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Top 15 Changes in the New Municipal Modernization Bill

New Municipal Modernization law generally reduces red tape.

In what is largely a win for municipalities, the Legislature unanimously passed the Municipal Modernization Act on the last day of the 2015-2016 session. The Bill should improve municipal administration, mostly over financial matters, by reducing red tape and a number of obsolete laws.

Many of these changes will go into effect in early November, but some apply retroactively, and the implementation of others is delayed until 2017.

Some high-profile proposed changes were not included in the final version of the Bill. Most notably, legislators dropped a liquor license provision that would have allowed municipalities, rather than the state, to set quotas on the number of bars and restaurants allowed to serve alcohol. That measure, as well as a comprehensive overhaul of the zoning code, may well reappear in next year’s session.

Here are the most important takeaways for municipalities:

  1. Rolling back DOR financial supervision. The Department of Revenue (DOR) is no longer required to audit county treasurers’ accounts, or make unannounced annual visits county financial officers. In addition, it may no longer advise county commissioners or personnel boards on employment matters, or petition the court to remove neglectful treasurers from municipal office.

Every five years, rather than every three, DOR must review whether municipalities are assessing the full and fair value of their taxable property. But municipalities no longer need DOR concurrence to declare a building “abandoned” for tax purposes. Nor do municipalities need DOR authorization to assess taxes on real property whose present ownership is unknown.

Currently, municipalities need DOR’s Director of Accounts approval to pay final court judgments greater than $10,000. Under the new law, they will be able to pay court judgments without appropriation, provided they have certification of municipal counsel.

The new law also makes clear municipalities may pay  final judgments adjudicated by agencies, rather than courts.

  1. Requiring municipal audits.  The flip side of decreased DOR oversight is that municipalities must now commission periodic audits of their accounts using private accounting firms and DOR standards. Previously, towns and cities could ask DOR to conduct such audits, but were not required to do so.
  1. Adjusting public procurement practices.  The cost thresholds in the procurement laws have changed.

For supply and service contracts procured under G.L. c. 30B, the following schedule now applies:

  1. Contracts for less than $10,000 may be awarded using sound business practices.
  2. Contracts between $10,000 and $50,000 (formerly $35,000) may be awarded after soliciting three quotes.
  3. Contracts for more than $50,000 shall be awarded in accordance with Chapter 30B’s competitive bidding process.

For public construction (vertical) contracts:

  1. Contracts for less than $10,000 may be awarded using sound business practices.
  2. Contracts between $10,000 and $50,000 (formerly $25,000) may be awarded after soliciting written quotes.
  3. Contracts between $50,000 and $150,000 (formerly $100,000) shall be awarded in accordance with the competitive bidding process set forth in Section 39M of Chapter 30.
  4. Contracts over $150,000 shall be awarded in accordance with the procedure set forth in G.L. c. 149, §§ 44A to 44H.

For public works (horizontal) projects:

  1. Contracts for less than $10,000 may be awarded using sound business practices.
  2. Contracts between $10,000 and $50,000 (formerly $25,000) may be awarded in accordance with the competitive bidding processes set forth in either G.L. c. 30, § 39M or G.L. c. 30B, § 5.
  3. Contracts over $50,000 shall be awarded in accordance with G.L. c. 30, § 39M.

In addition, procurement officers must now publish invitations for bids on the COMMBUYS system administered by the state operational services division. And specifically as to vertical construction projects, municipalities may now enter into blanket contracts for vendors to perform multiple individual tasks of not more than $50,000 each.

  1. Encouraging tax abatement agreements for affordable housing.  Municipalities can adopt “workforce housing special tax assessment plans” (to be known as WH-STAs) to stimulate middle income housing development. The Bill authorizes municipalities to abate up to 75% of back real estate taxes or up to 100% of outstanding interest and costs for these and other affordable housing sites.
  1. Strengthening emergency funding.  Municipalities are no longer limited in the amount of tax revenues they may appropriate to “stabilization funds,” which may have any lawful purpose. Moreover, they can appropriate particular revenue streams to these funds. Cities can now appropriate 5% (previously 3%) of tax revenues into a reserve fund for extraordinary or unforeseen expenditures.

In addition, municipal departments may now incur liabilities in excess of their appropriations when the Governor has declared a state of emergency, and not only upon a two-thirds vote of the municipality’s governing body. Also, only chief administrative officer approval is needed to authorize snow removal spending in excess of available appropriations – perhaps in a nod to the Winter of 2015.

