FY18 Classification Hearing — File 204541

City of Somerville FY2018 Classification Hearing November 9, 2017 Adoption of Tax Levy percentages for FY 2018 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 87.5435, the legal minimum for the City of Somerville for FY 2018. 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 2018. 2

Comparison of State Form LA-4 FY17 & FY18 USE CODE DESCRIPTION FY 2017 FY 2018 FY 2017 FY 2018 PARCEL COUNT PARCEL COUNT ASSESSED VALUE ASSESSED VALUE 101 SINGLE FAMILY 2,347 2,344 $1,486,191,900 $1,629,602,100 102 CONDOMINIUM 5,119 5,359 $2,482,342,700 $2,844,293,100 104 TWO FAMILY 5,140 5,097 $3,509,203,300 $3,729,338,300 105 THREE FAMILY 2,305 2,280 $1,849,029,700 $1,946,204,600 109 2 OR MORE RES. BUILDINGS/1 LOT 72 71 $74,887,200 $80,748,900 111-125 APARTMENTS 4+ 663 657 $1,123,456,300 $1,249,656,800 130-132,106 VACANT RES. LAND 175 176 $12,637,900 $15,246,800 300-393 COMMERCIAL 592 595 $1,139,892,300 $1,204,347,718 400-452 INDUSTRIAL 104 102 $339,856,200 $348,231,400 012-043 MIXED USE RESIDENTIAL 258 257 $276,464,402 $331,439,247 MIXED USE COMMERCIAL $115,364,398 $145,477,135 501-508 PERSONAL PROPERTY 1,296 1,280 $251,203,200 $266,170,830 TOTAL REAL & PERSONAL PROPERTY VALUE 18,071 18,218 $12,660,529,500 $13,790,756,930 900-990 EXEMPT REAL ESTATE 404 405 $1,547,392,400 $1,683,127,200 3

Parcel Count Changes FY17-FY18: • Added 240 residential condo units (173 conversions/67 new) • 43 fewer two family properties • 25 fewer three family properties 4 Market & Growth Market Only Single family 10% 9% Two family 6% 5% Three family 5% 4% Apartments 4+ 11% 8% Condominiums 11% 8% Commercial 6% 5% Industrial 5% 5% Personal Property 6% n/a Average Valuation Changes FY17-FY18

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Average Assessment Changes By Neighborhood: Single Family FY17 Value FY18 Value % Change 17-18 1001 West Somerville South & Cambridge Line 755,900 826,700 9.37 2001 Ward 2 Union Square South 621,500 694,100 11.68 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 902,000 985,500 9.26 5001 Winter Hill North 436,300 473,900 8.62 6001 Ten Hills 532,700 580,100 8.90 7001 Winter Hill & MaGoun Square 542,800 598,600 10.28 8001 Central, Spring & Prospect Hill 635,900 697,900 9.75 9001 East Somerville 441,200 481,400 9.11 City Average 633,200 695,200 9.79 6

Average Assessment Changes By Neighborhood: Two Family FY17 Value FY18 Value % Change 17-18 1001 West Somerville South & Cambridge Line 758,500 809,200 6.68 2001 Ward 2 Union Square South 662,200 724,900 9.47 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 814,500 867,900 6.56 5001 Winter Hill North 472,300 504,800 6.88 6001 Ten Hills 537,200 581,000 8.15 7001 Winter Hill & Magoun Square 571,900 615,100 7.55 8001 Central, Spring & Prospect Hill 660,000 706,100 6.98 9001 East Somerville 504,800 543,300 7.63 City Average 682,700 731,700 7.17 7

Average Assessment Changes By Neighborhood: Three Family FY17 Value FY18 Value % Change 17-18 1001 West Somerville South & Cambridge Line 938,700 991,700 5.65 2001 Ward 2 Union Square South 850,600 920,200 8.18 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 936,300 988,000 5.52 5001 Winter Hill North 658,100 695,400 5.67 6001 Ten Hills 620,900 695,000 11.93 7001 Winter Hill & Magoun Square 694,800 735,100 5.80 8001 Central, Spring & Prospect Hill 792,400 845,000 6.64 9001 East Somerville 625,800 664,300 6.15 City Average 802,200 853,600 6.41 8

Average Assessment Changes By Neighborhood: Condominium FY17 Value FY18 Value % Change 17-18 1001 West Somerville South & Cambridge Line 578,700 639,100 10.44 2001 Ward 2 Union Square South 503,600 538,700 6.97 3001 Ward 2 Cobble Hill 423,500 449,600 6.16 4001 West Somerville 576,700 631,400 9.49 5001 Winter Hill North 342,700 381,800 11.41 6001 Ten Hills 424,600 460,100 8.36 7001 Winter Hill & Magoun Square 382,900 420,000 9.69 8001 Central, Spring & Prospect Hill 487,300 539,200 10.65 9001 East Somerville 396,400 439,200 10.80 City Average 484,900 530,800 9.47 9

