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Fiscal Year 2010 Tax Classification Hearing Jan Dangelo, MAA Director of Assessing November 16, 2009.

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Presentation on theme: "Fiscal Year 2010 Tax Classification Hearing Jan Dangelo, MAA Director of Assessing November 16, 2009."— Presentation transcript:

1 Fiscal Year 2010 Tax Classification Hearing Jan Dangelo, MAA Director of Assessing November 16, 2009

2 The purpose of the classification hearing is to determine the percentage share of the tax levy that each class of property will pay. The Board of Selectman must determine a residential factor. The residential factor is used by the assessors to determine the tax levy paid by each class of property and calculate the tax rate. Fiscal Year 2010 Tax Classification Hearing

3 Property Assessment Review This year for the third consecutive year, there is a shift in value from residential to commercial. As a result, commercial taxpayers will pay a larger share of the tax levy. Overall, single family homes decreased slightly this year for the second year in a row. Small condominiums had the largest decrease. The average single family assessment dropped from $471,000 to $452,620.

4 Commercial and mixed use property values increased. Commercial condos, small retail, office and various other commercial buildings continue to perform well. Industrial properties also increased after a year of virtually no change. Property Assessment Review

5 New Growth was certified at $193,644,320. Condominiums contributed the largest increase. This is a direct result of the condos at Nouvelle, South Ave, and the armory location. Single family home new growth has slowed. Telecommunication companies and retail properties contributed to our personal property new growth of $12,182,950. New Growth

6 The maximum levy allowed for fiscal year 2010 is $77,024,748 Maximum Allowable Levy

7 Levy Limit Calculation TO CALCULATE THE FY2010 LEVY LIMIT A. FY2009 Levy Limit from I. 72,154,997 A1 ADD Amended FY2009 Growth0 B. ADD ( II A + II A1 ) X 2.5%1,803,875 C. ADD FY2010 New Growth2,147,515 D. ADD FY2010 Override E. FY2010 Subtotal76,106,387 F. FY2010 Levy Ceiling164,890,904 $ 76,106,387 FY2010 Levy Limit TO CALCULATE THE FY2010 MAXIMUM ALLOWABLE LEVY A. FY2010 Levy Limit from II. 76,106,387 B. FY2010 Debt Exclusion(s)918,361 C. FY2010 Capital Expenditure Exclusion(s) D. FY2010 Other Adjustment E. FY2010 Water / Sewer F. FY2010 Maximum Allowable Levy $ 77,024,748 MAXIMUM LEVY

8 This years excess levy capacity is $53,673.89 This is the difference between the maximum levy and our actual levy. We are at our maximum allowable levy, since increasing the tax rate by one cent would exceed the limit. Levy Limit – Actual Levy = Excess Levy Capacity Excess Levy Capacity

9 The minimum residential factor is 84.3758%. This is the factor that would split the tax rate toward commercial at 150%. This would increase the commercial tax rate by $5.83 per thousand and reduce the residential rate by $1.82 per thousand. A residential factor of 1.00 will maintain a single tax rate. A residential factor below 1.00 will result in a split tax rate. Residential Factor

