A bunch of maps about property taxes

There was a post recently on a Facebook group, Hello Holyoke!!! [sic] where someone complained that the city’s taxes are the highest in the state (spoiler – they’re not, though they are relatively high). Many others bemoaned the high tax rate, and blamed it for failing businesses, empty storefronts, and blighted mill buildings. This post inspired a lot of passion, vitriol, and bile from those who commented (pro-tip: once the number of comments on a post exceeds 20, it’s best not to read them).

hh_post
Facebook post on taxes. 

I don’t know too much about tax policy, and especially about municipal tax policy. That post got me interested in looking to see what tax rates are like across the valley, and how the various communities fall. Fortunately, the Massachusetts Department of Revenue has a really handy table showing all municipal tax rates, and so of course I made some maps.

Taxes Across the State

First, a comparison of taxes across the state. Property taxes are based on what’s called the “Mill Rate,” or taxes per $1,000 of assessed value. For example, Holyoke has a residential mill rate of 19.17. That means that our tax rate is 0.01917% of the assessed value of our house.

Res_rate_statewide
Residential Mill Rate
comm_rate_statewide
Commercial Mill Rate

Interestingly, most communities have just one property tax rate. A handful, including Holyoke, have a split property tax rate, where commercial property is taxed at a higher rate than residential. I’m not really sure why that is, except that perhaps the thought is that commercial and industrial property is less easily movable? I don’t know but would be interested in finding out.

Anyway, you can see that residential tax rates are lower inside Route 128, near Boston, and higher in the rest of the state. Commercial tax rates, on the other hand, are all over the place, though they do seem to be higher in the higher-population urban areas.

Those two maps, of course, are only showing the tax rate – not the actual amount of money being paid in taxes. Property values are WAY higher in the Boston area, so even though the rates are relatively low, the tax bills are still relatively high.

tax_bill_statewide
Average Residential Tax Bill. Some communities, like Boston and Cambridge, are missing. That’s just a quirk in the dataset I was using. 

Taxes in the Pioneer Valley

I also got curious about how Holyoke compares to our immediate neighbors. So let’s take a look.

res_rate_pv
Residential Mill Rate
comm_rate_PV
Commercial Mill Rate

The two maps above confirm that Holyoke’s tax rates are relatively high – though generally on par with Westfield and Springfield, two of the other largest communities in the Pioneer Valley. But property values in these communities are pretty low.

PV_Med_home values
Median Residential Property Value. Source: 2016 American Community Survey

So, with low property values, even a high rate doesn’t translate into especially high property tax bills. You can see this in the average residential tax bill.

PV_ave_tax_bill
Average Residential Tax Bill

Of course, this is just the residential tax bill. As shown above, Holyoke has a very high commercial tax rate – actually, the third highest in the state after Holbrook and Pittsfield (side note – where is Holbrook?). Regardless, commercial property values in Holyoke, Chicopee, and Springfield are also relatively low, meaning that the relatively higher rates probably still don’t translate into a disproportionately high tax bill compared to surrounding communities.

Thoughts on Economic Development

Now for the policy deep dive. The real question, of course, has to do with tax rates and economic development – that’s what the guy who posted was really complaining about. I don’t pretend to be an expert on economic development or tax policy, but it does seem to me that there are a lot of places in Massachusetts that are expensive to do business, and yet business is booming.

Kendall Square in Cambridge has some of the most expensive property in the world, but is a power-house commercial district nonetheless. Despite the sky-high cost of developing or renting property, Fortune 500 companies locate there because they have Harvard and MIT a stone’s throw away to pull talent from. They have ample high-end housing and restaurants and bars. And they have bike paths and the Red Line and the Charles River Basin. The cost of doing business, including local taxes, doesn’t seem to be a major impediment.

Indeed, the Urban Institute wrote about taxes:

Taxes are a consideration in business decisions about location, but they are not the only one. Although firms welcome tax incentives, availability of transportation and low labor costs more often drive business decisions about expansion or relocation. Corporate site selection professionals rank the availability of skilled labor and adequate land and infrastructure higher than they rank tax policy.

At a macro-scale, taxes appear to have a fairly tenuous connection to broader economic performance. The Brookings Institution put together this chart during the most recent debate on slashing the corporate tax rate:

brookings tax chart
Federal tax revenue (left) seems fairly unrelated to per capita GDP (right).  

