Assessors tax classification hearing

Posted on November 27, 2018 | 2 Comments

The Board of Selectmen received the report below today from the Assessors for the tax classification hearing that will occur this evening as part of the select board meeting.  Towns in Massachusetts are permitted to charge the commercial and industrial taxpayers property taxes at a rate up to 50% higher than the residential rate (called a split tax rate), but Medfield never has.

Medfield’s reality is that because so little of our tax base is other than residential, even if we were to opt for the 50% higher tax rate on commercial and industrial properties, while the commercial and industrial properties taxes would go up by a lot (50%), the home owner would see little change – scant benefit to homeowners, while strong fiscal policy discouragement for any commercial/industrial uses.  For that reason Medfield has always kept a single tax rate.  See a PDF of the analysis here – 20181127-Assessors-tax classification hearing analysis

BOARD OF ASSESSORS Fiscal 2019 Classification Hearing Purpose The purpose of the classification hearing is for the Board of Selectmen to determine the allocation of the local property tax to be borne by the four classes of real property and personal property for Fiscal Year 2019. It is the responsibility of the Selectmen to adopt a residential factor. The residential factor is used to determine the percentage of the tax levy that is applied to each class of real and personal property. The Board of Assessors than applies these percentages to each property class (M.G.L. Chapter 40, section 56). It is the responsibility of the Assessors to provide the Selectmen with relevant information and to discuss the fiscal effects of possible alternatives. Tax Rate The tax rate is the tax levy divided by the town's taxable valuation. This is known as the Uniform Tax Rate. Under this rate each class of property pays a share of the tax levy equal to its share of the total town value. A. Residential Factor Adopting a residential factor of "1" will result in the taxation of all property at the same rate. However, the law allows the Commercial/Industrial/Personal Property, tax rate for the Town to be as high as 50% above the uniform ratei and the Residential/Open Space, R/O, to be as low as 65% of the uniform rate. B. Analysis of surrounding cities' and towns' FY18 tax rates: Town Res. Rate CIP Rate Residential% Dover 12.84 12.84 97.0783 Norfolk 18.62 18.62 92.2049 Millis 18.02 18.02 89.988 Sherborn 19.30 19.30 95.4188 Walpole 15.27 20.33 83.0286 Westwood 15.09 29.30 74.3145 Medfield 17.03 17.03 94.3434 C. History of differential tax rates in Medfield Historically Medfield has always maintained a single tax rate. Shifting the tax onto the Commercial, Industrial and Personal properties would create a tax burden for those properties, while the Residential properties would only benefit from a small savings. E. F. D. Tax Rate Scenarios Overall Scenario Commercial/Industrial/Personal Properties projected share of the tax levy: $2,621A38 Last Year's CIP share= $2,487,906 With a 10% shift With a 25% shift With a 50% shift $2,883,582 $3,276,798 $3,932,157 tax dollars would be paid by CIP tax dollars would be paid by CIP tax dollars would be paid by CIP Individual Scenario For a $600,000 home & commercial property based on an estimated tax rate of $17.87, Residential Commercial $600,000 $600,000 Single rate $10,722 $10,722 10% shift $10,660 $11,794 Difference ($62) +$1,072 25% shift $10,567 $13,403 Difference ($155) +$2,681 50% shift $10,412 $16,083 Difference ($310) +$5,361 Historical Commercial/ Industrial/ Personal Data: Year CIP% Tax Dollars Tax Le~ Tax Rate 2014 5.6966 $2,099,404 36,853,583 16.12 2015 5.4819 $2,100,312 38,320,353 16.04 2016 5.4950 $2,287,440 41,627,344 16.75 2017 5.4753 $2,339,247 42,723,595 16.89 2018 5.6566 $2,487,906 43,982,483 17.03 2019 5.4694 $2,621,438 47,928,863 17.87 Residential Category Single Family Averages Year SPA Value Tax$ 2014 569,600 9,182 2015 595,600 9,553 2016 615,600 10,311 2017 623,400 10,530 2018 634,700 10,809 2019 658,400 11,766 Please note: For purposes of this hearing the tax rate is an example only. The final rate will be determined after the Department of Revenue has approved the Tax Recap. I ~ ! ri I r20181127-Assessors-tax classification hearing analysis_Page_220181127-Assessors-tax classification hearing analysis_Page_3

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2 responses to “Assessors tax classification hearing”

  1. Nic Scalfarotto | November 27, 2018 at 11:40 am |

    Accepting that developing differential tax rates would not provide benefit to home owners because there is a small industrial base, a plan to address the lack of such a base needs to be developed and communicated to residents.

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    • Selectman Osler "Pete" Peterson | November 27, 2018 at 12:15 pm |

      As a new selectman, my first search was for businesses that wanted to locate in town, and when that did not seem a likely result, I have turned to having a town policy of building housing that this revenue positive to the town.

      We do know that people want to live in town, but mainly not build businesses here. Therefore, the town can make money and reduce our taxes by building the right kind of housing, such as Old Village Square (42 units paying over $600K/year in taxes, with one school child the last time I heard) or the two Larkin brothers projects (Glover Place off North Street and Chapel Hill on Hospital Road, again both with few school children).

      Search my blog for the analysis that Kathy McCabe, the consultant to the Medfield State Hospital Master Planning Committee, did of the potential taxes to the town from leasing the land to build 42 units of senior housing on the town owned lot 3 on Ice House Road versus leasing to a commercial facility, and the town netted about double the taxes from the residential use over the sports complex.

      I think that many of the friendly 40B projects that we are currently allowing in order to be in safe harbor, will be revenue positive. Statistically, we will likely average about 1.5 school children per in single family houses, while we will likely average 0.15 school children per unit in multifamily housing. So multifamily housing may be revenue positive for the town.

      Additionally, the town is mainly single family homes, so we really do not need any more single family homes, while we do not have a sufficient variety of other housing opportunities for residents, especially for seniors. Current proposals in the pipeline will assist at filling in that gap:
      8 units on North Street (two developments)
      36 units on Dale Street
      16 units on Adams Street, age restricted
      42 units at the Rosebay, age restricted
      56 units at The Legion site

      Such diversification of the tax base can only accomplish so much with respect to reducing our individual tax bills. The other issue with which we need to deal is the town’s willing to spend, witness our vote at the last annual town meeting (ATM) to increase our tax bills by about 10%, over the objections of the Board of Selectmen and the Warrant Committee.

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