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Why are my taxes so high?

Nick Grabbe

Average Amherst homeowners paid a $1,826 property tax bill last month, and the same amount will be due again in January. Their counterparts in Northampton paid $1,267 and the average Hadley homeowner paid only $907.

A large part of the reason why Amherst’s taxes are higher than in neighboring communities is that we have restricted housing and commercial development that could have broadened the tax base and eased the financial pressure on homeowners. Amherst has relied on residents for 90 percent of its tax revenue, compared to 80 percent in Northampton and 65 percent in Hadley.

Decisions made by Town Meeting have played a role in this disparity. Here are some of those decisions:

  • UMass hotel/conference center. In 1999, Town Meeting defeated a proposal to adjust the zoning on land between Sunderland and Montague Roads in North Amherst. One Town Meeting member feared that the development would turn into a “bar mitzvah mill.” This hotel/conference center would have increased the value of the property substantially, thus bringing in more taxes, and brought in room and meals tax revenue. It would have attracted visitors (and their dollars) to the town. Now, UMass is planning a hotel on its own land that may not be taxable.
  • Gateway. In 1993, Town Meeting voted to severely restrict the development of apartments in the General Residence zone. Twenty years later, this was a major factor in the failure of a joint town-gown plan to create a mixed-use project and hotel on North Pleasant Street between downtown and UMass. This plan would have generated substantial tax revenue. Now UMass is planning on a development at the site, possibly student housing, that may not be taxable.
  • Walgreen’s. In 2004, Town Meeting didn’t approve a proposal to rezone the northwest corner of the intersection of Route 9 and University Drive to accommodate a drugstore. This development would have increased tax revenues without affecting downtown.
  • Professional Research Park rules. Land zoned PRP in North Amherst and East Amherst had conditions attached to it that restricted its development, such as a limit on the number of visits per day. The land was intended for businesses arising from UMass faculty research, but this vision never materialized. The PRP land in East Amherst was instead developed into offices for medical, financial and environmental services, at great cost because of the restrictions. The North Amherst land may now be used for a solar array, which is commendable, but it will bring in much less tax revenue than an office park.

And then there is Town Meeting’s vote on new elementary schools a year ago. Because of this vote, Amherst gave up $34 million in state money after an expensive 10-year planning effort. Even if you didn’t support the proposed project, a majority of the town did. Yet a minority of Town Meeting members failed to authorize the bond, thereby refusing state money that would have helped us pay for replacement of these outdated buildings. The Wildwood and Fort River school buildings will still need substantial improvements or replacement, but now it is likely that Amherst taxpayers will have to pay the entire cost, increasing taxes for years to come.

Amherst faces additional revenue challenges. More than half of our land is exempt from taxes because it’s a campus, a church or conservation area, or it pays minimal taxes as preserved farmland. And while the colleges bring us cultural and employment benefits, they also bring higher costs for police, fire and other municipal services. High-quality schools, adequate staffing and competent employees are integral to Amherst’s quality of life, but they cost money, which has to come from somewhere.

Amherst faces a financial squeeze. If we continue to pass up opportunities to get revenue from sources other than residents, it is inevitable that we will continue to have high residential taxes, tight budgets and difficulty funding major projects.

Given these challenges, we need a government that won’t make our revenue picture worse. We need a government that can deliberate year-round, with a wide range of input from residents, so it can make informed, timely decisions and be held accountable for those decisions by the whole town.

I want to be clear: in supporting the proposed new form of government, I’m supporting democracy, not development. I don’t know how a 13-member council will be respond to future development proposals. But I am confident that whatever the council decides, it will reflect the wishes of residents better than Town Meeting does. And if it doesn’t, it has a much better chance of being replaced by voters.

Amherst’s property taxes are 54th highest among the 351 Massachusetts cities and towns. We all notice the extra bite on our household budgets, but there are other, less visible costs of high taxes.

Combined with high house prices, they make it difficult for young families to afford to live here, and for some seniors on fixed income to remain here. They make it difficult to attract businesses that could provide jobs and alleviate the pressure on residential taxes. They increase social stratification, moving Amherst more toward a town of relatively wealthy people owning homes and relatively poor renters, with fewer and fewer people in the middle.