10 Classification Impact Examples Tax Levy Shift TypeTypical PropertyAssessmt100%110%120%130%140%150% ResidCondo250,000$2,917.50$2,827.50$2,735.00$2,645.00$2,552.50$2,462.50 ResidSingle or Multi500,000$5,835.00$5,655.00$5,470.00$5,290.00$5,105.00$4,925.00 ResidSingle Family750,000$8,752.50$8,482.50$8,205.00$7,935.00$7,657.50$7,387.50 ResidSingle Family1,250,000$14,587.50$14,137.50$13,675.00$13,225.00$12,762.50$12,312.50 ResidSm. Apartment1,500,000$17,505.00$16,965.00$16,410.00$15,870.00$15,315.00$14,775.00 ResidLg. Apartment15,000,000$175,050.00$169,650.00$164,100.00$158,700.00$153,150.00$147,750.00 CommercGas Station750,000$8,752.50$9,630.00$10,500.00$11,377.50$12,255.00$13,125.00 CommercSmall Retail1,250,000$14,587.50$16,050.00$17,500.00$18,962.50$20,425.00$21,875.00 CommercOffice Bldg40,000,000$466,800.00$513,600.00$560,000.00$606,800.00$653,600.00$700,000.00 CommercRetail Mall405,000,000$4,726,350.00$5,200,200.00$5,670,000.00$6,143,850.00$6,617,700.00$7,087,500.00 Mixed UseResidential w/ Office1,250,000$14,587.50$15,093.75$15,593.75$16,093.75$16,593.75$17,093.75 Residential Change-3.08%-6.26%-9.34%-12.51%-15.60% Commercial Change10.03%19.97%29.99%40.02%49.96% Mixed Use Change3.47%6.90%10.33%13.75%17.18% Residential Factor10.96870.93750.90620.87490.8437 0.012840.0140.015170.016340.0175

11 The board may also adopt a residential exemption of up to 20% of the average residential value. The average residential value is $404,679. The residential exemption shifts the tax burden within the residential class. It does not split the tax rate. Non-owner occupied and many residential properties would actually pay a higher tax. The residential exemption works well in communities with a high percentage of non-resident property owners such as the Cape and communities with a large number of apartments and rental units. Natick does not have a high percentage of non- resident owners. Residential Exemption

12 Residential Exemption Examples Selected Exemption No Exemption5.00%10.00%15.00%20.00% Residential Exemption$0$20,234$40,468$60,702$80,936 Residential Tax Rate11.6712.1912.7613.3814.07 Commercial Tax Rate11.67 AssessTax Owner Occupied Home400,000.004,668.004,629.354,587.634,539.814,489.23 Commercial400,000.004,668.00 Non Occupied Home400,000.004,668.004,876.005,104.005,352.005,628.00 Vacant Land400,000.004,668.004,876.005,104.005,352.005,628.00 Owner Occupied Home800,000.009,336.009,505.359,691.639,891.8110,117.23 Commercial800,000.009,336.00 Non Occupied Home800,000.009,336.009,752.0010,208.0010,704.0011,256.00 Apartment2,500,000.0029,175.0030,475.0031,900.0033,450.0035,175.00 Commercial2,500,000.0029,175.00

13 Fourteen communities adopted a residential exemption in 2009. BarnstableEverettSomerville BostonMaldenTisbury BrooklineMarlborough Waltham CambridgeNantucket Watertown ChelseaSomerset Owner occupied condominiums in West Natick would benefit most from a residential exemption. Residential Exemption

14 The board may also approve a small commercial exemption of up to 10%. This is only available to businesses that employ less than 10 people annually (as certified by the Department of Labor and Workforce Development) and are valued less than $1,000,000. All businesses at the property must qualify. Approximately 75 properties would qualify. Small Commercial Exemption

15 Six communities adopted a small commercial exemption in 2009. AvonSomerset Bellingham Westford Braintree Wrentham Adopting a small commercial exemption without classifying taxes would result in an effective tax rate for some commercial properties that is less than the residential rate. Small Commercial Exemption

16 Single Family Tax Bill Comparison

17 Naticks average single family tax bill increased 47.9% since 2001. The statewide average increase is 50.4%. The average increase of the area communities is 61.1%. Sixteen of the seventeen area communities increased more than Natick. Average Single Family Tax Bill Comparison

18 Classification Percentages

19 This year we experienced a value shift toward commercial. Commercial property owners will pay a greater share of the property tax in FY2010. The board must adopt a residential factor. A residential factor of 1.00 will result in a single tax rate. Conclusion

20 A residential factor less than 1.00, will result in a split tax rate. You may also adopt a residential exemption. You may adopt a small commercial exemption. Conclusion

21 Questions Fiscal Year 2010 Tax Classification Hearing ?

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