FY19 Classification Hearing Presentation — File 207131

City of Somerville FY2019 Classification Hearing November 29, 2018 Adoption of Tax Levy percentages for FY 2019 Somerville Board of Assessors Francis J. Golden, MAA Acting Chief Assessor & Chairman Michael Flynn, MAA Richard Scanlon, MAA Joseph A. Curtatone Mayor

Recommendations 1. A motion that the Board of Aldermen adopts a minimum residential factor of 88.0533, the legal minimum for the City of Somerville for FY 2019. 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 2019. 2

Comparison of State Form LA-4 FY18 & FY19 USE CODE DESCRIPTION FY 2018 FY 2019 FY 2018 FY 2019 PARCEL COUNT PARCEL COUNT ASSESSED VALUE ASSESSED VALUE 101 SINGLE FAMILY 2,344 2,337 $1,629,602,100 $1,833,223,700 102 CONDOMINIUM 5,359 5,547 $2,844,293,100 $3,181,834,408 104 TWO FAMILY 5,097 5,046 $3,729,338,300 $4,147,818,700 105 THREE FAMILY 2,280 2,263 $1,946,204,600 $2,308,846,400 109 2 OR MORE RES. BUILDINGS/1 LOT 71 72 $80,748,900 $98,316,200 111-125 APARTMENTS 4+ 657 660 $1,249,656,800 $1,505,309,810 130-132,106 VACANT RES. LAND 176 174 $15,246,800 $15,755,500 300-393 COMMERCIAL 595 595 $1,204,347,718 $1,371,165,475 400-452 INDUSTRIAL 102 99 $348,231,400 $354,134,400 012-043 MIXED USE RESIDENTIAL 257 257 $331,439,247 $414,171,222 MIXED USE COMMERCIAL $145,477,135 $132,667,693 501-508 PERSONAL PROPERTY 1,280 1262 $266,170,830 $293,268,510 TOTAL REAL & PERSONAL PROPERTY VALUE 18,218 18,339 $13,790,756,930 $15,656,512,018 900-990 EXEMPT REAL ESTATE 405 404 $1,683,127,200 $1,681,532,000 3

Parcel Count Changes FY18-FY19: • Added 229 residential condo units (207 conversions/22 new) • 60 fewer two family properties • 21 fewer three family properties 4 Market & Growth Market Only Single family 13% 12% Two family 12% 11% Three family 20% 19% Apartments 4+ 19% 7% Condominiums 12% 9% Commercial 12% 4% Industrial 5.4% 1.4% Personal Property 10% n/a Average Valuation Changes FY18-FY19

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Average Assessment Changes By Neighborhood: Single Family FY18 Value FY19 Value % Change 18-19 1001 West Somerville South & Cambridge Line 826,700 882,720 6.78 2001 Ward 2 Union Square South 694,100 782,000 12.66 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 985,500 1,105,730 12.20 5001 Winter Hill North 473,900 555,850 17.30 6001 Ten Hills 580,100 590,330 1.80 7001 Winter Hill & Magoun Square 598,600 659,690 10.21 8001 Central, Spring & Prospect Hill 697,900 791,930 13.47 9001 East Somerville 481,400 583,830 21.28 City Average 695,200 784,435 12.84 6

Average Assessment Changes By Neighborhood: Two Family FY18 Value FY19 Value % Change 18-19 1001 West Somerville South & Cambridge Line 809,200 854,600 5.61 2001 Ward 2 Union Square South 724,900 815,090 12.44 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 867,900 975,990 14.91 5001 Winter Hill North 504,800 570,470 13.01 6001 Ten Hills 581,000 573,890 -1.22 7001 Winter Hill & Magoun Square 615,100 685,270 11.41 8001 Central, Spring & Prospect Hill 706,100 803,750 13.83 9001 East Somerville 543,300 649,400 19.53 City Average 731,700 822,001 12.34 7

Average Assessment Changes By Neighborhood: Three Family FY18 Value FY19 Value % Change 18-19 1001 West Somerville South & Cambridge Line 991,700 1,153,600 16.33 2001 Ward 2 Union Square South 920,200 1,124,430 22.19 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 988,000 1,145,460 15.94 5001 Winter Hill North 695,400 882,340 26.88 6001 Ten Hills 695,000 674,940 -2.89 7001 Winter Hill & Magoun Square 735,100 852,890 16.02 8001 Central, Spring & Prospect Hill 845,000 1,009,370 19.45 9001 East Somerville 664,300 839,570 26.38 City Average 853,600 1,020,259 19.52 8