And because of our already-high taxes, it is difficult to convince voters to approve large building projects, such as the school and library projects and a new fire station, because overtaxed voters don’t want to see further increases, or just can’t afford them.

Amherst’s residential property taxes are higher than they need to be. We can do better.

Comments 18

  1. For thirty years I was involved in housing. During that time 38 new roads were built with millions invested in taxable Real Estate. The school aged population was declining from 1990 onward, while School cost were rising at around 8 per cent. The problem is not housing.

  2. One of the reasons a friend of mine strongly supports the charter commission’s proposed changes is because of Amherst’s higher property taxes. When I asked him why, if that was so important to him, he didn’t move to Hadley or Northampton, he quietly answered, “because I like it here.” While you say you’re supporting democracy not development (and you have made some valid points in previous posts about TM not being as democratic as many think it is) the examples you cite above, except for the cobbled together “two schools in one building” idea, could very well reflect the opinion of the majority of residents. Amherst chose not to have the mall that keeps Hadley’s taxes lower. Amherst chose to put a approximately a third of its footprint into dedicated green space.
    As you say, you don’t know how a 13 member council will regard development proposals, but it would seem a one vote majority on many issues could well change the nature of the town.
    While TM has its problems—cutting the number of members in half would help—we do have very livable town. And like my friend, I like it here.

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    I like it here too, Doug. And I think I’ll like it more when all the decision-makers are chosen by voters. My main point was that IF we’re going to have lots of tax-exempt land, and IF we’re going to have high-quality (expensive) municipal services, then if we don’t get revenue from other sources, the burden will fall disproportionately on residents, with the consequences I outlined. I don’t have an opinion on whether the school proposal was better than the status quo (it was two schools on one site, not one building), but I sure as hell have an opinion on giving up $34 million in state money. As for Hadley, what you see on Route 9 is only a tiny part of the town; most of it is rather nice. Hadley people can’t figure out why Amherst stands by and watches their town lose offices and businesses to Hadley, but they’re happy to pocket the tax revenue. Amherst can choose not to have a commercial strip, and can choose to have lots of green space, and still be welcoming to development that broadens the tax base and doesn’t change the basic nature of the town.

  4. There are many reasons why the taxes in Amherst are high, but the biggest reason wasn’t mentioned in this piece. Amherst has three institutions of higher learning, and those are exempt from property taxes by state law. The University of Massachusetts is exempted under Chapter 59, section 5, subsection two, which exempts property of the Commonwealth of Massachusetts, and Amherst and Hampshire Colleges are exempted under Chapter 59, section 5, subsection two, which exempts property of educational, and other non-profit organizations.

    While the three institutions of higher learning do not cost the Town much in direct expenses, they and the many thousands of people who are associated with them cost the Town a huge amount. People have tried to calculate the costs imposed by those, but the methods and allocations vary, but all agree that it is a lot. It probably is safe to say that without those three entities the taxes of Amherst probably would be about the same level as Hadley.

    The cities of Boston and Cambridge have similar problems with tax exempt properties. It would be easy to ameliorate the problem by reducing the complete exemption to exemption of a certain (or variable) percentage of the property value, and other states have done this with fairly satisfactory results. In other states, non-profit organizations expect to pay something for municipal services that they use or their personnel use. That change would require a few words to be added to sub-section two and three of Ch. 59, sect. 5, something like “exempted to a maximum of 50% (or 75% or 100^) of valuation”, or they could be exempted by a percentage determined by the city or town.

    The exemption for churches has been altered within the last few decades, and the exemption for educational, and such, organizations is similar in nature, so it should be considered, and that subsection needs to be rewritten (link below).

