Westfield

Utility board hikes PILOT payment

The Municipal Light Board voted to approve a payment in lieu of taxes (PILOT) to the city that put the utility in an exclusive class.
The MLB approved a payment to the city of $442,444 for the 2013 fiscal year which begins July 1. That is $41,643, a 10.4 percent, increase over the $400,801 payment for the current fiscal year.
Daniel Howard, general manager of the Westfield Gas & Electric Department, said the PILOT is generated based upon a formula adopted by the board in 2004 during the administration of former Mayor Richard K. Sullivan and modified in 2007.
The formula is based upon a 70 percent assessment of the municipal utility’s physical plant book value, a submission required annually by the state Department of Energy Resources.
The plant value is set at $24,818,026. The 70 percent calculation of that value is $17,372,618.
That $17,372,618 figure is then multiplied by the current commercial tax rate which is $30.36 per $1,000 of value. That calculation results in a gross PILOT of $527,444.
The formula allows the department to deduct the cost of certain services voluntarily provided to the city, such as maintenance of the city’s traffic lights. The allowed deductions total to $85,000.
The PILOT will be paid to the city in monthly installments of $36,870.
The WG&E estimates other benefits, such as the use of the utility’s $10 million reserve kept in the city treasury, and used by the city to eliminate the need for short-term borrowing. The city also keeps the interest on that reserve money.
The utility estimates a total of $1.5 million in cash and services to the city, which positions the municipal utility as the city’s largest “taxpayer,” in the city according to Howard ‘s report to the MLB.
MLB Chairman Thomas Flaherty said the PILOT is increasing annually for a number of reason.
“It definitely is increasing,” he said, “but so is the value of the plant and the city’s tax rate.”
“When I came onto the board, the PILOT was about $200,000 a year. The PILOT we approved this year of $442,444 puts the department in the top five taxpayer bracket for the city,” Flaherty said.
That payment in lieu of taxes is exceeded only by the taxes paid to the city by C&S Wholesale Grocers, the East Main Street strip malls, HD Westfield MA Landlords LLC and National Industrial Portfolio.
The impact of the pilot on the average gas customer is $11.06 per year and on the average electrical customer of $23.44 a year.

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