FY20 Classification Hearing Presentation — File 209275

City of Somerville FY2020 Classification Hearing November 26, 2019 Adoption of Tax Levy percentages for FY 2020 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 City Council adopts a minimum residential factor of 87.9553, the legal minimum for the City of Somerville for FY 2020. 2. A motion that the City Council accepts the provisions of Chapter 59, section 5C approving a residential exemption of 35% of average assessed value for owner occupied properties for FY 2020. 2

Comparison of State Form LA-4 FY19 & FY20 USE CODE DESCRIPTION FY 2019 FY 2020 FY 2019 FY 2020 PARCEL COUNT PARCEL COUNT ASSESSED VALUE ASSESSED VALUE 101 SINGLE FAMILY 2,337 2,330 $1,833,223,700 $1,992,135,100 102 CONDOMINIUM 5,547 6,010 $3,181,834,408 $3,754,783,313 104 TWO FAMILY 5,046 4,990 $4,147,818,700 $4,695,040,900 105 THREE FAMILY 2,263 2,253 $2,308,846,400 $2,645,109,600 109 2 OR MORE RES. BUILDINGS/1 LOT 72 73 $98,316,200 $108,426,200 111-125 APARTMENTS 4+ 660 659 $1,505,309,810 $1,750,474,480 130-132,106 VACANT RES. LAND 174 174 $15,755,500 $19,750,800 300-393 COMMERCIAL 595 594 $1,371,165,475 $1,613,775,030 400-452 INDUSTRIAL 99 94 $354,134,400 $374,474,600 012-043 MIXED USE RESIDENTIAL 257 261 $414,171,222 $540,514,650 MIXED USE COMMERCIAL $132,667,693 $174,988,823 501-508 PERSONAL PROPERTY 1262 1273 $293,268,510 $326,987,090 TOTAL REAL & PERSONAL PROPERTY VALUE 18,339 18,711 $15,656,512,018 $17,996,460,586 900-990 EXEMPT REAL ESTATE 404 402 $1,681,532,000 $2,013,116,152 3

Parcel Count Changes FY19-FY20: • Added 463 residential condo units (198 conversions/224 new) • 56 fewer two family properties • 10 fewer three family properties 4 Market & Growth Growth Only Single family 8% 1% Two family 14% 1% Three family 14% 1% Apartments 4+ 13% 9% Condominiums 7% 4% Commercial 5% 15% Industrial 5% 3% Personal Property n/a n/a Average Valuation Changes FY19-FY20

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Average Assessment Changes By Neighborhood: Single Family FY19 Value FY20 Value % Change 19-20 1001 West Somerville South & Cambridge Line 882,720 980,255 11.05 2001 Ward 2 Union Square South 782,000 874,369 11.81 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 1,105,730 1,158,734 4.79 5001 Winter Hill North 555,850 611,660 10.04 6001 Ten Hills 590,330 638,490 8.16 7001 Winter Hill & Magoun Square 659,690 727,005 10.20 8001 Central, Spring & Prospect Hill 791,930 867,947 9.60 9001 East Somerville 583,830 655,028 12.20 City Average 784,435 855,033 8.99 6

Average Assessment Changes By Neighborhood: Two Family FY19 Value FY20 Value % Change 18-19 1001 West Somerville South & Cambridge Line 854,600 997,853 16.76 2001 Ward 2 Union Square South 815,090 946,884 16.17 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 975,990 1,096,312 12.33 5001 Winter Hill North 570,470 678,183 18.88 6001 Ten Hills 573,890 676,165 17.82 7001 Winter Hill & Magoun Square 685,270 790,552 15.36 8001 Central, Spring & Prospect Hill 803,750 921,564 14.66 9001 East Somerville 649,400 760,503 17.11 City Average 822,001 940,604 14.43 7

Average Assessment Changes By Neighborhood: Three Family FY19 Value FY20 Value % Change 19-20 1001 West Somerville South & Cambridge Line 1,153,600 1,320,418 14.46 2001 Ward 2 Union Square South 1,124,430 1,300,244 15.64 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 1,145,460 1,289,981 12.62 5001 Winter Hill North 882,340 1,024,964 16.16 6001 Ten Hills 674,940 780,360 15.62 7001 Winter Hill & Magoun Square 852,890 1,006,536 18.01 8001 Central, Spring & Prospect Hill 1,009,370 1,162,492 15.17 9001 East Somerville 839,570 987,540 17.62 City Average 1,020,259 1,174,076 15.08 8

Average Assessment Changes By Neighborhood: Condominium FY19 Value FY20 Value % Change 19-20 1001 West Somerville South & Cambridge Line 675,120 734,325 8.77 2001 Ward 2 Union Square South 580,700 640,816 10.35 3001 Ward 2 Cobble Hill 451,640 600,761 33.02 4001 West Somerville 683,840 725,612 6.11 5001 Winter Hill North 412,990 472,694 14.46 6001 Ten Hills 509,950 562,286 10.26 7001 Winter Hill & Magoun Square 461,940 518,838 12.32 8001 Central, Spring & Prospect Hill 581,960 637,235 9.50 9001 East Somerville 479,420 527,123 9.95 City Average 570,835 626,502 9.75 9

FY20 Growth Use Type New Growth Valuation Tax Levy Growth Single Family 15,050,446 Condominium 113,250,341 Two & Three Family 55,451,495 Four+ Units 133,865,763 Mixed-Use Residential & Other 3,045,380 Total Residential 321,027,025 3,454,251 Commercial 199,741,519 3,461,521 Industrial 10,170,300 176,251 Personal Property 74,068,270 1,283,603 Total Commercial, Industrial & Personal Property 283,980,089 4,921,375 Total Real & Personal Property 605,007,114 $8,375,626 10