    The restrictive zoning of Amherst needs to be addressed someday, but addressing the free ride that the colleges get needs is of more immediate importance.

    https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter59/Section5

  5. One of the key reasons our taxes are high is that Amherst pays higher salaries across the board, particularly in our schools. Look at school salaries from the top down; our teachers are better paid. Amherst is paying about $4,000 more per kid than Hadley and Northampton–and our school budgets take up the lion’s share of our tax dollars. The Amherst School Committee and Amherst-Pelham Regional School Committees prepare their budgets and send them to the Finance Committee and Select Board for their recommendations and then onto to Town Meeting for approval. I am completely unaware of any Amherst For All leaders standing up before any of these bodies to ask for deep cuts — and know they haven’t in Town Meeting in the 4 years I have served there. I’ve never heard you advocate for that. Should administrative and teacher salaries be cut? Are you suggesting that the 13 city councilors will be making deep cuts to our school budgets?

    (And some fact updates: while 90 percent of our taxes are residential-half of these residences are owned by landlords. So homeowners are not bearing 90% of the tax burden, only 45%. The Wildwood School Project was not the culmination of a 10 year planning effort, unless you consider 7 years of putting in an application to the Massachusetts School Building Authority ‘planning.’ Amherst received the go-ahead in 2013 and the project was approved by Amherst School Committee members 4-1 in early January 2016.)

  6. And then there’s the matter of the Town spending money like a drunken sailor. That school project that was not passed was one example of trying to spend as much money as possible to get something done. A school building of like utility could be built for a fraction of the proposed cost. Then there’s the matter of putting in poorly designed rotaries to replace perfectly good controlled intersection, and the rationale for replacement seems to be that someone prefers rotaries. And there are the crosswalks that are designed to need replacement in a few years at the same time as they eliminate parking spaces. It seems like money gets spent, because someone wants to spend regardless of need.

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    Author

    Janet McGowan’s comment puts her tactic of misdirection on full display. I call it “Pay no attention to that; look over here!” First, she ignores the issue under discussion (in this case, the relation between Town Meeting votes and high taxes). Second, she starts with an unassailable fact (teacher salaries are high in Amherst). Third, she makes an outrageous insinuation (a council might seek to cut them). Does she think readers of this blog are so ill-informed that they don’t know that teacher salaries are set by union contract and the council will have no control over them? Her apparent goal is to distract people from the substance of the blog post and create a debate about an unrelated assertion, in the hope that that’s what readers will remember. She did this recently on Facebook by implying that a council would be dominated by men, ignoring Amherst’s history of gender equality in government. She succeeded in generating a debate and distracting readers from the substance of the original post.
    This blog welcomes comments from responsible critics of the charter proposal. But we would prefer it if they would address directly the issues that our posts raise and not engage in scare tactics.

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    I want to address Janet McGowan’s assertion about the percentages of residential taxes. She seems to be saying that renters don’t count as residents and when calculating this statistic, the buildings they live in should be considered as commercial establishments, like retail stores and other businesses. That’s not the way Amherst or any other town I know of counts rental housing. Amherst’s high taxes affect renters just as they do homeowners because the property owners take tax obligations into consideration when setting rent levels. So renters do pay taxes, though indirectly. (By the way, expect rents to soar in apartment complexes if the assessors’ estimate of a 30 percent increase in their value, and thus in their taxes, survives the inevitable challenge.) Still, the two large buildings at the northern end of downtown do resemble businesses in some ways. They have offices or retail on the ground floors, and they bring in more tax revenue relative to public expenditures than single-family houses do, because there are fewer children living there to educate.

  9. In my life experience, and this is purely my own personal opinion… attorneys have a different way of presenting an opinion or an argument by way of a comment, at least in comparison to a nurse or a carpenter or mail carrier or a mom… or just about any other average person. Attorneys, having been highly educated in their trade by fine Universities at great expense, have learned how to twist facts and exaggerate half-truths, (but never telling flat out lies) in an effort to confuse jurors to win their client’s case… and a win for them does not need to be a “not guilty” verdict. They are quite content to get a hung jury so no decision is made at all. Now, being an attorney can be a noble profession when it prevents an injustice from being inflicted on an innocent person and I admire that. However, in this instance, the client seems to be town meeting members who don’t want to lose their grip on power and don’t want to see the voters make a change in how we govern ourselves. And those skills are seemingly being used to confuse and scare undecided voters into either voting “no” or to dishearten enough people so that they don’t even bother voting at all.

