While the city is flush with free cash and increasingly quick to trumpet its enviable financial situation, Worcester residents and businesses are likely to be digging in the couch cushions for a little “free cash” of their own once the City Council determines the dual tax rates at Tuesday’s meeting.
City Manager Edward M. Augustus Jr. used $250,000 from free cash to reduce the city’s tax levy to about $293.5 million, some $11 million more than last year but nearly $14 million below what the city could ask from its taxpayers.
But still, with the spike in property values across the city, especially residential properties, even staying at last year’s rates of $19.22 per $1,000 of assessed value for residential and $32.93 for commercial, industrial and personal property, the average bills would rise $179 and $83, respectively.
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With the slightly reduced tax levy, the combined tax rate would be $23 per $1,000 valuation. (For those clamoring for a move back to a single rate — with the caveat that such a shift would almost certainly be phased in over several years — that would increase residential bills by an average of $925 while reducing commercial obligations by nearly $3,000.)
While no recommendation is included with the tax tables and other information provided to councilors, only one row out of 247 possible tax rate options was highlighted by the Assessing Department: That line item shows a $19.20 rate for residents and $33.24 for businesses, which would mean a median bill of $3,788 with a $175 increase (nearly 5 percent) for residents and a median of $9,812 with a $98 increase (about 1 percent) for businesses.
The Worcester Regional Chamber of Commerce had advocated for rates of $19.34 for residents and $32.94 for businesses (prior to the updated calculations produced by the new, lower tax levy).
The tax rate classification hearing is expected to take up most, if not all, of Tuesday’s regular City Council meeting, which begins at 7 p.m. in Esther Howland Chamber, City Hall, 455 Main St.
About that free cash
Thomas F. Zidelis, chief financial officer, recommended the city manager add $250,000 from free cash to the city’s tax relief efforts as part of the finalization of the fiscal 2018 budget.
The city had about $9.2 million in free cash certified by the state.
According to the city’s updated long-term financial plan, 50 percent of free cash must be allocated to the Bond Stabilization Fund, 30 percent to the OPEB Trust Reserve, and 20 percent for operational and capital needs.
That would mean $4.6 million for the stabilization fund, $2.7 million for OPEB, $1.1 million extra for Worcester Public Schools and increased funding (mostly to be earmarked for new vehicles) for the Fire Department, DPW&P, Recreation Worcester and Police Department.
Courting more downtown development
With the specter of vanishing federal funds looming — and pending the expected approval of the City Council — city officials have come to terms with Boston developer Trinity Financial on the $1.3 million sale of the former Worcester County Courthouse.
Work is expected to begin in fall 2018 and last 18 months, according to a letter from Chief Development Officer Michael E. Traynor recommending the council OK conveyance of the deed to Trinity Worcester Development LLC, the parent company’s subsidiary.
The controversial Republican tax plan could have a major impact on public funding generally available for such projects.
“The federal tax overhaul bills pending in Congress propose either elimination of federal historic building tax credits or a steep cut in their value. However, both bills also provide grandfather rights for properties owned as of Dec. 31, 2017,” Traynor wrote. “At this time, Trinity has completed its environmental and financial due diligence and would like to proceed with the acquisition of the property in order to lock in the federal historic tax credits allocable to this project.”
The renovation of the courthouse, vacant since 2008, is expected to cost $53 million, officials said when the deal was announced in June. It was noted then that “historic tax credit equity” would be a linchpin of the deal’s financing.
The new development will consist of about 114 rental units, half at market rate and half “income-restricted,” and intended to attract artists and others in the creative economy sector.