Tax Classification HearingFiscal 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

$0

$20

$40

$60

$80

$100

FY12 FY13

Residential Commercial

Industrial Personal Property

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

2005 2006 2007 2008 2009 2010 2011 2012 2013 $4,500

$4,700

$4,900

$5,100

$5,300

$5,500

$5,700

$5,900

$6,100

$6,300 Actual Average Tax Bill

Actual Average Tax Bill

$277 Increase

$201 Increase

$218 Increase

$189 Increase over 3 years

$187 Increase

$218 Increase

Top Taxpayers  Taxpayer Description FY2013

ValueProposed

FY2013 Tax

1 Northborough Retail Properties LLC Northborough Crossing 106,730,800 1,719,433

2 AVB Northborough, Inc. Avalon Bay Communities 53,129,660 855,918

3 Cabot II MA1MO1 MO2 & MO4 LLC Whitney St & Forbes Rd 30,007,100 483,414

4 Massachusetts Electric Corp. National Grid 28,147,440 453,455

5 Iron Mountain Information Mgmt. 176 Bearfoot Road 24,236,810 390,455

6 Norton Company Saint-Gobain Corp 19,224,900 309,713

7 MM Industrial Beeman Rd LLC 1 Beeman Rd (FedEx Smart Post) 19,135,500 308,273

8 Realty Associates Fund IX LP 55 Lyman St (FedEx Ground) 16,713,400 269,253

9 GN11 Forbes Rd. LLC Genzyme Corporation 16,580,400 267,110

10 Verizon Telecom – Personal Property 12,515,500 201,625

11 Newcorr Realty LLC 66 Lyman Street 12,199,060 196,527

12 Nationwide Health (now BWP) Beaumont Nursing Home 11,177,800 180,074

13 Wal-Mart Real Estate Wal-Mart 11,005,250 177,295

14 Northborough Land Realty Trust Guitierrez Company 8,864,700 142,810

15 Nboro Realty LLC A Duie Pyle, Inc 8,844,700 142,488

Assessed Value by Class

FY % Residential % CIP

2009 78.4 21.6

2010 78.8 21.2

2011 77.9 22.1

2012 76.7 23.3

2013 74.6 25.4

Average Value/Bill History

VALUATION FY09 FY10 FY11 FY12 FY13

Residential 1,947,673,200 1,951,950,300 1,890,669,400 1,902,482,700 1,857,906,419Open Space 2,400,000 100,600 100,600 57,000 0Commercial 183,798,500 183,263,800 180,875,800 232,323,100 290,418,511Industrial 271,011,400 267,299,900 281,489,900 272,000,400 267,829,738Personal Property 83,460,870 75,710,970 75,430,450 72,332,300 75,683,210

TOTAL VALUATION 2,488,343,970 2,478,325,570 2,428,566,150 2,479,195,500 2,491,837,878

TAX RATE (per thousand) $13.76 $14.38 $15.11 $15.49 $16.11 *

AVERAGE HOME VALUE 419,600 416,700 395,200 394,700 383,646

AVERAGE TAX BILL $5,774 $5,992 $5,971 $6,114 $6,181

* Proposed tax rate

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 ScenariosSingle Rate

FY2013 Tax Tax

Property Type Assessed Value Rate Bill

Single Family Home 383,646

16.11

$ 6,181

Condominium 234,689 $ 3,781

Commercial 1,470,760 $ 23,694

Industrial 2,433,095 $ 39,197

5% Shift

  FY2013 Tax Tax  

Property Type Assessed Value Rate Bill $ Difference

Single Family Home 383,646 15.84

$ 6,077 $ (104)

Condominium 234,689 $ 3,717 $ (64)

Commercial 1,470,760 16.92

$ 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 Exemption With Exemption @ 10%

Assessed Value

Tax Rate Tax Bill Exemption Amount

Net Taxable Value

Tax Rate Tax Bill Difference

$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 rate2. Do not adopt:

Residential Exemption Small Commercial Exemption

Any Questions?