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HomeMy WebLinkAboutMinutes - City Council - 12/10/1975AIRPORT TAX ASSESSMENT DISCUSSION DECEMBER 10, 1975 Members of the South Burlington City Council net with a group from Burlington for an informal discussion regarding tax assessment on some of the Airport properties. The meeting was held on Wednesday evening in the Conference Room, Municipal Offices, 1175 Williston Road. PRESENT Paul Farrar, Chairman, City Council: Councilmen John Dinklage, Michael Flaherty, Duane Merrill: William Szymanski, City Manager: Richard Underwood, City Assessor. Thomas Schmidt, Airport Manager: Joseph McNeil, Burlington City Attorney: Roger P. Fay, Paul Fisher The meeting was opened at 8:00 p.m. by Chairman Farrar of the City Council, who stated that during the discussion with the Board of Civil Authority it was thought there was partially a political problem as well as a tax problem and a meeting should be held to iron out a new agreement or new interpretations of the old one, that some agreement should be reached so that it would become an administrative procedure with guidelines provided. Atty. McNeil said they had told the Board of Authority they were interested in some degree of stability or certainty so they would know over a period of time what their tax obligations would be. South Burlington's position was that they didn't want their tax base eroded, especially in cases where the Airport continued to acquire properties and demolish them. He suggested the way to go about this would be to see if agreement could be reached on a formula per square feet or per square acre or whatever; what the taxes would be; and to see whether that formula could be made to work over an expanded period of time and be applied to all property then on hand or to be acquired within that period of time. Then they would discuss with South Burlington in as much detail as possible what the acquisition plans are so South Burlington would have a handle on where the Airport would be going and what the City could expect by way of dollars. The natural and desirable patterns could be examined in good faith, then get into the technical nature of dollars and cents. Chairman Farrar said it was not the intention to charge the Airport an unreasonably high rate on any of the land they acquire; it was the intent of the Council's predecessors that the land to be acquired was to be put on the tax rolls at fair market value. The point brought up by Mr. McNeil might be an alternative way to proceed if a fair market value could be established for the land to be acquired. It could be assessed at a certain value or some multiple that might be equally effective, and then it would be a matter of pure arithmetic. Atty. McNeil said that was basically what they were suggesting. Mr. Farrar asked if they were suggesting that the present agreement be modified to spell out what is meant by the value of the land, if the problem was really defining more precisely the value or the way we determine the value of future pieces to be acquired. Mr. McNeil said this agreement has put them right into the appeal process.. Mr. Dinklage said he would like a better understanding of what the problems have been in using standard procedures, and where we generally run into an area of misunderstanding. Mr. McNeil said they really haven't had one other than the present situation, Property was acquired on Thompson's Court and Airport Parkway with the intention of using them as part of the Airport property and the homes were taken off. Originally the appraisal was based on the fair market value as previously established; after that was examined there was a considerable reduction but still the figure was over and above what the Airport considered to be the listed value of comparative surrounding properties. The effect was one of ultimate ability to pay at those rates and continue to make the Airport financially viable. Obviously, he said, the Airport should not use South Burlington services and land and not repay something in taxation, but in the assessment there should be some recognition of the public service furnished by the Airport. The Airport is entirely self-sustaining and pays no amounts in lieu of taxes. Mr. Szymanski asked if a surplus would go back to the Airport. Mr. McNeil said it would, that they have never had excess profits to the point of being concerned with that, it is just being plowed right in. Mr. Merrill asked if they would take this into a contract, that these continuing surpluses would be continued to be pumped back to the Airport and that the costs would be reduced. Mr. Schmidt said there is a resolution on file to that effect. Mr. McNeil said costs of services would be determined by the Airport Commission and not by the contract. Mr. Farrar said it would certainly be something that would be negotiable, to ask for that, to discuss it. Mr. McNeil agreed it was obviously a fair position from South Burlington's standpoint that if they are providing any services they don't want it to be used to subsidize anything in Burlington. Mr. Flaherty suggested putting something in the contract about future commitments. Mr. Farrar suggested putting a limit on how many they would expect to buy within the next five or the next ten years. Mr. Merrill felt the idea of the growth of the Airport in terms of the surplus concerned the base in South Burlington, giving the Airport a special