Average Assessment Changes By Neighborhood: Condominium FY18 Value FY19 Value % Change 18-19 1001 West Somerville South & Cambridge Line 639,100 675,120 5.34 2001 Ward 2 Union Square South 538,700 580,700 7.80 3001 Ward 2 Cobble Hill 449,600 451,640 0.05 4001 West Somerville 631,400 683,840 8.31 5001 Winter Hill North 381,800 412,990 8.17 6001 Ten Hills 460,100 509,950 10.84 7001 Winter Hill & Magoun Square 420,000 461,940 9.99 8001 Central, Spring & Prospect Hill 539,200 581,960 7.93 9001 East Somerville 439,200 479,420 9.16 City Average 530,800 570,835 7.54 9

FY19 Growth Use Type New Growth Valuation Tax Levy Growth Single Family 18,129,064 Condominium 79,445,569 Two & Three Family 65,926,004 Four+ Units 173,718,184 Mixed-Use Residential & Other 5,127,200 Total Residential 342,346,021 3,871,933 Commercial 110,368,945 2,009,818 Industrial 15,086,000 274,716 Personal Property 63,214,620 1,151,138 Total Commercial, Industrial & Personal Property 188,669,565 3,435,672 Total Real & Personal Property 531,015,586 $7,307,605 10

Major Contributors to New Growth Valuation u/vanhoosear on Flickr 11 Assembly Row New Valuation FY19 Tax (Estimate) 375A Canal St. (Block 5: Apts & Condos in FY20) $36.0M $407,160 391 Revolution Dr. (Partners Retail) $10.9M $198,489 479 Canal St. (Block 6: Apartments) $94.0M $1,063,140 479 Canal St. (Block 6: Retail Commercial) $12.0M $218,520 Other 250 Dawes Street – Inner Belt (Office) $48.0M $874,080 Wayfair LLC – Inner Belt (Personal Property) $22.8M $415,188 351 Summer St. (Apartments) $7.6M $85,956

FY19 Tax Levy & Classification FY19 Levy Limit: $155,996,513 FY19 Levy: $154,983,548 FY18 Levy: $143,562,349 Tax Levy Change: $ 11,421,199 Excess Levy Capacity: $ 1,012,965 FY19 Change: 7.96% Commercial Levy: $ 37,266,414.10 Residential Levy: $117,717,133.90 As Assessed With 175% Classification Commercial Value Percentage 13.7402 24.0454 Residential Value Percentage 86.2598 75.9546 12

FY19 Tax Levy & Classification FY19 Levy Limit: $155,996,513 FY19 Levy: $154,583,548 FY18 Levy: $143,562,349 Tax Levy Change: $ 11,021,199 Excess Levy Capacity: $ 1,412,965 FY19 Change: 7.68% Commercial Levy: $ 37,170,232.50 Residential Levy: $117,413,315.50 As Assessed With 175% Classification Commercial Value Percentage 13.7402 24.045 Residential Value Percentage 86.2598 75.9546 13

Tax Levy Share: FY19 75.96% 16.81% 3.96% 3.28% Residential Commercial Industrial Personal Property FY18 Tax Levy Share (For Reference) Residential: 75.07% Commercial: 17.13% Industrial: 4.42% Personal Prop: 3.38% 14

Option 1: No Classification & No ResX • Single Tax Rate: $ 9.90 Use Type FY18 Average Value FY19 Average Value FY18 Average Tax FY19 Average Tax Tax Change FY18-FY19 CONDO 530,800 570,835 $5,526 $5651 $125 1 FAMILY 695,200 784,434 $7,237 $7,766 $529 2 FAMILY 731,700 822,001 $7,617 $8,138 $521 3 FAMILY 853,600 1,020,259 $8,886 $10,101 $1,215 4-8 FAMILY 1,131,900 1,760,470 $11,783 $17,429 $5,646 9+ APTS 4,874,500 5,667,019 $50,744 $56,104 $5,360 COM/IND 2,227,500 2,486,023 $23,188 $24,612 $1,424 NOT RECOMMENDED 15

