EAST LONGMEADOW — The Town Council voted Nov. 12 to change the funding sources for the acquisition of 382 N. Main St., the future home of East Longmeadow’s Town Hall.
The town first began its efforts to purchase the two-story building on a 3.81-acre site in 2022. The Town Council appropriated $2.4 million from free cash to be used in conjunction with a $3.3 million bond. However, the town learned that a straightforward purchase at the agreed upon price was not possible under state law. Instead, the parties agreed that the property would be taken in what Council President Connor O’Shea described on Oct. 8 as “friendly” eminent domain.
On Nov. 12, Town Manager Tom Christensen and Municipal Finance Director Kimberly Collins explained to the council that a change in funding sources would be advantageous, saving the town in interest payments and ensuring that no ARPA funding will go unused.
The Dec. 31 deadline for appropriating federal American Rescue Plan Act funding is fast approaching and the town had $53,042 of the town’s ARPA funding left unallocated. Christensen explained that if the town reallocated $783,247 in ARPA funds from four other projects, the town could use the combined $836,289 to reduce the $3.3 million bond. The plan also included using $500,000 in free cash to further reduce the borrowed amount. This would leave just $1.96 million to bond, saving the town in interest over the life of the loan. Additionally, the lower bond amount means that the rental income of the building’s tenants will cover both the bond payment and the building’s operating cost.
Free cash would then be used in place of ARPA funds for the four projects: the Municipal Light and Power project, a police patrol vehicle, window replacement at Birchland Park Middle School and the landfill on Allen Street.
Christensen acknowledged that the funding changes may seem puzzling. “We just moved the money into the MLP. It seems weird that we’re moving it out,” he said. However, because no reappropriations can be made after the Dec. 31 deadline, “If we appropriate [the money to a project] and we don’t spend it all, it’s gone.”
O’Shea described it as “leaving money on the table.”
With $10.97 million in the town’s free cash account, $3.3 million more than last year, people may wonder why the town did not eliminate the bond and pay for the building outright. Christensen said that the town’s bond rating may drop if the balance of its reserves drops below last year’s levels. To avoid approaching that threshold, the decision was made to limit the amount of free cash used for the purchase.
The town already occupies a small space in the new building. Christensen told Reminder Publishing that as the tenant leases expire, the town will begin relocating to the new building, as needed.
Tax classification
On a separate financial matter, the council set a single tax classification for both residential property and commercial, industrial and personal property.
When calculating the levy for the year ahead, municipalities begin with the current year’s levy, $51.37 million for fiscal year 2025. Under state law, the town can raise an additional 2.5% over the previous year’s levy and add the tax revenue of any new grown, $1.28 million, and $551,359, respectively. Debt exclusions, such as for modular classrooms, the new high school and the natatorium, totaling $1.02 million, are also added. This brings the FY26 levy to $54.23 million.
Director of Assessing Diane Bishop laid out the options for how the tax burden can be distributed across property owners. With the FY25 levy, a single tax rate means that all property owners pay approximately $18.48 per $1,000 of property value, six cents less than the current fiscal year’s rate. However, because home values are up 5.5% over last year, from an average of $372,681 in 2023 to an average of $392,900 this year, the average tax bill will increase by $353 this year. Of that, $133 is due to the debt exclusion for the high school and natatorium.
The council could also have chosen to increase the tax rate for commercial, industrial and personal property while reducing it for residential ones. However, Bishop explained that with the town composed of 84% residential properties, each taxpayer would save a relatively small average of $711 for the year, while the average commercial and industrial property owner would pay an average of $8,864 more over the course of the year.
Another option available to the council was to shift the tax burden to favor owner-occupied homes over rentals. Like the split tax rate, people who live at their properties would have seen relatively small savings, while the few rental property owners in town would have paid dramatic increases. This exemption is used in just 18 of the state’s 351 cities and towns, mostly those with a lot of rental units.
A small commercial exemption was also possible. This would apply to properties that house businesses with less than $1 million in assessed value and 10 or fewer employees.
Thirty-six properties in town may have qualified for this exemption, however, this benefits property owners and not necessarily the businesses to whom they rent.
