SalemNews.com, Salem, MA

January 15, 2013

Panel agrees on tax breaks

Beverly: Subcommittee votes 2-1 to give mayor the ability to negotiate a lower rate

BY PAUL LEIGHTON
STAFF WRITER

---- — A City Council subcommittee last night backed Beverly Mayor Bill Scanlon in his effort to gain negotiating power with developers seeking a tax break.

The council’s Finance and Property Committee voted 2-1 at City Hall in favor of allowing the mayor to negotiate a tax break lower than the 70 percent that the City Council approved in November.

The change must still be approved by the full council, but the vote was a victory for Scanlon in the controversy over who should determine the size of the tax break, the City Council or the mayor.

“You totally tie the hands if you insist on a flat rate,” Scanlon told councilors during the meeting. “Don’t make bad policy because you’re afraid you’ll have a bad decision-maker.”

The council and Scanlon all agree that the tax breaks are needed in order to draw developers to Rantoul Street and bring vibrancy to the area around the train depot. Councilors voted unanimously in November to set a nonnegotiable tax break of 70 percent for the first five years and 30 percent for the next five years for developers who are accepted into the program.

But Scanlon used his veto power for one of the rare times in his 18-year tenure to overturn the law because he thinks the mayor should have the authority to negotiate a lower tax break rather than giving 70 percent for every project.

The matter went back to the council last night. And this time, Scanlon, who did not attend some of the council meetings where the issue came up before, was on hand to state his case.

Scanlon told councilors that giving every developer the same tax break regardless of the quality of the project was “absolutely dreadful policy.”

The mayor, in fact, said he would be willing to let the City Council negotiate the tax breaks if they didn’t want him to do it. He said the city needs to have leverage with developers in trying to get what will be the best project for the city.

“I think it’s imperative that we have that power,” he said. “I don’t see how we can look a constituent in the eye if we don’t.”

Scanlon said the Beverly public schools have seen an influx of 87 students in the last four months and that some people are concerned about the impact that new apartments would have on school class sizes.

But some councilors said giving the mayor leeway to negotiate the size of the tax break would subject the city to charges of backroom dealing and lack of transparency.

“It’s rife with problems,” Councilor Scott Dullea said. “It opens itself up to the appearance of impropriety and actual impropriety.”

Councilor Brett Schetzsle questioned why Scanlon was originally in favor of a flat percentage, then changed his mind. Scanlon said that was because he originally proposed that the City Council have the authority to approve a development and that it would be too difficult for nine councilors to negotiate with a developer.

When the council decided to set the 70 percent rate but let the mayor approve projects, Scanlon decided the mayor should also have the power to negotiate that rate.

“I didn’t want to have a giveaway program that is too big,” he said.

The plan approved by the finance committee sets the tax break at a minimum 45 percent for the first five years and gives the mayor the authority to increase it up to 70 percent. The break would be 20 percent for the next five years, with the mayor’s option to bump it up to 30 percent.

The mayor would also have to explain his reasoning in a report to the council before the tax break is submitted to the state.

Scott Houseman, who proposed the plan, and Paul Guanci voted in favor. Don Martin voted no.

“I won’t support ‘up to’ (language), period,” Martin said. “I’m just not going to go there.”

Martin had proposed setting the tax break at 50 percent for the first five years and 25 percent for the next five, but the subcommittee did not vote on that option.

The full City Council is scheduled to take up the issue at its next meeting on Jan. 22.

Staff writer Paul Leighton can be reached at 978-338-2675 or pleighton@salemnews.com.