Frequently Asked Questions about the Public Safety Building Debt Exclusion

This FAQ is designed to provide the public with balanced and comprehensive information on the debt exclusion question that will be on the November 7, 2023 election ballot.

Information on debt exclusion requirements and procedures is generally drawn from publications of the Massachusetts Department of Revenue. More information is available on Mass.gov

What is a debt exclusion?

A debt exclusion is a temporary increase in the tax levy that allows a City to borrow for a specific capital purpose. Unlike an override, which is a permanent increase in the tax levy, the additional amount for the payment of debt is added to the levy limit for the life of the debt only.

How does a debt exclusion question get on the ballot?

A debt exclusion ballot question can only be placed on an election ballot by a two-thirds vote of the City Council and requires the Mayor’s approval.

What will the ballot question for the Melrose Public Safety Buildings say?

The form of all Proposition 2 ½ ballot questions is dictated by state election law (M.G.L. c. 59, § 21C). Unlike an override, a ballot question for a debt exclusion does not include a specific dollar amount. The language and form of a ballot question for a debt exclusion leaves only a portion to be completed by the city/town relative to the purpose for the borrowing. The City Council and the Mayor have agreed on the language that will be placed before the voters on November 7, 2023, as follows:

Shall the City of Melrose be allowed to exempt from the provisions of proposition two and one-half, so called, the amounts required to pay for the bonds issued in order to pay costs for design, engineering, construction, site improvements, equipping, and furnishing of a renovated Melrose Central Fire Station, a new Melrose Highlands Fire Station, a new Melrose East Side Fire Station and a new Melrose Police Station, and all other costs incidental and related thereto? 

Yes__________________________     No__________________________

Where is there information available on what the project to renovate and replace the public safety buildings will involve? 

The final report of the Mayor's Public Safety Building Committee is available here. It contains the committee's review of the 2017 feasibility study, an assessment of need and proposed solutions for all four public safety buildings, proposed project sequencing and construction phasing, as well as preliminary cost estimates. Hard copies of the Public Safety Building Committee final report are available for review at the Melrose Public Library and at the Mayor's Office in City Hall.

Do we know how much the public safety buildings will cost?

The work done by the Public Safety Building Committee indicates that the cost of doing all four public safety buildings is approximately $130 million. 

Who will get to decide if this question passes or not?

The voters of Melrose will decide if this question passes. The debt exclusion question will appear on the November 7, 2023 election ballot, and a majority of voters will have to vote "Yes" in order for it to pass. You must be a registered voter in Melrose in order to participate in this election. The deadline to register to vote in this election is Friday, October 27, 2023 at 5:00 pm. More election information is available here. To find out if you are registered to vote, visit: https://www.sec.state.ma.us/VoterRegistrationSearch/MyVoterRegStatus.aspx. 

If the debt exclusion question passes, what will happen next?

If the ballot question is passed by the voters, the first step would be for the City Council to appropriate funds or authorize borrowing to pay for the design services needed to move the project forward. A qualified architectural firm would be hired by the City to provide specific designs and an accurate and complete cost estimate for the entire project. Once the project costing was complete, the City Council would then need to vote with a two-thirds majority (8 of 11 councilors) to approve a bond authorization in order to borrow the funds to pay for the project.

If the question passes, could the City wind up borrowing more than $130 million for this project?

A debt exclusion covers debt service on the amount of borrowing authorized or contemplated for the stated purpose at the time of the election. Debt service includes payments of principal on permanent debt and interest on permanent and temporary debt. The debt service on any additional borrowing above the amount fixed at the time of election is not covered unless (1) it is a modest amount attributable to inflation, new regulatory requirements or minor project changes, or (2) another debt exclusion is approved by the voters. It cannot be due to a change in scope from the project originally approved by the electorate at the time the debt exclusion was approved.

The debt service on any additional borrowing above the amount fixed at the time of election could possibly be increased but only for the stated “purpose or purposes described in the debt exclusion” and must also meet specific standards required by the DOR. These include, but are not limited to 1) the filing of an application with the DOR [Form DE-2]; 2) signed by the City Council President and Mayor; 3) approved by a vote of the City Council; 4) containing the specific dollar amount of the proposed increase; and 5) a report from an architect, cost estimator or owner’s project manager’s report that contains a description of the circumstances requiring an increase in the cost. The application would then be submitted to the Director of Accounts of the DOR for approval or disapproval. Further information can be found in the “Informational Guideline Release  (IGR) No. 22-14” of the DOR.

What will the impact be to taxpayers if the ballot question passes?

At the City's current average single-family home value of $733,465, the estimated impact to the average homeowner would be approximately $875/year over the life of the bond, which is expected to be 30 years. The City's financial advisors, Hilltop Securities, have prepared a debt model that shows the estimated tax impact of the debt exclusion as different phases of the public safety buildings moved forward. [1]. These are estimates - the actual tax impact will vary depending on various economic factors over the next 30 years.

How can a residential property owner calculate how much this debt exclusion would cost them in additional property taxes each year?

• Step 1: Find the assessed value of your home on your tax bill or by looking it up in the Assessor's database here.
• Step 2: Divide your property value by 1,000, then multiply by $1.19 to get the estimated additional tax you would pay if the debt exclusion passes.

Example calculation: for a residential property worth $500,000, a  property owner would pay an additional $595 per year ($500,000 ÷ 1000 = 500 x $1.19 = $595).

When would the increase in taxes go into effect?

According to the debt model, smaller increases in property taxes would start in 2025 when payment on short-term borrowing for the project is expected to begin. The amount added to taxes would then grow over several years as long-term borrowing for the project got underway: the repayment of the first phase of long-term borrowing would begin in 2027, the second phase in 2028, and the final phase in 2030, when the average excluded amount is estimated to reach approximately $875/year. It would stay at this level until 2055 and then decline until the debt exclusion ends in 2059.

If this is a "temporary" increase in taxes, how long will taxpayers be paying for this project?

If passed, this debt exclusion is expected to last for 30 years, which is the expected life of the bonds that the Ciy will have to pay for. This is similar to a homeowner taking out a 30-year mortgage.

When was the City's last debt exclusion? If it still on the books, how much is it costing taxpayers?

The voters of Melrose approved a debt exclusion in 2003 to borrow funds for the Melrose Veterans Memorial Middle School building project. Borrowing began a few years later with a 20-year term, which is still being paid for by taxpayers. The current tax impact for the average single-family homeowner of the Middle School debt exclusion is approximately $200/year. The last major debt payment for the Middle School project will be in 2028, and the debt will be fully paid off in 2029. This excluded debt is shown under "column (a)" in the debt model provided by Hilltop Securities.

Is there an exemption from this debt exclusion for seniors or people on a fixed income who might not be able to afford the increase in their property taxes?

No. There are no additional exemptions available for defraying the cost of a debt exclusion beyond those that a taxpayer might already qualify for. Information on real estate tax exemptions is available from the Assessor's Office or visit their webpage.