FY17 Classification Hearing Final — File 202430

City of Somerville FY2017 Classification Hearing November 22, 2016 Adoption of Tax Levy percentages for FY 2017 Somerville Board of Assessors Marc A. Levye, RMA, MAA Chief Assessor & Chairman Michael Flynn, MAA Thomas J. Mulhern, MAA Joseph A. Curtatone Mayor

Recommendations 1. A motion that the Board of Aldermen adopts a minimum residential factor of 87.1953, the legal minimum for the City of Somerville for FY 2017. 2. A motion that the Board of Aldermen accepts the provisions of Chapter 59, section 5C approving a residential exemption of 35% of average assessed value for owner occupied properties for FY 2017. 2

Comparison of State Form LA-4 FY16 & FY17 USE CODE DESCRIPTION FY 2016 FY 2017 FY 2016 FY 2017 PARCEL COUNT PARCEL COUNT ASSESSED VALUE ASSESSED VALUE 101 SINGLE FAMILY 2,341 2,347 $1,299,181,600 $1,486,191,900 102 CONDOMINIUM 4,953 5,119 $2,174,115,200 $2,482,342,700 104 TWO FAMILY 5,178 5,140 $3,210,889,500 $3,509,203,300 105 THREE FAMILY 2,317 2,305 $1,651,088,700 $1,849,029,700 109 2 OR MORE RES. BUILDINGS/1 LOT 72 72 $65,280,900 $74,887,200 111-125 APARTMENTS 4+ 662 663 $899,199,500 $1,123,456,300 130-132,106 VACANT RES. LAND 179 175 $12,173,400 $12,637,900 300-393 COMMERCIAL 596 592 $1,013,105,300 $1,139,892,300 400-452 INDUSTRIAL 105 104 $318,967,000 $339,856,200 012-043 MIXED USE RESIDENTIAL 255 258 $235,064,286 $276,464,402 MIXED USE COMMERCIAL $95,727,514 $115,364,398 501-508 PERSONAL PROPERTY 1,312 1,296 $223,981,370 $251,203,200 TOTAL REAL & PERSONAL PROPERTY VALUE 17,970 18,071 $11,198,774,270 $12,660,529,500 900-990 EXEMPT REAL ESTATE 411 404 $1,429,039,000 $1,547,392,400 3

Parcel Count Changes FY16-FY17: • Added 175 condo units (122 from conversions & 53 new construction) • 38 fewer two family properties • 12 fewer three family properties • 9 condo units revert to two or three family properties Average Valuation Changes FY16-FY17 4 Market & Growth Market Only Single family 14% 13% Two family 10% 9% Three family 13% 12% Apartments 4+ 21% 17% Condominiums 11% 9% Commercial 14% 10% Industrial 7% 7% Personal Property 12% n/a

5

Average Assessment Changes By Neighborhood: Single Family FY16 Value FY17 Value % Change 16-17 1001 West Somerville South & Cambridge Line 688,700 755,900 9.76 2001 Ward 2 Union Square South 584,600 621,500 6.31 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 793,900 902,000 13.62 5001 Winter Hill North 364,400 436,300 19.73 6001 Ten Hills 466,900 532,700 14.09 7001 Winter Hill & Magoun Square 467,500 542,800 16.11 8001 Central, Spring & Prospect Hill 561,300 635,900 13.29 9001 East Somerville 348,000 441,200 26.78 City Average 555,000 633,200 14.09 6

Average Assessment Changes By Neighborhood: Two Family FY16 Value FY17 Value % Change 16-17 1001 West Somerville South & Cambridge Line 720,200 758,500 5.35 2001 Ward 2 Union Square South 635,900 662,200 4.14 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 739,600 814,500 10.13 5001 Winter Hill North 420,300 472,300 12.37 6001 Ten Hills 514,700 537,200 4.37 7001 Winter Hill & Magoun Square 508,900 571,900 12.38 8001 Central, Spring & Prospect Hill 598,200 660,000 10.33 9001 East Somerville 422,100 504,800 19.59 City Average 620,100 682,700 10.10 7

