Letter: Capital Plan Portends Substantial Property Tax Increases For Amherst Residents

The February 16, 2021 Finance Committee (FC)  presentation “Four Major Building Projects Financial Model”  managed to side-step the question on every homeowner’s mind: how much will this increase my property taxes? 

One of the stated rationales for bundling these four major capital projects is to “minimize the impact on taxpayers.” However, owners of a $250,000 home paying $5,455 a year at the current rate of $21.82 per thousand would see their tax bill rise to between $7,265 and $7,895 in just 10 years, with the projected increase of $181.76 to $244.17/year) while the owner of a $650,000 home now paying $14,183 would see the annual property tax bill go up to at least $18,979 and as much as $20,532 (with increases of $472.59 to $634.84/year) by 2031. In other words, at the end of ten years the owner of a $250,000 house could be paying an additional $2,440 (+45%) a year, while the owner of a $650,000 home could be paying an additional $6,349 (+48%).

More to the point for most homeowners, since the 2019 median home value in town was $359,324, FC estimates show that the owners of $350,000 homes who now pay  $7,637 a year will see their bills rise between  $5,080 to $12,717 (+66%) and $6,840 to $14,819 (86%) over a 20 year debt period.

These figures assume that the $21.82 per thousand rate remains in force and that properties are not reassessed. If home sale prices increase, that will trigger another reassessment.

Most important, although the FC states that “these projects are ready to move forward and delays could result in higher borrowing costs and/or sunk maintenance costs,” the actual borrowings are not scheduled to begin for the DPW until 2023, the library in 2024, and the new school and the fire station in 2025. None of these projections consider any other long-term needs of the Town including building replacements, other capital projects, and increased operating budgets. 

Furthermore, the FC expects interest rates to remain between 2.8% and 4%, even though the Biden administration’s $1.9 trillion stimulus package is widely recognized as likely to trigger inflation and increase interest rates. In this environment, it is also impossible to predict the costs of construction materials and labor.

Craig Meadows

Craig Meadows has lived in the Amherst area for 51 years. He is the owner of an Amherst-based, service disabled veteran owned, small business.