Northampton Web Log

An article in the Gazette Thursday, January 25, 2007, “Smart Growth Recognized” by Andrew Horton informed their readers that the city “won a Smart Growth Award for its planned Roundhouse downtown revitalization project…” from the Pioneer Valley Planning Commission.

Let’s take a closer look.

Northampton officials chose the $1 bid from Pioneer Valley Hotel Group of Ludlow over the $750,000 bid by Tryumph Management Corporation of Miami Beach, Florida, who had planned an office building also to be situated over a parking garage. Officials stated the determining factor was the $1,599,449 in occupancy taxes the hotel would bring the city over a twenty-year period, taxes the Tryumph office-building proposal would not have to pay.

Troubling is that city officials used a 60% occupancy rate for the proposed hotel, when the current citywide occupancy rate is 55%. With Pioneer’s project Northampton’s supply of rooms will increase 26.385% from 379 to 479 in about a year’s time. For the new hotel to maintain a 60% occupancy rate, they will need to rent out 60 rooms daily or 21,900 rooms annually; at a rate of 55% Pioneer will need to rent out 55 rooms daily or 20,075 annually. Absent from the city’s economic analysis is the financial impact to existing Northampton hotels and their corresponding occupancy taxes. Other than the creation by someone of a significant new tourist draw, the only other means for Pioneer to achieve a 60% occupancy rate is to draw business away from existing hotels in the city, or from hotels outside of the city. Since Pioneer owns two in Hadley, they will likely draw some patrons from their own existing customer base and will use their new hotel as a loss leader in order to penetrate the Northampton downtown market. Pioneer’s estimated initial average room rate at the outset is about $105 and that is $45 below the Hotel Northampton’s average room rate and $20 below the Clarion’s. This cutthroat pricing policy could result in fewer overall occupancy taxes collected by the city of Northampton not more, if existing hotel owners lost business and/or had to lower their prices.

Horton’s article quoted City Planner Wayne Feiden as stating, “Since the hotel would be centrally located in downtown Northampton, there would be no need for long car trips along the busy corridors of Route 9 and Interstate 91” and he added, “With this hotel, all trips to downtown Northampton could be made by foot, eliminating the need for cars.”

While it’s true that when patrons of Pioneer’s new hotel decide to patronize a downtown tourist related establishment that they are more likely to walk due to the hotel’s proximity, in general though, this seems like a facile assertion. What if tourists wish to frequent an event at one of the area’s other significant tourist draws like the Basketball Hall of Fame, the Springfield Civic Center, the University of Massachusetts, Amherst College, Hampshire College, Mt. Holyoke College, the Yiddish Book Center, the Eric Carle Museum, the Amherst Cinema, Yankee Candle, or perhaps skiing in Vermont?

Further, using the city’s analysis, Pioneer’s daily parking need is 126 spaces and Tryumph’s would have been 40 spaces, for a difference of 86 spaces demanded daily. No matter how one examines it, 86 more spaces generally means 86 more vehicles, and 86 more vehicles generally means more traffic not less, unless tourists decide not to venture outside of the downtown area and use a helicopter or some other means to arrive at the hotel or for general touring. It’s unreasonable to assume travelers would not leave the downtown area.

Since the employees and patrons of the office building would have been more likely to live nearby, they would also have been more likely to bicycle or walk to the site than will patrons of the hotel. There is a planned bicycle trail very close by going out to bid soon, public transit is equally close by, and the highest density of population in Northampton is located downtown. Thus the office building would not have attracted the same kind of petroleum based vehicular traffic that the hotel will and would likely have provided a sleepier downtown neighbor than the hotel. So here we had two very different options to choose from and I suggest the hotel will contribute more traffic, pollution, and aggravation for downtown residents, pedestrians, and bicyclists than the office building would have, not less.

Let’s address Pulaski Park too, both bids proposed to expand the park’s footprint a like distance, but the Tryumph bid offered the city an additional $90,000 above Pioneer’s bid for park improvements. In lieu of providing the extra $90,000 Pioneer might now request the city maintain Pulaski Park to a higher standard, with public funding. That equates to public funding for private gain.

The nature of Pioneer’s hotel will be primarily hospitality and tourism, which can be negatively impacted by a poorly performing economy or volatile fuel prices. Additionally, I would deem the inherent risks in running the hotel business as less diversifiable than Tryumph’s. Tryumph could have sold units as office condominiums thereby sharing ownership of the building and spreading accompanying risks, or at the very least rented out offices for a variety of uses, which seems more sustainable over the long term. The Potpourri office building on King Street perfectly exemplifies of this type of diversification.

