The South Essex Sewerage District (SESD) is responsible for the wastewater treatment of Beverly, Danvers, Marblehead, Peabody, and Salem, in addition to portions of Middleton and Wenham. They collect and treat contaminated water, removing harmful contaminants before releasing the water as outflow. As a paid service, wastewater treatment does not come without a cost to the residents of Salem.
Map of SESD Partner Cities (From SESD Website) and SESD Logo
SESD’s treatment plant is located in Salem. In return, Salem receives $500,000 as compensation for a lack of property taxes, an agreement defined in 1997. This amount has remained constant, even while inflation and property taxes continue to rise. Today, an industrial facility of that size would pay millions of dollars in property taxes to Salem annually. In 2015, it was estimated that the property taxes would be around the $3 million mark. Accounting for inflation, if the land value did not increase between 2015 and 2026, the total amount paid to Salem from SESD in property taxes would have been $42.11 million; instead, they paid $6 million [12 years * $500,000/yr]. That means we essentially paid, through lost revenue from property taxes, at least an additional $36.11 million from 2015-2026 that has not been accounted for in any of the proposals or presentations by the SESD.
Recently, SESD requested an increase in its funding through a special exemption from Proposition 2 ½, legislation preventing the funding for the SESD from increasing by more than 2.5% in a single year. Currently, the amount each community has paid is determined by how much the town used SESD’s infrastructure. This proposal from SESD would be to have additional costs added onto that to cover the infrastructure improvements for the district. Without the proposal, Salem is estimated to pay $5.12 million this fiscal year, and, according to the proposal’s estimates, over the next 10 years (2026-2036) Salem would pay a total of $62.82 million. If the proposal is accepted as it currently stands, Salem would pay SESD an additional $13.08 million over the next 10 years, totalling at $75.9mil, with more additional costs in the following years that were not shown in the February 2026 memorandum. We’d like to note that due to international conflict, this funding might have less purchasing power than when calculated, increasing the costs for all involved.
Table showing projected additional cost to each town each year in the millions.
(Source: February 2026 memorandum)
The table above shows what each town is proposed to pay in addition to the costs of residents’ use. While Salem seems to have the lowest total additional cost out of all the towns {town totals: Beverly: $24.87 million; Danvers: $20.62 million; Marblehead: $21.01 million; Peabody: $23.79 million; Salem: $13.08 million}, when you add the lost property tax revenue, Salem becomes the largest contributor, paying $50.48 million. That is over 2 times the amount of the second highest paying town. That number was calculated under the assumption that the property value does not increase from the 2015 $3 million estimate, and that no inflation takes place between 2026 and 2036. Neither of those things could be true, meaning the true potential financial contribution is even higher.
Indeed, while the idea of an increase in municipal funding was only proposed recently, Salem’s mayors and elected officials have long sought equal treatment for Salem. Our three most recent mayors, Mayor Kim Driscoll, Mayor Bob McCarthy, and Mayor Dominick Pangallo, have all filed home rule petitions to amend the PILOT agreement. Mayor Pangallo originated the push for connecting SESD’s request for Proposition-2 ½ Override Act to an amendment to the PILOT program and to increase board representation for Salem as the host city.
When SESD came to Salem City Council to present on Proposition-2 ½ relief, Pangallo made it clear to all city councilors that this was a perfect opportunity to demand just treatment for Salem.
Following Pangallo’s lead, Councillor at Large Ty Hapworth emphasized in the meeting that the adjustment to the property agreement has been blocked time and time again by the SESD’s Board, which is composed of 1 representative from each town in the district, alongside SESD Board Chair Michael Parsons. He also argued in favor of Pangallo’s proposed increase in Salem’s board representation, stating that Salem, as the host city, deserves two additional seats in the SESD’s board. This would increase Salem’s portion from 1 out of 6, to 3 out of 8.
Addendum (August 6, 2026): We received more information from Mayor Pangallo about his contribution to the PILOT agreement amendment, and felt it was necessary to update the blog to reflect this.
SAFE recognizes the need for infrastructure upgrades, but we agree with the Mayor and Councilor Hapworth, that the residents of Salem shouldn’t bear the burden of an unfair and outdated agreement.
Check out this link to watch the SESD present to the City Council’s Committee of the Whole.
Title Slide of SESD Presentation
As was revealed in the council meeting, Salem’s proposal to hold more board seats and to adjust the property agreement was blocked from even appearing before other City Councils in Beverly, Danvers, Marblehead, and Peabody during the SESD’s presentations. Given the SESD’s current need, Salem has an opportunity to demand just treatment by requesting a legislative change to the board’s make-up and to the PILOT agreement, which has locked us into a 1997 rate for waterfront property valued much higher today.
At its heart, this is an environmental justice issue. Communities that have been historically wealthier are happy to contribute the same amount to SESD’s compensation to Salem as they have since 1997, while showing no interest in achieving fair treatment for Salem. Salem has the lowest median household income of the other municipalities, and yet we have become the primary contributor to a plant we host.
The total additional amount paid and the lost property taxes over the next 30 years will far exceed $100 million—almost like another high school but without a public vote. That is another burden that falls on Salem residents.
Of course, it is impossible to dismiss the financial needs of the SESD. Wastewater treatment plants, including the SESD, are chronically underfunded and plagued by operational challenges and aging infrastructure. The EPA has estimated a national funding gap of 896 billion dollars over the next 20 years for drinking water infrastructure and wastewater. If Salem decides not to support the special exemption, SESD Board Chair Michael Parsons claims “one, we’ll have to make cuts” and two, “we’ll come back again” to ask for more funding.
These challenges were highlighted in a documentary titled Unless Something Goes Terribly Wrong, which was screened at Cinema Salem through a partnership between Ward 1 Councilor Erin Turowski and the SESD. The film tells the story of employees at the Portland Water District in Maine, whom filmmakers documented for a year. They captured moments of humor, relatable challenges and successes, and the human aspect of wastewater treatment.
During the documentary, the Portland Water District experienced a severe challenge when the only landfill that would accept large-scale bio-waste shipments in the state of Maine had to refuse deliveries. Likewise, during the presentation to Salem’s City Council, Parsons revealed “disposal costs have gone up about 7% each year” due to landfills refusing waste, and “at the moment, there’s no indication that that’s going to change…We might be back in 10 years, 7 years.”
The truth is, whatever decision is made regarding the special exemption, Salem faces an uncomfortable challenge. Stephanie Peach, a City Councilor for Peabody, stated for The Salem News, “There’s levels of this that are a necessity. It’s a public service. Just from speaking to colleagues in Beverly and Salem I have no idea where we even find the money.”
Ultimately, this decision to make the arrangement more fair to Salem rests with the state legislature, and it will be up to State Senator Joan Lovely and State Representative Manny Cruz to advocate on our behalf.