Yes, taxes shouldn’t be any higher than they need to be (of course!). But economic success depends on so much more than the mill rate – Holyoke and the rest of the greater Rust Belt would be well served to remember that quality of schools, quality of life, and quality infrastructure are all crucial ingredients to effective, sustained economic development.

PS –  That’s where high-tax Holbrook is.

holbrook

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The GOP Tax Plan Would Hit Massachusetts Hard

There have been so many articles about the ways in which the tax plan coming out of the GOP-controlled Congress is bad for America. To briefly recap:

  1. It raises taxes on the poor and lowers taxes on the rich (here);
  2. It actually raises the federal deficit, which conservatives generally consider the biggest long-term threat to America today (here);
  3. It will do nothing to spur employment growth, but will increase dividends and corporate profits (here);
  4. It raises taxes on the poor and lowers taxes on the rich (here).

I’m sure I left some things out.

Aside from being a Robin Hood in reverse, this tax plan would have probably derailed my education and, thus, my life had it been in effect in 2009. That is for one simple change – tuition benefits for graduate students would no longer be tax exempt. This sounds like not a big deal, but it is.

NPR wrote a story showing exactly what that would mean for an example PhD student. In 2016 this student earned a $30,000 stipend, on which she paid taxes – about $2,500. But under the new tax plan, she would be taxed on both her stipend and the value of her tuition (which is paid for through grants) – about $60,000 total. Her tax bill would then be about $7,500, a $5,000 increase. 

The Massachusetts Angle

This particular change in the tax code is appalling for me on a lot of different levels. Pragmatically, it discourages people to go into the very fields where we need a lot more people – those which require advanced training, such as scientists, engineers, doctors, etc. Philosophically, it punishes low-income graduate students, while people who fly in private jets will get a tax break.

Without going off on a tangent, I do think that issues of free speech and tolerance of a wide range of ideas needs to be addressed on college campuses – specifically liberal tolerance of conservative speakers and events. Richard Reeves published an article through Brookings pointing out that small liberal arts colleges (like my alma mater) are especially bad at allowing conservative speakers to go on stage.

es_20170314reevesfreespeech
In red are colleges that have disinvited conservative speakers since 2014. You can see that it tends to skew toward wealthier institutions. Source: Brookings Institute

 

Even more troubling, a recent Brookings Institute poll showed that 20% of college students think it’s acceptable to use violence to silence objectionable speakers. To re-emphasize, 1 out of 5 college students are OK with cracking some skulls if they don’t like what the people have to say.

I suppose it’s unsurprising then when our president said, “I love the poorly educated,” at a campaign rally. And maybe we shouldn’t be surprised that a conservative congress is trying to stick it to all those (presumably liberal) graduate students seeking advanced degrees. But from the Mayflower to the US Geological Survey to the Space Race, The United States has historically been a place that values and supports the pursuit of knowledge. This tax plan is a distressing departure from that tradition.

A big reason I chose Massachusetts is precisely because it is a state that is defined by the presence of higher education institutions. Thought leaders from around the country and around the world come here to learn, discuss, and dream. That makes this element of the tax plan that much more dangerous to the state.

Boston colleges
Boston-Area Colleges and Universities. Harvard gets four stars because it’s Harvard, I suppose. Source: MassGIS

The Boston area alone has 52 institutions of higher education. The Pioneer Valley has at least 15 (not counting some of the less prestigious institutions – sorry Baystate Medical Center Midwifery Program!). And, of course, some of the most august institutions in the country – with some of the most robust graduate programs – are located in the state, including Harvard, MIT, Amherst, and Williams.

PV Colleges
Pioneer Valley Colleges and Universities. Source: MassGIS

Universities as Anchor Institutions

Unlike the heavy industry which left the Pioneer Valley in the 1950s through 1980s, higher ed has been in the region for hundreds of years and is unlikely to go anywhere. Universities serve as “Anchor Institutions,” engines of economic development that aren’t easily transferable elsewhere (similar to medical institutions).

As this article from CityLab points out, “General Motors in Flint, Michigan, picked up and left. And with it went all of these jobs, and that really decimated the economy. Wayne State University in Detroit? They’re not going to be picking up and leaving.”

It doesn’t take an expert to see the economic impact that these institutions have on the region. Amherst, home to three post-secondary educational institutions, boasts among the highest real estate values in the region. The areas around Smith and Mount Holyoke are home to thriving cultural districts and numerous small businesses. What would Westfield be without Westfield State University?

