Fiscal Year 2013

Tax Classification Hearing

Jan Dangelo, MAA

Director of Assessing

December 10, 2012

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 andcalculate the tax rate.

Fiscal Year 2013

Tax Classification Hearing

Property Assessment Review

Overall, this year residential values were stable and commercial values decreased slightly. Some taxpayers may see a decrease in the assessed value and others an increase. Decreases do not always translate to a tax dollar decrease. Property values are driven by the sales market. Taxes are driven by the Town’s budget.The average single family assessment increased from $432,400 to $433,500.

This is a minimal increase of only $1,100.00.

Commercial, industrial, and mixed use property values have decreased slightly. Again, this year there is a slight shift back to residential properties.

Property Assessment Review

Residential CIP

Fiscal Year 2012

76.634% 23.366%

Fiscal Year 2013

76.7234% 23.2766%

Shift 00.0894% -00.0894%

Classification Percentages

23.2766%CIP

76.7234%Residential

New Growth was certified at $67,088,473. Condominiums contributed the largest residential increase. This is a direct result of the condos at South Natick Hills. Single family home new growth decreased.

Utility companies contributed greatly with $5,592,863 to our personal property new growth total of $7,880,473.

New Growth

The maximum levy allowed for fiscal year 2013 is

$89,341,857

(This includes the debt exclusion of $4,768,302)

Maximum Allowable Levy

Levy Limit CalculationTO CALCULATE THE FY2013 LEVY LIMIT  

A. FY2012 Levy Limit 81,578,625  

A1 ADD Amended FY2012 Growth 21,720  

B. ADD (A + A1) X 2.5% 2,040,009  

C. ADD FY2013 New Growth 933,201  

D. ADD FY2013 Override    

E. FY2013 Subtotal 84,573,555  

F. FY2013 Levy Ceiling  155,724,277 $

84,573,555

 FY2013 Levy

Limit

TO CALCULATE THE FY2013 MAXIMUM ALLOWABLE LEVY

A. FY2013 Levy Limit  84,573,555  

B. FY2013 Debt Exclusion(s)  4,768,303  

C. FY2013 Capital Expenditure Exclusion(s)    

D. FY2013 Other Adjustment    

E. FY2013 Water / Sewer  

F. FY2013 Maximum Allowable Levy $

89,341,857 MAXIMUM

LEVY

This years excess levy capacity is $18,412.00

This is the difference between the maximumlevy and our actual levy. We are at our maximum allowable levy, since increasingthe tax rate by one cent would exceed the limit.

Levy Limit - Actual Levy = Excess Levy($89,341,857 - $89,323,445 = $18,412.00)

Excess Levy Capacity

The minimum residential factor is 84.8308%.

This is the factor that would split the tax rate toward commercial up to 150%. This would increase the commercial tax rate by $7.18 per thousand and reduce the residential rate by $2.17 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

Classification Impact Examples

Typical Property Assessmt 110% 120% 130% 140% 150%Condo 250,000 3,475$ 3,368$ 3,258$ 3,150$ 3,040$ Single or Multi 500,000 6,950$ 6,735$ 6,515$ 6,300$ 6,080$ Single Family 750,000 10,425$ 10,103$ 9,773$ 9,450$ 9,120$ Single Family 1,250,000 17,375$ 16,838$ 16,288$ 15,750$ 15,200$ Sm. Apartment 1,500,000 20,850$ 20,205$ 19,545$ 18,900$ 18,240$ Lg. Apartment 15,000,000 208,500$ 202,050$ 195,450$ 189,000$ 182,400$ Gas Station 750,000 11,828$ 12,908$ 13,980$ 15,060$ 16,133$ Small Retail 1,250,000 19,713$ 21,513$ 23,300$ 25,100$ 26,888$ Office Bldg 40,000,000 630,800$ 688,400$ 745,600$ 803,200$ 860,400$ Retail Mall 405,000,000 6,386,850$ 6,970,050$ 7,549,200$ 8,132,400$ 8,711,550$ Residential w/ Office 1,250,000 18,544$ 19,175$ 19,794$ 20,425$ 21,044$

-3.07% -6.07% -9.14% -12.13% -15.20%9.97% 20.01% 29.99% 40.03% 50.00%3.45% 6.97% 10.43% 13.95% 17.40%

Residential Factor 1 0.969662 0.939323 0.908985 0.878647 0.848308

10,755$

10,755$ 17,925$ 21,510$

215,100$

Tax Levy Shift

100%3,585$ 7,170$

17,925$ 573,600$

Mixed Use Change

17,925$ Residential Change

Commercial Change

5,807,700$

The board may also adopt a residential exemption of up to 20% of the average residential value. The residential class average value is $376,899. 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.