FY18 Growth Use Type New Growth Valuation Tax Levy Growth Single Family 10,721,700 Condominium 81,810,860 Two & Three Family 50,002,200 Four+ Units 55,850,300 Mixed-Use Residential & Other 52,443,782 Total Residential 250,828,842 2,940,576 Commercial 40,591,083 763,518 Industrial 2,408,600 45,306 Personal Property 45,139,190 849,436 Total Commercial, Industrial & Personal Property 88,138,873 1,658,260 Total Real & Personal Property 338,967,715 $4,598,836 10

Major Contributors to New Growth Valuation Assembly Row 375 Canal St. (Block 5 ASQ, Hotel/Apartments) $40.0M 479 Canal St. (Block 6, ASQ, Apartments/Retail $18.2M $58.2M Other 25 Highland Ave. (Apartments) $15.6M NSTAR Gas (Personal Property) $ 8.2M NSTAR Electric (Personal Property) $ 5.4M 266 Beacon St. (Apartments) $ 4.6M 50 Inner Belt Rd. (Pers. Prop., Shutterstock Images) $ 3.3M 70 Inner Belt Rd. (Pers. Prop., United Healthcare) $ 2.3M u/vanhoosear on Flickr 11

FY18 Tax Levy & Classification FY18 Levy Limit: $145,062,349 FY18 Levy: $143,562,349 FY17 Levy: $136,071,683 Tax Levy Change: $ 7,490,666 Excess Levy Capacity: $ 1,500,000 FY18 Change: 5.5% Commercial Levy: $ 35,783,490 Residential Levy: $107,778,859 As Assessed With 175% Classification Commercial Value Percentage 14.2431 24.9254 Residential Value Percentage 85.7569 75.0746 12

Tax Levy Share: FY18 75.07% 17.13% 4.42% 3.38% Residential Commercial Industrial Personal Property FY17 Tax Levy Share (For Reference) Residential: 74.4% Commercial: 17.4% Industrial: 4.7% Personal Prop: 3.5% 13

Commercial/Residential Tax Levy Share 25% 33% 37% 75% 67% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% Commercial Share Residential Share Source: City of Somerville Assessing Dept 14

Option 1: No Classification & No ResX • Single Tax Rate: $10.41 Use Type FY17 Average Value FY18 Average Value FY17 Average Tax FY18 Average Tax Tax Change FY17-FY18 CONDO 484,900 530,800 $2,912 $5,526 $2,614 1 FAMILY 633,200 695,200 $4,642 $7,237 $2,595 2 FAMILY 682,700 731,700 $5,220 $7,617 $2,397 3 FAMILY 802,200 853,600 $6,615 $8,886 $2,271 4-8 FAMILY 1,019,000 1,131,900 $9,145 $11,783 $2,638 9+ APTS 4,382,700 4,874,500 $51,146 $50,744 -$402 COM/IND 2,126,100 2,227,500 $39,992 $23,188 -$16,804 NOT RECOMMENDED 15

• Residential Rate: $9.11 • Commercial Rate: $18.22 Use Type FY17 Average Value FY18 Average Value FY17 Average Tax FY18 Average Tax Tax Change FY17-FY18 CONDO 484,900 530,800 $2,912 $4,836 $1,924 1 FAMILY 633,200 695,200 $4,642 $6,333 $1,691 2 FAMILY 682,700 731,700 $5,220 $6,666 $1,446 3 FAMILY 802,200 853,600 $6,615 $7,776 $1,161 4-8 FAMILY 1,019,000 1,131,900 $9,145 $10,312 $1,167 9+ APTS 4,382,700 4,874,500 $51,146 $44,407 -$6,739 COM/IND 2,126,100 2,227,500 $39,992 $40,585 $593 Option 2: With Classification & No ResX 16 NOT RECOMMENDED

• Residential Rate: $11.32 Commercial Rate: $18.22 RECOMMENDED Option 3: With Classification & ResX Use Type FY17 Average Value FY18 Average Value FY17 Average Tax FY18 Average Tax Tax Change FY17-FY18 CONDO 484,900 530,800 $2,912 $3,124 $212 1 FAMILY 633,200 695,200 $4,642 $4,985 $343 2 FAMILY 682,700 731,700 $5,220 $5,398 $178 3 FAMILY 802,200 853,600 $6,615 $6,778 $163 4-8 FAMILY 1,019,000 1,131,900 $9,145 $9,928 $783 9+ APTS 4,382,700 4,874,500 $51,146 $55,179 $4,033 COM/IND 2,126,100 2,227,500 $39,992 $40,585 $593 ResX Value Reduction: $254,867 Tax Savings of $2,885.09 17 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $1,500,000

Recent City Initiatives to Ease Tax Impact • Senior work-off income limits increased (FY 16). Base amount allowed increased from $1,000 to $1,500 (FY18). • Interest rate lowered from 4% to 3% for tax deferral FY18. • Temporary Hardship deferral interest rate decreased from 8% to 3% for FY18. • Additional real estate statutory exemption up to 100% allowed (annual). • Water & Sewer discount for 41C & 17D recipients adopted FY17. • Residential Exemption amount increased to 35% effective FY 16. • Assessing’s expanded fraud detection program eliminated 55 residential exemptions allowing for a lower residential tax rate. 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