a message to new businesses. We're missing an opportunity in Salem. Hold the tax rate for businesses or consider a little lower. And it's always been my opinion that apartments are businesses. Get Representative Keenan to do an amendment if apartments are their business recognize them as a business. CITY OF SALEM 287 DECEMBER 1, 2005 PUBLIC HEARING OF THE CITY COUNCIL Mr. Kulik stated that anyone can introduce Legislation. Renters are the poorest people in the city. Mr. Michaud stated the largest property on waterfront that it goes down in value every year. The priority is you have to find 4 million dollars. Roger Leger— 64 Marlborough Rd. a lot of people are having a hard time. I would like to see the tax rate stay where it is. Councillor O'Keefe asked Mr. Michaud would you support an entertainment fee? Councillor Furey stated it shouldn't be resident vs. business we have a new administration which is a breath of fresh air we should consider reduce 1%. Councillor Sargent agreed it's not business vs. residents. Mr. Pabich hit on it, JPI took over a commercial site. A Hotel rate can evict someone in the morning. But apartment owners can't, I've seen someone in court not receiving rent and judge extends this stay for no money. Challenge is business community has to help us. P.I.L.O.T programs are needed from the Hospital, Museum etc. they need to pitch in. Councillor Lovely we wanted a Hotel they need to pay their fair share, 12 units and up is commercial. Councillor Sosnowski with the reorganization of some of the departments we will see a change. The Power Plant will be renegotiated and Non-profits should be renegotiated. If it's not owner occupied it's a business. We should look at this again. Not a year that the average homes taxes haven't gone up. If we decrease the rate it devalues the property. If we drop it the value goes up. We need to find a balance without penalizing either side. We do have a great Council and commend Councillor Veno for a great job well done with the Committee on Administration and Finance. On the motion of Councillor Veno the Public Hearing was closed. Councillor Veno stated it was poor management on the part of the administration. It's not a crisis it's a problem. We have a very bright new Mayor and we'll get through the problem. We will cut the Budget and look for additional State aid. We need more commercial in town. We need to support business. The tax classification is about sending a message. I would support it at 1% decrease (1.64). Councillor Sosnowski states taxes are going to go up every year because of inflation. The long term effect would be great. 288 CITY OF SALEM DECEMBER 1, 2005 PUBLIC HEARING OF THE CITY COUNCIL Councillor Lovely stated the bottom line we need to figure out a way to pay for the Budget that's why we're here tonight. On the motion by Councillor Lovely the meeting was recessed at 7.50 P.M. and to be continued on December 8t" 2005. ATTEST: CHERYL A. LAPOINTE CITY CLERK