tax rate is just forcing higher taxes to someone else. At some point our tax-payers and our City have to say how much benefit does the City of South Burlington derive, how many houses is the Airport going to buy, how many houses are we willing to sacrifice to continue to provide this Airport service. Mr. Farrar said he felt the scope of the agreement should be limited to those presently pointed out in the Master Plan. Mr. McNeil agreed it was a necessary part of some agreement of fixing a cost. Mr. Schmidt commented it was not a downhill tax base because the Airport is constantly adding improvements which are going on the grand list. Mr. Merrill said he looked at it more as the City operating a free enterprise. The Airport sought out businesses and located them at the Airport and is taking in money. The land is becoming more valuable both for Airport and for commercial uses. Mr. Schmidt said GE was an isolated case, the building is not suitable for Airport purposes. Generally they reserve all their property for Airport uses. Mr. Underwood said GE did pay personal property taxes out there. Mr. Dinklage asked about the implication of establishing a square foot value, if this would have the effect of freezing the tax valuation at the time the property was transferred to the Airport or would it allow for an increase in taxes subsequent to improvement of the property. Mr. McNeil said they were talking only about land right now, in terms of whatever is fixed per whatever, that it is prevailing throughout the entire term. Some sort of escalation or reduction clause could be open to negotiation. Mr. Farrar said the value could be fixed, and then the taxes be determined by that the general tax rate is. It was more important to get some general framework. Mr. McNeil said they would be happy to work up a proposal along those lines. Mr. Dinklage said that would have the effect of establishing the constant valuation, with the tax derived by South Burlington coming from the tax rate. Mr. Farrar said they could use that way, or use the multiple per square foot per year. It would be exactly the same type of thing and might be a more reasonable way. When the Airport acquired a piece of property they would know what the taxes would be per year. Mr. Farrar then referred to the GE building, and asked if that building being used for non-Airport purposes should not be taxed at its fair value. He felt that spelling that out would be making it easier for the Airport when they do rent property. It might be in everybody's best interests even though this is an isolated case. Mr. Dinklage asked if the present lease to GE doesn't anticipate having to pay taxes. Mr. Schmidt said that was right. Mr. Szymanski said the final result should be that South Burlington should not lose any taxes, and said the problem now is that the Airport is not satisfied even though South Burlington is losing three or four thousand dollars. Mr. Schmidt said the Airport should be looked at as a whole, that the amount on the grandlist is a great deal more than it was. There will be several other improvements coming through. South Burlington will be farther ahead in total value and in total taxes; they will be looking at another half million dollars on the tax rolls. Mr. Szymanski mentioned the comparison with adjacent property such as that of Webster Martin. Mr. Schmidt replied they didn't understand these wide variations either. Mr. Farrar referred to the residential property acquired, saying the fair market value could be greater for a use which is not the one it had been used for. A house and land might be worth $30,000 but a piece of land without the house might be worth $25,000. It should be checked both ways. He said he would like to come to some mutually satisfactory agreement saying it will be taxed at the following rate for that portion which is in your expansion plans in your Master Plan. Mr. Dinklage asked if one of the properties came on the market which had been indicated as one in the Master Plan the Airport wished to acquire, and it was acquired by the Airport but continued in its present use, such as being rented for a single family house, would South Burlington under those circumstances derive the usual tax income. Mr. Schmidt said this has happened. Mr. Farrar commented that Council should be wise enough to cover these contingencies so their successors won't have to go over then again in a few years. Mr. Merrill asked how much surplus funds are being pumped back in. Mr. Schmidt said it varies between $100,000 and $200,000. They are now taking depreciation and the surplus goes into the Capital Budget. Sometimes it gets a little difficult to predict the Capital Budget. Mr. Dinklage asked if there was a particular reason why the carryover is so large. Mr. Fay explained it is not a carryover; it is capital expenditures which are derived from operating funds. Mr. McNeil said they had been thinking about the 30th of January for a hearing and Mr. Farrar said that would be fine, or perhaps the third week in January if possible. Mr. Farrar said Minutes of this discussion would be sent out and they would tentatively schedule to get together in January. Each group could get their proposals to the other in advance to allow time to study for a more meaningful discussion. The meeting was declared adjourned at 8:40 p.m. Published by ClerkBase ©2019 by Clerkbase. No Claim to Original Government Works.