MMA letter to Revenue Committee on a number of bills that would affect municipal finance

The Honorable Jay R. Kaufman, House Chair
The Honorable Michael J. Rodrigues, Senate Chair
Joint Committee on Revenue
State House, Boston

Dear Chairman Kaufman, Chairman Rodrigues, and Distinguished Committee Members,

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to offer written testimony on several bills heard by the Committee on Tuesday, June 2nd.

Please oppose H. 2681, An Act to Modernize the Renewable Energy Property Tax Exemption. This bill would make negative and disruptive changes to property tax laws around the tax status of renewable energy equipment and the capacity of municipalities to negotiate payments-in-lieu-of-taxes (PILOT) agreements for certain renewable energy equipment and projects. The proposal would eliminate important local revenues by creating a new special exemption for solar powered water heating systems.  The measure would also undermine local revenue collections by exempting renewable energy equipment with a production capacity or 60 kilowatts or less, changing the current standard of exempting equipment capable of producing not more than 125 percent of the electricity used by the property on which the equipment is located. There is no clear understanding of what the practical impact of this change would be, except to reduce revenues to cities and towns. The bill would also undermine municipal revenues and standing in negotiations by exempting 85 percent of the value of renewable energy equipment with an electricity generating capacity over 60 kilowatts, provided that a PILOT agreement is reached. This would greatly weaken and infringe upon the existing local option to decide whether or not to enter into a PILOT agreement for renewable energy equipment. The bill also calls for a study of the municipal revenue impact associated with these changes, but only after the changes are implemented–a cart-before-the-horse approach that doesn’t make sense. Massachusetts municipalities have a long and strong record in the development of renewable energy –yet this legislation would strip communities of existing revenue authority, and weaken the public’s standing in negotiations with private developers.  The MMA strongly opposes this bill, and respectfully requests that the Committee not advance legislation that would alter the ability of municipalities to enter into locally negotiated PILOT agreements, as such negotiated agreements are a key element in the renewable energy development process that has worked very well at the local level and made Massachusetts a national leader in solar energy production.

Please support S. 1531, An Act Relative to a Municipality’s Right of First Refusal of Agricultural Land. This bill would amend the timeline surrounding the municipal option to exercise or assign the right of first refusal on agricultural land that a property owner plans to sell or use for non-agricultural purposes. This proposal would extend, from 120 to 180 days, the time that a municipality has to complete due diligence on the property and hold a vote by the city or town council or Board of Selectmen to determine what action to undertake. In addition, the bill would extend, from 90 to 120 days, the time period for a municipality to close on a purchase and sale contract. This extended timeframe would better enable cities and towns to complete the bond process to finance a land purchase, or to identify and secure other funding sources. Finally, S. 1531 would establish a 30-day timeline for a property seller to accept and execute the purchase and sale agreement. Under current law, there is no timeline placed on the seller for acceptance. This lack of a timeframe for action may create needless financial and legal uncertainty for the communities. For these reasons, we urge you to give S. 1531 a favorable report.

Please oppose S. 1548/ H. 2660, An Act Relative to Exempting Farmers’ Markets from Certain Property Taxes. The bills would create a new property tax exemption for land on which a farmer’s market is held. This new exemption is not local option and would result in the loss of tax revenue at the local level. We respectfully request that you to give the proposal an unfavorable report.

Please support H. 2454, An Act to Promote Development Through Historic Tax Credits, and H. 2582, An Act Amending the Historic Rehabilitation Tax Credit. These bills would each increase the capitalization of the State Historic Tax Credit Fund above $50 million (to $75 million and $67 million, respectively). A funding increase would bolster the adaptive reuse of historic buildings in communities across the state and provide an important element of project financing for many rehabilitative developments.

We respectfully request your support for the municipal policy positions highlighted above. The MMA appreciates your leadership on finance and revenue policy issues to protect municipalities, taxpayers, and the Commonwealth. If you have any questions, please do not hesitate to have your office contact me or Catherine Rollins of the MMA staff at 617-426-7272 at any time.

Thank you very much.

Sincerely,
Geoffrey C. Beckwith
Executive Director & CEO, MMA