• Residential Rate: $ 8.72 • Commercial Rate: $17.32 Use Type FY18 Average Value FY19 Average Value FY18 Average Tax FY19 Average Tax Tax Change FY18-FY19 CONDO 530,800 570,835 $4,836 $4,978 $142 1 FAMILY 695,200 784,434 $6,333 $6,840 $507 2 FAMILY 731,700 822,001 $6,666 $7,168 $502 3 FAMILY 853,600 1,020,259 $7,776 $8,897 $1,121 4-8 FAMILY 1,131,900 1,760,470 $10,312 $15,351 $5,039 9+ APTS 4,874,500 5,667,019 $44,407 $49,416 $5,009 COM/IND 2,227,500 2,486,023 $40,585 $43,058 $2,473 Option 2: With Classification & No ResX 16 NOT RECOMMENDED

• Residential Rate: $10.76 Commercial Rate: $17.32 RECOMMENDED Option 3: With Classification & ResX Use Type FY18 Average Value FY19 Average Value FY18 Average Tax FY19 Average Tax Tax Change FY18-FY19 CONDO 530,800 570,835 $3,121 $3,038 -$83 1 FAMILY 695,200 784,434 $4,980 $5,336 $356 2 FAMILY 731,700 822,001 $5,393 $5,740 $347 3 FAMILY 853,600 1,020,259 $6,772 $7,873 $1,101 4-8 FAMILY 1,131,900 1,760,470 $9,919 $15,838 $5,919 9+ APTS 4,874,500 5,667,019 $55,131 $60,977 $5,846 COM/IND 2,227,500 2,486,023 $40,563 $43,058 $2,495 ResX Value Reduction: $288,539 Tax Savings of $3,104.68 17 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $1,012,965

• Residential Rate: $10.73 Commercial Rate: $17.28 RECOMMENDED Option 3: With Classification & ResX Use Type FY18 Average Value FY19 Average Value FY18 Average Tax FY19 Average Tax Tax Change FY18-FY19 Variance From Alt. Levy CONDO 530,800 570,835 $3,121 $3,029 -$92 $9 1 FAMILY 695,200 784,434 $4,980 $5,321 $341 $15 2 FAMILY 731,700 822,001 $5,393 $5,724 $331 $16 3 FAMILY 853,600 1,020,259 $6,772 $7,851 $1,079 $22 4-8 FAMILY 1,131,900 1,760,470 $9,919 $15,794 $5,875 $44 9+ APTS 4,874,500 5,667,019 $55,131 $60,807 $5,676 $170 COM/IND 2,227,500 2,486,023 $40,563 $42,959 $2,396 $99 ResX Value Reduction: $288,539 Tax Savings of $3,096.02 18 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $1,412,965

Reviewing the Impact of the Residential Exemption Use Type FY19 Average Value Tax Change w/o ResX Tax Change WITH ResX Difference CONDO 570,835 $142 -$83 $225 1 FAMILY 784,434 $507 $356 $151 2 FAMILY 822,001 $502 $347 $155 3 FAMILY 1,020,259 $1,121 $1,101 $20 4-8 FAMILY 1,760,470 $5,039 $5,919 $880 9+ APTS 5,667,019 $5,009 $5,846 $837 COM/IND 2,486,023 $2,473 $2,495 $22 19

FY18 Residential Tax Community Comparison Municipality Residential Tax Rate Comm/Ind/ PP Levy Share Average FY16 Res Value ResX Percentage ResX Savings Average Residential Tax Bill Waltham $12.61 34.62% $492,635 30% $1,864 $4,348 Boston $10.48 35.11% $692,043 35% $2,538 $4,715 Cambridge $6.29 39.42% $1,129,643 30% $2,046 $5,059 Somerville $11.31 24.93% $728,190 35% $2,883 $5,353 Watertown $13.47 19.26% $587,354 23% $1,820 $6,092 Newton $10.82 10.09% $957,201 no - $10,357 20

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 Cambridge Crossing 517,000 SF Other 580,000 SF Total 7,969,200 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 21 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 require new commercial development with a commercial only zoning district that will help to ease the tax impact on the residential sector (this was partially implemented with Union Square Zoning Overlay). Further transformational area planning will set development expectations including commercial/residential split. 22