The city in rejecting Tryumph’s bid rejected a one-time cash payment of $750,000. Presuming Tryumph’s principals had access to this cash via credit or otherwise, had the city accepted this payment it could have been invested in a 20-Year callable Certificate of Deposit at an interest rate of 6.05% compounded semi-annually per FISN. At the end of 20 years the principal would have generated $1,720,393 in guaranteed interest or an annual average of $86,019.65, which if discounted 5% would give us a figure of $1,071,994.98 in 2007 dollars for a total city benefit of $1,821,994.98 when adding the discounted interest to the $750,000 principal. (This calculation relies on the city NOT withdrawing interest but compounding it).

Or the $750,000 could have been placed in a savings account earning simple interest. At a rate of 5% annually without compounding, but with enhanced liquidity, the city could have withdrawn $37,500 per year or a total of $750,000 over the twenty years, holding the principal harmless. Discounting the interest at 5% computes to $1,354,832.89 in total financial benefits in 2007 dollars.

Of course an argument can be made that by investing the principal and re-investing the interest with the first option, the money cannot be used. Further, any funds withdrawn would lower the yield and with the second option only the earnings are available as well. However the city sold the parcel for $1 and it is now generating only a modest sum from the parking revenues associated with its current use, though I don’t know the specific figure. In addition, the city has recently upped its free cash account to about $2.5 million and enjoys a positive bond rating. In fact, Mayor Higgins recently committed the city to building a $12.5 million new police headquarters without a debt-exclusion tax override, explaining to the public that as the city is retiring some long-term debt, taxpayers can now afford it. Plus, the new $4 million senior center is being constructed without an override as well. It would seem as though the city must be on reasonably firm financial footing based on these commitments entered into on behalf of taxpayers.

Another option would have been that the $750,000 could have been used for a variety and combination of purposes right away, from retiring long-term debt to repairing degraded streets, to supplementing the city’s operating budget until local aid levels are restored as has been promised by Governor Patrick.

In my view, city officials are accepting increased risks on our behalf and engaging in a questionable bet with the disposition of this public property. Bypassing a certain $750,000 for the parcel in exchange for the possibility of increased occupancy taxes is far from full proof planning. For instance, if the city chose Tryumph’s bid, once Tryumph provided the funds, even if Tryumph’s project failed, the city would be left holding $750,000. If Pioneer’s project fails, the city holds nothing, not even the land if the deed has been conveyed legally.

Daryl G. LaFleur

Read the Gazette article at the link below:

‘Smart growth’ recognized: Honored projects include cohousing, Hospital Hill plan

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From Easha Williams June 29 article, “Who’s Winning the Race to Build Out the Valley?” “A problem with the way development has proceeded in the Valley so far is that it’s often the result of a conversation between a corporation or contractor and an overwhelmed, all-volunteer local planning board, and involves little input from the public” adding that town commissions are “run by volunteers with little or no formal training.”

These observations circumvent the crux of the matter, which is that volunteers are APPOINTED and serve at the discretion of local politicos. Appointments are not random nor do planning boards bear the responsibility for development decisions alone, quite the contrary. When volunteers are granted “special municipal employee” status, as they have been in Northampton, conflict of interest laws are undermined. When boards are staffed with employees of firms conducting business with or operating within a municipality; with relatives of municipal employees; with commercial property owners, what kind of decisions are to follow? Therefore, I disagree that local board members are “overwhelmed”; rather, they are following the intent of those who appointed them, that’s how the political process works at any level.

Generally, Valley appointments occur with limited media coverage thereby allowing politicos to compose committees outside the oversight of the general public. If the local media committed resources and commenced a diligent analysis of appointments in general, the “curtain would be drawn” and the intentions of local politicians would be exposed for whatever they are.

As a proponent of the Community Preservation Act I have three concerns regarding the proposed Ordinance that will codify Northampton’s Community Preservation Committee.

First, under Membership and Terms: “ Four members of the public to be appointed by the City Council for an initial term of one year and thereafter for a term of three years.”

It was reported recently that the Ordinance is to be amended to reflect two members appointed by the Council and two popularly elected. I campaigned for the popular election of all four of the citizen members because the Council retains ultimate authority over CPA disbursements, as it does the city budget, therefore if either of these options is implemented, the Council will retain significant discretion over Committee members and policy. Because the Council approves the Mayoral appointees who would fill the five statutorily required seats that include the Historic, Recreation, and Conservation Commissions, as well as the Planning Board and Housing Authority, it is clear the designed impact of electing only two members would be to dilute their political influence. As Massachusetts is the only state in the union that has ratified same-sex marriage, Northampton officials should feel proud to enable the community to popularly elect four members to the Committee. There is nothing to fear from this suggested approach to progressive, transparent, and inclusive lawmaking and distribution of power.