This exemption does not make sense for a community like Natick.

Residential Exemption

Residential Exemption ExamplesSelected Exemption 0 5.00% 10.00% 15.00% 20.00%

Residential Exemption $0 $18,845 $37,690 $56,535 $75,380

Residential Tax Rate 14.34 14.73 15.15 15.59 16.05

Commercial Tax Rate 14.34 14.34 14.34 14.34 14.34Assess Tax Tax Tax Tax Tax

Owner Occupied Home 400,000.00 5,736.00 5,615.61 5,488.43 5,353.87 5,211.28

Commercial 400,000.00 5,736.00 5,736.00 5,736.00 5,736.00 5,736.00Non Occupied Home 400,000.00 5,736.00 5,893.26 6,059.38 6,235.13 6,421.39

Vacant Land 400,000.00 5,736.00 5,893.26 6,059.38 6,235.13 6,421.39Owner Occupied Home 800,000.00 11,472.00 11,506.41 11,549.00 11,590.62 11,630.63

Commercial 800,000.00 11,472.00 11,472.00 11,472.00 11,472.00 11,472.00Non Occupied Home 800,000.00 11,472.00 11,784.00 12,120.00 12,472.00 12,840.00

Apartment2,500,000.0

0 35,850.00 36,825.00 37,875.00 38,975.00 40,125.00

Commercial2,500,000.0

0 35,850.00 35,850.00 35,850.00 35,850.00 35,850.00

Fourteen communities* adopted a residential exemption in 2012.

Barnstable Everett SomervilleBoston Malden TisburyBrookline Nantucket WalthamCambridge Somerset WatertownChelsea West Barnstable Fire*Includes Fire District

Owner occupied condominiums in West Natick would benefit most from a residential exemption.

Residential Exemption

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 35 properties would qualify.

Small Commercial Exemption

Ten communities adopted a small commercial exemption in 2012.

Auburn New AshfordAvon SeekonkBellingham SomersetBraintree WestfordDartmouth 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.

Again, this exemption does not make sense for our community.

Small Commercial Exemption

Single Family Tax Bill Comparison

Fiscal Year 2012

$5,740.00

$5,774.00

$5,958.00

$6,015.00

$6,105.00

$6,916.00

$7,790.00

$8,075.00

$8,082.00

$8,334.00

$8,811.00

$8,910.00

$10,937.00$11,274.00

$11,860.00

$12,390.00

$13,534.00

$16,643.00

$0.00 $5,000.00 $10,000.00 $15,000.00 $20,000.00

1

Weston

Sherborn

Dover

Wellesley

Wayland

Sudbury - S

Newton - S

Medfield

Southborough

Hopkinton

Needham - S

Westborough

Holliston

Medway

Natick

Ashland

Framingham - S

Walpole - S

Tax Rate

If Natick maintains a single tax rate by voting a Residential Factor of 1.0;

The Tax Rate would be:

$14.34

Lets Talk Taxes..

If Natick maintains a single tax rate, we can expect the following:

We have projected an increase to the Average Single Family Tax Bill of $201.39

Natick’s Top 10 Commercial Taxpayers will collectively contribute $9,834,355.22 in taxes for Fiscal Year 2013 (This includes Personal Property)

Note: The Top 10 Taxpayers pay approximately 11% of Natick’s Total Tax Levy

The board must adopt a residential factor.

A residential factor of 1.00 will result in a single tax rate.

A residential factor less than 1.00, will result in a split tax rate.

Conclusion

You may also adopt a residential exemption.

You may adopt a small commercial exemption.

Typically the exemptions above are found in communities that split the tax rate or that have a large percentage of rental or absentee owners.

Conclusion