    Now, if a nurse or a plumber or a mail carrier or a mom or any just about any other average person who has not been lucky enough to have years of expensive education learning great debate skills makes a comment about something… about ANYTHING… well, I always listen to that. Because I’m betting that it’s just the plain truth. And that’s pretty noble too.

  10. One of the peculiarities of Massachusetts property tax is that apartment buildings are considered residential properties. In the rest of the world, the owners perspective is considered the defining factor, and apartment buildings are considered commercial investments. The owners use them for the same purpose as the owners of shopping malls, and this is the most common view, except in Massachusetts. Massachusetts changed from the ordinary definition when classified tax rates were introduced just a few decades ago.

  11. Nick, you point to 4 TM decisions over the past 24 years you’re prepared to second guess. Your fifth example is TM choosing not to spend $34 million of other people’s tax money. I recognize there’s little point rehashing arguments made over the past 24 years but I’m sure there were some merits to each of those decisions.

    And, while you say you don’t know how a city council would respond to future development proposals, you seem to see the only alternative to ever increasing property taxes to be more development than Amherst has experienced in the past. Isn’t it fair to infer you believe a council would be more receptive to development proposals than you feel town meeting has been? Is this election really about more, and more rapid development vs at least slower development?

    Also, I thought Peter’s comment above was thought provoking though perhaps you might see it as off topic since the theme of your post is, only more development can prevent ever-increasing property taxes. I wonder if the energy and money spent over the last two years producing the proposed charter changes (and attendant bad will it has created between people all of whom want the best for the town) had instead been given to organizing and lobbying to reduce the complete tax exemption given to UMass, and Amherst and Hampshire Colleges, would Amherst, as well as other college towns in the state have been better served.

  12. Post
    Author

    Doug, Thanks for writing. The reasons for the rejection of those proposals I mentioned were mostly fear of students, traffic and noise. Some of them look like they are going to happen anyway, perhaps but with no tax benefit. Combined with the $34 million in state money, we missed opportunities to broaden our tax base and maybe pay for those new buildings we need. High municipal expenses, tax-exempt land and little development, combined, are a formula for higher taxes.
    Curiously, we are now in the process of broadening our tax base not with offices or businesses, but with the development of high-end student housing. Kendrick Place, One East Pleasant and three other planned buildings will probably bring in over $1 million a year in new tax revenue. Their tax benefits will be greater than a similar amount of single-family housing because there will be fewer children to educate.
    I take it as a given that no one wants to see development near the place where they live. I also understand that many people either have a nostalgic view of the way Amherst used to be, or are opposed to the charter because they’re Town Meeting members and want to keep their power over budgets and zoning.
    I don’t know that a council would be more receptive to development proposals like the ones I mentioned, but I know that their decisions would better reflect the wishes of residents. And remember that zoning changes would require a higher percentage of votes in a council than in Town Meeting, and the council’s composition is heavily tilted toward neighborhoods.
    I think the people who want to preserve Town Meeting would like you to think that this is all about development, but it’s not. That’s a scare tactic. It’s really about taking power away from a largely self-appointed elite, who are not demographically representative of the community and have only a small electoral mandate, and giving power to the voters, who can decide who they want to represent them in participatory, competitive elections.

  13. Nick, you seem to have the common misunderstanding about revenue versus costs. Generally, apartments require more in expenditure than they contribute in taxes. The same is true of most other classes of developed property. The only kind of development that consistently contributes more than it costs are industrial parks and some office parks. Amherst is not an average town so the generalities may not be true here, but population density drives taxes; low population density means low taxes.

    Did you include this for humor? [b]”It’s really about taking power away from a largely self-appointed elite, who are not demographically representative of the community and have only a small electoral mandate, and giving power to the voters, who can decide who they want to represent them in participatory, competitive elections.”[/b]

    You know perfectly well that the aim of the Charter Commission was to centralize power in as few hands as possible. Transparency in government, democracy, voices of the citizens, etc. were to be thrown out.
    A more powerful Town Meeting that controls its agenda and has committees to specialize in certain areas would be more representative of the needs and opinions of the citizens, and it would allow more participation in government.