Average Assessment Changes By Neighborhood: Three Family FY16 Value FY17 Value % Change 16-17 1001 West Somerville South & Cambridge Line 859,700 938,700 9.19 2001 Ward 2 Union Square South 775,800 850,600 9.64 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 839,400 936,300 11.54 5001 Winter Hill North 558,500 658,100 17.83 6001 Ten Hills 571,700 620,900 8.61 7001 Winter Hill & Magoun Square 614,700 694,800 13.03 8001 Central, Spring & Prospect Hill 710,300 792,400 11.56 9001 East Somerville 516,700 625,800 21.11 City Average 712,600 802,200 12.57 8

Average Assessment Changes By Neighborhood: Condominium FY16 Value FY17 Value % Change 16-17 1001 West Somerville South & Cambridge Line 517,900 578,700 11.74 2001 Ward 2 Union Square South 435,200 503,600 15.72 3001 Ward 2 Cobble Hill 353,200 423,500 19.90 4001 West Somerville 516,300 576,700 11.70 5001 Winter Hill North 307,300 342,700 11.52 6001 Ten Hills 396,800 424,600 7.01 7001 Winter Hill & Magoun Square 342,200 382,900 11.89 8001 Central, Spring & Prospect Hill 442,900 487,300 10.02 9001 East Somerville 340,100 396,400 16.55 City Average 431,500 484,900 12.38 9

FY17 Growth Use Type Market Change %(w/o growth) New Growth Valuation Tax Levy Growth Single Family 13.2 14,720,800 Condominium 9.2 58,957,600 Two & Three Family 10.2 41,240,400 Four+ Units 16.8 30,271,395 Mixed-Use Residential & Other 19.2 55,345,737 Total Residential 11.2 200,535,932 2,512,715 Commercial 10.5 34,869,644 703,669 Industrial 6.6 658,700 13,293 Personal Property n/a 55,839,130 1,126,834 Total Real & Personal Property 291,903,406 $4,356,511 10

Major Contributors to New Valuation Growth 479 Canal Street(Block 6 ASQ, Res./Retail) $39.9M 9 Medford Street (Apartments) $13.9M 399 Revolution Drive (FRIT at Partners, Retail) $12.4M NSTAR Electric (PP) $11.1M 445 Artisan Way (Block 4 ASQ, Res./Retail) $10.1M 375 Canal Street (Block 5 ASQ, Res./Hotel/Retail) $ 8.4M NSTAR Gas (PP) $ 5.7M Microsoft Corp. (PP) $ 4.9M 197 Washington Street (Res./Retail) $ 4.7M u/vanhoosear on Flickr 11

FY17 Tax Levy & Classification FY17 Levy Limit: $137,032,678 FY17 Levy: $136,032,678 FY16 Levy: $129,147,863 Tax Levy Change: $ 6,884,815 Excess Levy Capacity: $ 1,000,000 FY17 Change: 5.3% FY16 Change: 5.7% Commercial Levy: $ 34,716,356 Residential Levy: $101,316,322 As Assessed With 175% Classification Commercial Value Percentage 14.5832 25.5206 Residential Value Percentage 85.4168 74.4794 12

Tax Levy Share: FY17 74.4 17.4 4.7 3.5 Residential Commercial Industrial Personal Property FY16 Tax Levy Share (For Reference) Residential: 74.2% Commercial: 17.3% Industrial: 5.0% Personal Prop: 3.5% 13

Option 1: No Classification & No ResX • Single Tax Rate: $10.74 USE FY16 AVERAGE VALUE FY17 AVERAGE VALUE FY16 AVERAGE TAX FY17 AVERAGE TAX TAX CHANGE FROM FY16 CONDO 431,500 484,900 $2,783 $5,208 $2,425 1 FAMILY 555,000 633,200 $4,330 $6,801 $2,471 2 FAMILY 620,100 682,700 $5,146 $7,332 $2,186 3 FAMILY 712,600 802,200 $6,305 $8,616 $2,311 4-8 FAMILY 897,300 1,019,000 $8,619 $10,944 $2,325 9+ APTS 3,084,500 3,633,800 $38,649 $39,027 $378 COM/IN 1,900,200 2,126,100 $38,346 $22,834 -$15,512 NOT RECOMMENDED 14