Further, elected seats should remain open the first year in order to avoid the appearance of political machination. Since a charter change approved by the state legislature is required, and because the Council ominously failed to act before the legislature closed their 2006 session, initial appointees to the elected seats would enjoy a distinct advantage in future elections, that of being incumbents. It cannot be overstated that these “endorsed” appointees would benefit not only from media exposure, but from their intergovernmental relationships with other boards and officials during their first year in office. As the funds can accumulate from year to year, the five members mandated by statute should be able to provide sufficient impetus for implementing a basic committee structure and could appropriately defer select decisions where the input of the future elected members would be desirable.

Second is the role of the city’s executive as outlined under Powers and Duties: “ The Community Preservation Committee shall make recommendations to the Mayor and City Council…”

It is not specified in the Ordinance or under state law the role of the executive branch with regards to Committee recommendations. According to the State Property Tax Bureau guidelines, Community Preservation Committees are “responsible for evaluating the community preservation needs of the city or town and making recommendations to the community’s legislative body as part of the annual budget process.”

These concerns were divisive for residents on either side of the CPA initiative during the closely contested 2005 campaign. The Council’s apparent winner-take-all posturing would seem to justify CPA opponents’ fears that political gerrymandering would dominate Committee formation. When federal and state legislatures are charged with appointing officials, such as Supreme Court justices, there is serious deliberation with regards to the selection process. This denotes sound governing at any level and in this case, governing towards the political center would accommodate CPA opponents that constitute 49% of our electorate. The CPA should provide spoils for the entire community, not just the victors.

Third is the status of Committee members outlined under Membership and Terms: “Committee members shall be classified as Special Municipal Employees for the purposes of Chapter 268A of the Massachusetts General Laws.” A specious designation that allows for less restrictive application of Conflict of Interest laws that would serve to encourage “special interest overlay” and the potential for dubious quid pro quo policies, at a time when there is an abundance of residents willing to serve on municipal boards. Generally speaking, Specials may represent private parties before Northampton boards other than ones they serve on; they may serve as an agent for private parties in connection with other matters of interest to Northampton; and they may receive compensation in connection with other matters involving Northampton (provided they have not officially participated in the matters as municipal officials and the matters are not within their official responsibilities). The Committee should be formulated for objectivity and independence under any administration or circumstances.

Ratified eight months ago, the Council failed to follow Tax Bureau guidelines that indicate, “the legislative body should be asked to adopt the by-law or ordinance at the same time it is asked to accept the act and approve the surcharge percentage.” Currently property owners are being assessed the CPA surcharge with no committee in place to oversee the funds.

Daryl G. LaFleur is a Northampton resident and graduate student in Public Policy and Administration at the University of Massachusetts, Amherst.

The Commissioner of Revenue, in accordance with MGL Ch. 58 Sect. 10C, is charged with the responsibility of biannually determining an equalized valuation (EQV) for each city and town in the Commonwealth.

EQVs present an estimate of fair cash value of all taxable property in each city and town as of January 1 of each year (MGL Ch. 58, Sects. 9 & 10C). The EQV is a measure of the relative property wealth in each municipality. Its purpose is to allow for comparisons of municipal property values at one point in time, adjusting for differences in local assessing practices and revaluation schedules.

EQVs have historically been used as a variable in the allocation of certain state aid distributions, the calculation of various state and county assessments to municipalities, and the determination of municipal debt limits. EQVs are used in some distribution formulas so that communities with lower property values receive proportionately more aid than those with higher property values. In some assessment formulas they are used so that those with lower property values assume proportionately less of the cost than communities with higher property values. The local aid receipt programs using EQV are: Lottery, Public Libraries, Chapter 70, and School Construction Aid.

A municipality’s EQV is the sum of the estimated fair market value for each property class plus an estimate of new growth, resulting in values indicative of January 1.

The equity of any assessment administration program is dependent on accurate estimates of the market or full and fair cash value of all property within a city or town. Assessment performance can be quantified through a statistical analysis referred to as an assessment sales ratio (ASR) study. This study is used to determine the composite ratio of the residential class. Each ratio indicates at what percent of market value the class is being assessed. If the resulting ratio is less than 1.00 (or 100%), the class is being assessed at less than market value.

SOCIAL EQUITY