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      Author

      You’re right that all development includes municipal costs. But the biggest cost, by far, is the $20,000 a year it costs to educate a child. Because places like Kendrick Place have few children in them, the $170,000 a year the owners pay in taxes has a much bigger financial benefit to the Town than single-family houses. Connie Kruger, a housing expert before she became a Select Board member, will back me up on this.
      It is not true that the goal of the Charter Commission was to centralize power; if it were, we would have recommended a mayor. I have created a spectrum of eight forms of government that have been discussed, with the one with the least centralization of power (open Town Meeting) on the left and the one with the most centralization (mayor/small council) on the right. The Charter Commission’s proposal is in the middle.
      I define “democracy” as a form of government that reflects the will of the governed. Currently, Town Meeting members are largely self-appointed and have little or no mandate from voters. If you believe that a large group of these people is more democratic than a group of 13 chosen by voters in competitive elections with greater voter participation, after a campaign where issues are discussed and voters know what they’re voting for, OK. But I don’t.

  14. Nick,
    Twice on this page you’ve accused those not eager to repeal that which has brought us a very livable town and replace with the unknown, of scare tactics. The argument you make in this blog entry is, “Your taxes will go up if you don’t open the door to more development.” Scare tactic, no?

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      Author

      This misrepresents my opinion. I believe that Town Meeting’s actions in the past have made Amherst’s residential property taxes higher than they would have been if some of the development proposals had been approved. I am not saying that taxes will go up if we don’t have more development. In fact, we are seeing more development, but it’s mostly high-end apartments, not offices or retail. This is not at all comparable to charter opponents saying that a council would be dominated by men, or that it would approve rampant development. I agree that we have a very livable town, but we delegate decision-making to an unrepresentative group of people who are not accountable to voters. That’s the real problem.

  15. With Massachusetts state law setting draconian caps on the ability of municipalities to tax, at 2.5% of the previous year’s levy plus new growth, I just want Amherst voters to know what they are doing when they go to the ballot box. I don’t believe Amherst voters have the ability to shape fiscal policy in town through their vote. If we have pending building projects stacked up like planes circling a traffic control tower, how did we get here? Did Amherst voters EVER get a chance to shape the Town’s fiscal reality? I say it doesn’t happen other than in our “primal scream” override votes. I view that as unhealthy. I have heard talk about the urgency of a new fire station since I arrived here with my family in 1995. Why haven’t we been able to get this done? Town Meeting’s collective interests have been elsewhere, I would argue.

  16. “I define “democracy” as a form of government that reflects the will of the governed. ”
    While you may define words as is convenient for you, I prefer to use the common definitions; they are understood by more people.
    Democracy
    1. government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system.
    2. a state having such a form of government.
    3. a state of society characterized by formal equality of rights and privileges.
    4. political or social equality; democratic spirit.
    5. the common people of a community as distinguished from any privileged class; the common people with respect to their political power.
    http://www.dictionary.com/browse/democracy?s=t
    Let’s use common definitions. Altering things to suit the premises that one wants can lead to peculiar results.

    “It is not true that the goal of the Charter Commission was to centralize power; if it were, we would have recommended a mayor. I have created a spectrum of eight forms of government that have been discussed, with the one with the least centralization of power (open Town Meeting) on the left and the one with the most centralization (mayor/small council) on the right. The Charter Commission’s proposal is in the middle.”

    While you may actually think that the Charter Commissions recommendation is different from a mayor/small council government, they are effectively identical; the difference is whether the head is called ‘mayor’ or ‘manager’.

    While Kendrick Place may contribute more in taxes than its residents get in services may be true at this time, but it adds to population density, which is one of the principal drivers of municipal government costs. If the town were interested in lowering taxes, then the type of real estate in the town would make no difference, but expenditures would need to be decreased. Who will live in a given area in the future can’t be predicted with much accuracy; i.e., current use does not tell us who will be living there in the future, and the future arrives sooner than anyone plans.

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