By Michael Gaffney, candidate for Worcester City Councilor at Large
The City of Worcester needs a new approach to doing business and leaders with fresh ideas.
The City of Worcester is replete with empty commercial buildings and store fronts that are abandoned. Commercial property owners now choose to demolish their buildings and turn them into parking lots or simply refuse to update their retail establishments. Other than Worcester North, retail has largely left the City for nearby towns.
The commercial tax rate in the City of is in excess of thirty percent (30%.) Surrounding towns have a commercial tax rate of around seventeen percent (17%.) It is clear why businesses have left and others choose not to open in the City.
The ideas to resolve the lack of commercial business in the City of Worcester have been limited to massive central planning projects such as the Theater District (to which citizen input was ignored) or the time-worn notion that the City of Worcester just needs to promote itself better. For decades the City of Worcester’s politicians have chased the latest gimmick that will “revitalize” the City. Past costly projects that would “save” the City have included the Worcester Common Fashion Outlets, the forgotten Arts District project and the Union Station project that is now a multi-million dollar banquet facility with an underutilized parking garage.
Where we currently have over a billion dollars in unfunded pension and pension health liabilities, another billion dollars in EPA requirements to benefit the Narragansett Bay clean up (for those that can afford to live in Newport and Jamestown) and are understaffed in our police department, fire department, and other services we simply cannot cut commercial tax rates. Our residential tax rate is nineteen percent (19%) while surrounding towns are around seventeen percent (17%.) The continued increase in residential taxes will result in residents leaving the City as well.
My plan is to focus on growing our tax base and taking a fresh approach to combatting our challenges with commercial growth. Currently, the City immediately increases the assessed value of commercial property as soon as the owner improves it. The owner has to pay increased taxes as well as additional costs to pay off whatever loan they needed to make the improvements in the hopes of attracting tenants. This is a disincentive and a significant driver of the increasing number of buildings in poor condition and abandoned. With the current commercial tax rate, there is little incentive for investment in existing commercial property and inhibits commercial growth in the City.
My plan would give commercial real estate holders an incentive to reinvest in the commercial property by fixing their taxes to the base (current) year for a period of time commensurate with the investment. For example, a commercial real estate holder invests $5 million in a building to improve it for tenants; I would suggest setting the taxable income on the property before improvements for a period of years to justify the return on investment. This will help to improve the building, employ workers to improve the building and bring in commercial tenants to the City of Worcester.
My plan would provide an incentive for owners to improve their buildings, but would also spur commercial growth while not lowering the City’s commercial tax revenue as it would remain the same, and then grow significantly in just a few short years. Right now, the City of Worcester’s commercial base is retracting and being bought up by non-taxpaying non-profits. This trend must be reversed or the City will not be able to maintain its debt obligations or services.
As commercial tenants come to the City, they employ workers, buy local goods, and create demand for more commercial real estate that then brings more tax revenue. Further, by creating jobs, people have a place to work and earn money, often leading them to purchase homes and pay taxes. They will frequent local businesses while living here. Finally, we may actually keep some of our transient college students in the City when we can offer them post-graduation employment.
Let’s take a new approach and bring fresh ideas to grow the City of Worcester and benefit our residents.