Major Contributors to New Growth Valuation u/vanhoosear on Flickr 11 Assembly Row New Valuation FY20 Tax (Estimate) 375A Canal St. Alloy (Block 5: Condos in FY20) $18.8M $202,933 391 Revolution Dr. (Partners Retail) $14M $242,620 449 Canal St. Montaje (Block 6: Apartments) $18M $193,680 375 Canal St. Marriott (Block 5: Hotel) $19.8M $343,626 Cambridge Crossing - Other 250 Dawes Street – Inner Belt (Com – Land) Approved for Office building $73.4M $1,272,265 0 Dawes Street – Inner Belt (Office/Lab) Building currently 50% complete 6/30/2019 $22.2M $384,530 Wayfair LLC – Inner Belt (Personal Property) $22.8M $395,422

FY20 Tax Levy & Classification FY20 Levy Limit: $168,272,052 FY20 Levy: $167,905,653 FY19 Levy: $155,031,240 Tax Levy Change: $ 12,874,413 Excess Levy Capacity: $ 366,399 FY20 Change: 8.3% Commercial Levy: $ 40,658,857.60 Residential Levy: $127,246,795.40 As Assessed With 175% Classification Commercial Value Percentage 13.8373 24.2153 Residential Value Percentage 86.1627 75.7847 12

Tax Levy Share: FY20 75.79% 17.39% 3.64% 3.18% Residential Commercial Industrial Personal Property FY19 Tax Levy Share (For Reference) Residential: 75.96% Commercial: 16.81% Industrial: 3.96% Personal Prop: 3.28% 13

Option 1: No Classification & No ResX • Single Tax Rate: $ 9.33 Use Type FY19 Average Value FY20 Average Value FY19 Average Tax FY20 Average Tax Tax Change FY19-FY20 CONDO 570,835 624,756 $5651 $5,829 $178 1 FAMILY 784,434 854,994 $7,766 $7,977 $211 2 FAMILY 822,001 940,890 $8,138 $8,779 $641 3 FAMILY 1,020,259 1,174,039 $10,101 $10,954 $853 4-8 FAMILY 1,338,176 1,587,380 $13,248 $14,810 $1,562 9+ APTS 5,667,019 6,397,258 $56,104 $59,686 $3,582 COM/IND 2,486,023 2,889,898 $24,612 $26,963 $2,351 NOT RECOMMENDED 14

• Residential Rate: $ 8.21 • Commercial Rate: $16.33 Use Type FY19 Average Value FY20 Average Value FY19 Average Tax FY20 Average Tax Tax Change FY19-FY20 CONDO 570,835 624,756 $4,978 $5,129 $151 1 FAMILY 784,434 854,994 $6,840 $7,019 $179 2 FAMILY 822,001 940,890 $7,168 $7,725 $557 3 FAMILY 1,020,259 1,174,039 $8,897 $9639 $742 4-8 FAMILY 1,338,176 1,587,380 $11,669 $13,032 $1,363 9+ APTS 5,667,019 6,397,258 $49,416 $52,522 $3,106 COM/IND 2,486,023 2,889,898 $43,058 $47,192 $4,134 Option 2: With Classification & No ResX 15 NOT RECOMMENDED

• Residential Rate: $10.10 Commercial Rate: $16.33 RECOMMENDED Option 3: With Classification & ResX Use Type FY19 Average Value FY20 Average Value FY19 Average Tax FY20 Average Tax Tax Change FY19-FY20 CONDO 570,835 624,756 $3,038 $3,038 $0 1 FAMILY 784,434 854,994 $5,336 $5,363 $27 2 FAMILY 822,001 940,890 $5,740 $6,231 $491 3 FAMILY 1,020,259 1,174,039 $7,873 $8,585 $712 4-8 FAMILY $1,338,176 1,587,380 $11,294 $12,760 $1,466 9+ APTS 5,667,019 6,397,258 $60,977 $64,612 $3,635 COM/IND 2,486,023 2,889,898 $43,058 $47,192 $4,134 ResX Value Reduction: $324,011 Tax Savings of $3,272.51 16 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $366,399

Reviewing the Impact of the Residential Exemption Use Type FY20 Average Value Tax Change w/o ResX Tax Change WITH ResX Difference CONDO 624,756 $151 $0 $151 1 FAMILY 854,944 $179 $27 $152 2 FAMILY 940,890 $557 $491 $66 3 FAMILY 1,174,039 $742 $712 $30 4-8 FAMILY 1,587,380 $1,363 $1,466 $103 9+ APTS 6,397,258 $3,106 $3,635 $529 COM/IND 2,889,898 $4,134 $4,134 $0 17

FY19 Residential Tax Community Comparison Municipality Residential Tax Rate Comm/Ind/ PP Levy Share Average FY19 Res Value ResX Percentage ResX Savings Average Residential Tax Bill Waltham $12.66 34.34% $537,971 35% $2,384 $4,427 Boston $10.54 34.58% $737,066 35% $2,719 $5,050 Cambridge $6.29 39.93% $1,252,241 30% $2,232 $5,206 Somerville $10.76 24.05% $824,397 35% $3,105 $5,766 Watertown $12.88 20.20% $643,680 23% $1,907 $6,384 Newton $10.45 10.04% $1,032,766 no - $10,792 18

Future development will build commercial tax base and lower residential tax liability New commercial space projected in the next 10 years: Assembly Square 2,500,000 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 Other 580,000 SF Total 7,152,200 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 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). Brickbottom and ASQ planning kicking off 2020. Minimum Mixed Use Ratio Study – Ongoing. 20