Tax Classification Hearing Fiscal Year 2013 Board of Selectmen December 17, 2012

Agenda Overview – FY2013 Triennial Certification Year  What is tax classification?  What is happening to the town’s total valuation?  What does it mean? Tax Rate Options & Implications  Board of Assessors’ Recommendation Board of Selectmen Vote  Tax Classification  Residential Exemption  Small Commercial Exemption

What is Tax Classification? Allows communities to have different tax rates for different classes of property:  Residential  Open Space  Commercial, Industrial and Personal Property (CIP) The statute provides a maximum allowable portion of the tax levy (up to 150%) to be borne by the CIP classes.

Key Concepts No additional tax dollars are raised Policy decision to artificially shift tax burden from one class to another Since 1979 Northborough has not voted to artificially shift the tax burden Issue of fairness and sustainability What is Tax Classification?

What is happening to values? Total valuation is up $12.6 million in FY2013 to $2.49 billion New Growth valuation in FY2013 certified at $92.9 million Once again, significant benefit from economic development

New Growth Values FY2013 New Growth Values (in millions) Residential $16.6 Commercial $55.4 Industrial $ 2.2 Total Real Estate Growth $74.2 Personal Property $18.7 Total New Growth $92.9

New Growth Values New Growth in FY13 certified at $92.9M. FY2013 captured virtually all of Northborough Crossing New Growth Future New Growth is expected to decline $92.9M New Growth History ($M) $81.4M

Single Family Homes Actual FY2013 tax impact on an average single family home will be $67, or $126 less than estimated at Town Meeting Board of Selectmen’s goal to minimize tax increase results in FY2013 excess levy capacity of $2.67 million

Single Family Homes

Top Taxpayers TaxpayerDescription FY2013 Value Proposed FY2013 Tax 1Northborough Retail Properties LLCNorthborough Crossing106,730,8001,719,433 2AVB Northborough, Inc.Avalon Bay Communities53,129,660855,918 3Cabot II MA1MO1 MO2 & MO4 LLCWhitney St & Forbes Rd30,007,100483,414 4Massachusetts Electric Corp.National Grid28,147,440453,455 5Iron Mountain Information Mgmt.176 Bearfoot Road24,236,810390,455 6Norton CompanySaint-Gobain Corp19,224,900309,713 7MM Industrial Beeman Rd LLC1 Beeman Rd (FedEx Smart Post)19,135,500308,273 8Realty Associates Fund IX LP55 Lyman St (FedEx Ground)16,713,400269,253 9GN11 Forbes Rd. LLCGenzyme Corporation16,580,400267,110 10VerizonTelecom – Personal Property12,515,500201,625 11Newcorr Realty LLC66 Lyman Street12,199,060196,527 12Nationwide Health (now BWP)Beaumont Nursing Home11,177,800180,074 13Wal-Mart Real EstateWal-Mart11,005,250177,295 14Northborough Land Realty TrustGuitierrez Company8,864,700142,810 15Nboro Realty LLCA Duie Pyle, Inc8,844,700142,488

Assessed Value by Class FY% Residential% CIP

Average Value/Bill History

Key Summary Points Town’s total valuation has increased to $2.49 billion Tax impact on an average single family home minimized Economic development successfully diversified tax base, top taxpayers expanded and reduced reliance on residential properties

Tax Rate Options & Implications Dan Brogie, Principal Assessor Arthur Holmes, Assessor James Dillon, Assessor

Split Tax Rate at 5% shift -Means a savings of $104 for the average single-family home taxpayer and an increase of $1,191 and $1,971 for the average commercial and industrial taxpayer, respectively. Any shift amount does NOT raise additional revenue. Split Tax Rate Scenarios Single Rate FY2013Tax Property TypeAssessed ValueRateBill Single Family Home 383, $ 6,181 Condominium 234,689 $ 3,781 Commercial 1,470,760 $ 23,694 Industrial 2,433,095 $ 39,197 5% Shift FY2013Tax Property TypeAssessed ValueRateBill$ Difference Single Family Home 383, $ 6,077 $ (104) Condominium 234,689 $ 3,717 $ (64) Commercial 1,470, $ 24,885 $ 1,191 Industrial 2,433,095 $ 41,168 $ 1,971

Residential Exemption Allowed only on residential property that is a primary residence of the taxpayer. If adopted, the residential exemption may be up to 20% of the average assessed value of all residential parcels. Accepting this option changes the residential tax rate only. Typically, this exemption is adopted in areas with a low rate of owner occupancy. Any owner occupied home assessed at $412,000 or higher would pay more with the exemption than without. Without ExemptionWith 10% Assessed Value Tax RateTax BillExemption Amount Net Taxable Value Tax RateTax BillDifference $300,000 $16.11 $4,833 $35,510 $264,490 $17.63 $4,663($170) $383,646$6,181$348,136$6,138($43) $500,000$8,055$464,490$8,189$134 Average

Small Commercial Exemption Small Commercial Exemption (SCE) May exempt up to 10% of the value on commercial buildings under one million dollars in value and with an average annual employment of not more than 10 employees. If adopted, the taxes will be shifted to other commercial, industrial properties that do not qualify for this exemption. The exemption is for the property owner, not the small businesses.

Board of Assessors’ Recommendations 1. Maintain a single-tax rate 2. Do not adopt: Residential Exemption Small Commercial Exemption Any Questions?