This tax plan is going to hit the Bay State, and the Pioneer Valley, hard. An assault on learning is an assault on Massachusetts. I know that my life would have been irreversibly harmed if I’d had to pay taxes on the grants I received while earning $12,000 per year pursuing my master’s degree (it would have gobbled up virtually all of my stipend).

Unfortunately there are thousands of others in the same boat today, many of them our neighbors. Let’s keep our fingers crossed that at least that part of the plan, if not the whole thing, doesn’t pass.

 

Will Hampden County Ever Gentrify?

Since moving to Hampden County, I’ve thought a lot about economic development, about why Holyoke and Springfield have so many blighted, abandoned structures, and about what we can do to fix that. But then a discussion I went to last Tuesday evening, “Places that Matter,” turned to the topic of gentrification, which was surprising. Surprising because when I think of Holyoke, I think of a place far away from even the prospect of gentrification. And yet a spirited conversation ensued nonetheless. 

The gist of the meeting was that some Architecture and Planning professors at UMass-Amherst had developed an online historic preservation tool. The tool pulls posts from Twitter and Flickr and then places mentions of specific Holyoke places on a map. Based on the number of mentions a certain place gets, it is ranked as an “important” place in the city. Ultimately, this could be a tool to help inform where historic preservation efforts should be targeted, rather than the traditional method of a Historic Preservation Commission and perhaps a few community members at sparsely-attended evening public meetings deciding what places are historically significant.

I was impressed by the diversity of the crowd at this presentation – it was about half white folks and half non-white, primarily Puerto Rican. Toward the end of the event, we discussed how we would like to see these “important” places marked, preserved, or otherwise commemorated.

At first, people suggested typical things – wayfinding signs, maps, plaques, etc. But then the question came up, who are we creating these designations for? And that led to a discussion about how do we ensure that the primarily non-white and/or Latino community residents benefit from this new attention to historic or “important” places in their neighborhoods, and not just “tourists” or “visitors.” Which, it quickly became obvious, “tourists” and “visitors” were code for “gentrifyers.”

The Broken American Economic Development Model

As far as I can tell, America basically doesn’t have a good economic development model for cities.

The model seems to be basically this: Wait around until a blighted area becomes desirable, at which point developers build luxury condos and boutique dog pedicure (“peticure”?) businesses, and just accept the skyrocketing housing costs. Residents, especially those who rent, get pushed out of the neighborhood while homeowners benefit from an incredible windfall that they more or less lucked into. This has happened in Boston’s South End, New York’s Williamsburg, Washington DC’s Columbia Heights, even here in the Pioneer Valley’s Northampton.

And then there are those areas which never gentrify, which is most of them. According to an analysis by Governing Magazine, only 8% of census tracts gentrified since the 2000 census. In those places, the millennial white collar hipsters never appear. Here in Massachusetts, think Fitchburg, think Orange, think Springfield, and yes, think Holyoke.

boston census tracts
Map of gentrified Boston census tracts since 2000. Source: Governing Magazine

So given the fact that there are basically two pathways for an impoverished neighborhood with blighted buildings and a lack of services (skyrocket into unaffordability or languish in poverty and disinvestment), economic development efforts leave residents – especially poor residents, especially people of color – with only bad options. But time and again, I have seen residents opt for the status quo because at least they won’t be displaced. And who can blame them?

Will Hampden County Ever Gentrify?

Of course, I’m not sure that Hampden County is going to be struggling in any significant way with gentrification in the near future. There may be certain places, like Longmeadow or maybe Atwater Park in Springfield or the Holyoke Highlands where housing affordability is a widespread issue.* But the population in these urban areas has declined from their record highs, meaning that the housing stock far exceeds the demand for housing. And then there are the numerous redevelopment opportunities for housing afforded by the abandoned mill buildings sprinkled all over the valley.

In short, I think there will be enough housing to keep prices pretty low for a long time.

population chart
Population of Springfield and Holyoke. Source: US Census Bureau

So I was glad that we went through the exercise of identifying important place. And I’m glad that we thought about how to mark where these important places are. And I’m certainly glad that we’re already thinking about what it will mean if we succeed and the “secret” of Holyoke gets out (that it’s a wonderful, diverse community with many excellent cultural, architectural, and natural resources). Gentrification is a legitimate concern. However, and I could be wrong here when I say this, but I think we’re a long way off from needing to deal with it in any big way here in Hampden County. 

*I should note that housing affordability will always be a major issue for households in or near poverty. When I talk about gentrification, I am specifically referring to housing affordability problems expanding beyond households in poverty to impacting middle-income households as well.