Author: Municipal Finance Legal Guidance
This month's Ask DLS features frequently asked questions concerning recent publications and the reservation of funds. Please also refer to Bulletin 2025-3 and Bulletin 2025-4. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
Can municipalities reserve PFAS settlement proceeds?
Yes. As it relates to PFAS settlement proceeds for Public Water Systems pursuant to 3M and Dupont legal settlements, the Director of Accounts has determined that cities and towns that receive PFAS settlement proceeds may treat these receipts as follows:
- The proceeds may be placed in a special revenue fund and used, with appropriation, for any purpose required pursuant to the settlement agreement or, if no restriction exists, any legal purpose allowed under Massachusetts General Law.
- The proceeds may otherwise be closed to the general fund at year end and certified as free cash during the free cash during the free cash certification process.
If you have any further questions, please contact your BOA field representative.
If municipalities charge 16% interest for tax title redemptions, can they reserve a portion of the payment in case it is later determined that the interest rate should have been 8%?
Yes. If a municipality follows the initial DLS guidance concerning the tax title interest rate for redemption, i.e., charging 16% if the tax title was entered into before November 1, 2024, then DLS will not oppose a community reserving in an interest-bearing agency account the difference between charging 16% and the calculation described in Leominster v. Corbett, 22 TL 000447 (2025) (charging 16% until November 1, 2024 and 8% thereafter). That way, whichever interpretation ultimately becomes binding, municipalities can either provide the difference to taxpayers or to the general fund. However, municipalities should be aware that the interest accrued on said difference in the agency account may not cover any prejudgment or postjudge interest should the matter be litigated.
Municipalities may also follow the redemption calculation described above in the Leominster case, i.e., charging 16% until November 1, 2024 and 8% thereafter. DLS’ understanding is that should this calculation be utilized, because it is a mid-fiscal year change, treasurers will need to either calculate the same by hand or receive updates to their internal systems. Municipalities will seemingly not be able to recover amounts owed if this calculation is utilized and the court ultimately determines that the tax title interest rate is 16% if the tax title was entered into before November 1, 2024.
Relatedly, if a municipality seeks to foreclose the right of redemption in Land Court, it is important to note that the Land Court has advised, in the above mentioned memorandum dated April 18, 2025, that: “No later than Tuesday of the week of the scheduled hearing on the Tax Lien Motion for the Entry of Finding, Plaintiff must eFile with the court an updated principal and interest balance of the tax title account that is calculated in accordance with the Memorandum and Order issued by Judge Foster on April 3, 2025 in case 22 TL 000447.” As such, the municipality must seemingly follow the Leominster case calculation when foreclosing through the Land Court.
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| Date published: | June 5, 2025 |
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