• Residential Rate: $9.37 • Commercial Rate: $18.80 USE FY16 AVERAGE VALUE FY17 AVERAGE VALUE FY16 AVERAGE TAX FY17 AVERAGE TAX TAX CHANGE FROM FY16 CONDO 431,500 484,900 $2,783 $4,544 $1,761 1 FAMILY 555,000 633,200 $4,330 $5,933 $1,603 2 FAMILY 620,100 682,700 $5,146 $6,397 $1,251 3 FAMILY 712,600 802,200 $6,305 $7,517 $1,212 4-8 FAMILY 897,300 1,019,000 $8,619 $9,548 $929 9+ APTS 3,084,500 3,633,800 $38,649 $34,049 -$4,600 COM/IN 1,900,200 2,126,100 $38,346 $39,971 $1,625 Option 2: With Classification & No ResX 15 NOT RECOMMENDED

• Residential Rate: $11.67 Commercial Rate: $18.80 RECOMMENDED Option 3: With Classification & ResX USE FY16 AVERAGE VALUE FY17 AVERAGE VALUE FY16 AVERAGE TAX FY17 AVERAGE TAX TAX CHANGE FROM FY16 CONDO 431,500 484,900 $2,783 $2,912 $129 1 FAMILY 555,000 633,200 $4,330 $4,642 $312 2 FAMILY 620,100 682,700 $5,146 $5,220 $74 3 FAMILY 712,600 802,200 $6,305 $6,615 $310 4-8 FAMILY 897,300 1,019,000 $8,619 $9,145 $526 9+ APTS 3,084,500 3,633,800 $38,649 $42,406 $3,757 COM/IN 1,900,200 2,126,100 $38,346 $39,971 $1,625 ResX Value Reduction: $235,399 Tax Savings of $2,747.11 16 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $1,000,000

Tax Change Comparison FY16/FY17 17 USE TAX CHANGE FY15 TO FY16 TAX CHANGE FY16 TO FY17 CONDO $399 $129 1 FAMILY $166 $312 2 FAMILY $150 $74 3 FAMILY $317 $310 4-8 FAMILY $315 $526 9+ APARTMENTS $1,145 $3,757 COMM/IND $2,034 $1,625

Recent City Initiatives to Ease Tax Impact • Residential Exemption amount increased to 35% (FY16) • Clause 41C for seniors increased from $750 to $1,000 (FY16) • Asset & income limits increased for 41C recipients (FY16) • Senior work-off income limits increased (FY 16). Base amount allowed proposed to increase from $1,000 to $1,500 (FY18) • Interest rate lowered & income limit raised for tax deferral program, 41A. Interest rate proposed to decrease from 4% to 3% for FY18. • Temporary Hardship deferral interest rate proposed to decrease from 8% to 3% for FY18 • Additional real estate exemption up to 100% allowed (annual) • Water & Sewer discount for 41C & 17D recipients for FY17 • The City is exploring raising the residential exemption percentage from 35% to up to 40% (FY18) • The City is analyzing the impacts of implementing a water & sewer bill discount for residential exemption recipients. 18

Future development will build commercial tax base and lower residential tax liability New commercial space projected in the next 10 years: Assembly Square 2,800,000 SF Union Square 1,400,000 SF Brickbottom 300,000 SF Inner Belt 1,200,000 SF Davis Square 150,000 SF Gilman Square 22,200 SF Boynton Yards 1,000,000 SF North Point 410,000 SF Other 580,000 SF Total 7,862,200 SF *Projections provided by OSPCD Current Approximate Square Footage Citywide Retail: 5,250,000 Office: 1,680,000 Industrial: 3,100,000 Total: 10,030,000 19 Source: FRIT

Other Initiatives to Ease Tax Impact The Green Line Extension will unlock development potential in Station areas, especially Union Square. This will spur new commercial development easing the tax liability on the residential sector. The Zoning overhaul will encourage new commercial development that will also help to ease the tax impact on the residential sector. 20