  1. Streamlining town disbursements. 

Rents.  Municipalities that rent out buildings (other than school buildings) may keep the revenue in revolving accounts and use the revenue to maintain that building without further appropriation, with the end-of-year balance paid into the general fund.

Year-end appropriation transfers.  The Bill eliminates limits on year-end appropriation transfers.

Parking meters.  Municipalities may purchase or install parking meters without further appropriation if it uses meter revenues to do so. In addition, municipalities may use such revenues to establish and fund new Parking Benefit Districts.

Revolving Funds.  The Bill simplifies the establishment of revolving funds (from which departmental expenditures can be made without further appropriation from fees, charges and other receipts of the department).

Under current law, a revolving fund must be re-established prior to each fiscal year by Town Meeting or City Council vote, including specifying programs, receipts, official(s) in charge of spending and total budget amount. Under the Bill, departmental revolving funds can be established through one-time enactment of a bylaw or ordinance, leaving only the total budget amount to annual re-authorization.

  1. Addressing municipal debt.  The Legislature has recast the menu of allowable borrowing purposes, as well as the maximum length of time the municipality may borrow for certain purposes. For example, municipalities may now borrow money for more than one year to pay a court judgment, if approved by the Municipal Finance Oversight Board.

In addition, a municipality’s final payment to satisfy a bond must now be made by the end of the fiscal year in which the bond would otherwise be due. And treasurers no longer need to report to DOR when municipalities satisfy debts.

  1. Funding and managing medical benefits.  Municipalities can establish a Special Injury Leave Indemnity fund to pay for police and firefighter medical leave and expenses. Municipalities and other governmental bodies that adopt (or re-adopt) an “Other Post-Employment Benefits” (OPEB) fund – the assets of which cover solely pensioners’ health benefits – may no longer employ an outside service to hold the monies in the fund, but must appoint an internal body to manage the fund. That internal body can be the treasurer, the retirement board, or a board of trustees. Also, the treasurer may now accept gifts, grants, and other contributions to the OPEB Fund, instead of solely appropriated funds.
  1. Eliminating redundancy in financial staffing.  Towns may now combine treasurer and tax collector positions into one appointed position. And Select Boards may designate one of their members to examine all bills and payrolls, and decide whether or not to pay.
  1. Peer review consulting fees. Under current law, only certain local boards – zoning, planning, conservation and health — may charge applicants fees to compensate for the cost of using outside experts to help evaluate a proposal. The Bill expands this authorization to any municipal permitting board or official.
  1. Special accounts to ensure performance. The Bill authorizes municipalities to create special funds in which to hold refundable financial security to ensure a permit or license holder performs its obligations.
  1. New limits on property tax appeals. Taxpayers will now forfeit appeal rights to the Appellate Tax Board for failure to timely pay “preliminary” tax bills (issued in July/October).  Under current law, appeal rights are forfeited only for failing to timely pay the final tax bill (usually issued in January and due in February/May).  The Bill also clarifies that, for purposes of appeals, the tax payment receipt date is the postmark date.
  1. Reduced taxes on agricultural/horticultural land siting renewable energy. Farmland throughout the state benefits from reduced taxes under G.L. c. 61A. Under the Bill, the favorable tax status may be retained although some of the land may be used for a renewable energy facility if energy is primarily used on site or adjoining property.
  1. Double Utility Poles. Many municipalities have struggled to get telephone and electric utility companies to remove old poles from locations where new poles have been erected, in part because of insufficient coordination among utilities for movement of wires belonging to multiple utilities on the same poles. The Bill requires all utilities to jointly file a report of double pole removal efforts and contemplates that joint committees of the House and Senate will develop a fine structure to incentivize compliance with statutory requirements to timely remove double poles.
  1. Greater control over speed limits.  Without further authority from the state, municipalities may now establish 25 MPH speed limits for any town road in dense residential or business districts, and create 20 MPH safety zones.

In addition to these changes to the General Laws, the bill encourages municipalities to “regionalize.” It does so by directing state agencies to favor applications for funding from municipalities that will partner to use funds.

For more information about the entire list of changes contained in this Bill, please see the Massachusetts Municipal Association’s Section-by-Section summary of the bill here.

 

Our Summer Associate Eva Rasho co-wrote this post.

Photo Creditmichael davis-burchat

About the Author

Kevin D. Batt – Counsel

Kevin represents public clients in general municipal, land use, environmental, energy and construction matters.

Please contact him at (617) 621-6514 or by emailing kbatt@andersonkreiger.com.


Posted In: Municipal Law, Procurement

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