FY21 Classification Hearing Presentation — File 210926

City of Somerville FY2021 Classification Hearing November 24, 2020 Adoption of Tax Levy percentages for FY 2021 Somerville Board of Assessors Francis J. Golden, MAA 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 86.7935, the legal minimum for the City of Somerville for FY 2021. 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 2021. 2

Comparison of State Form LA-4 FY20 & FY21 USE CODE DESCRIPTION FY 2020 FY 2021 FY 2020 FY 2021 PARCEL COUNT PARCEL COUNT ASSESSED VALUE ASSESSED VALUE 101 SINGLE FAMILY 2,330 2,313 $1,992,135,100 $2,092,957,700 102 CONDOMINIUM 6,010 6,282 $3,754,783,313 $4,105,218,086 104 TWO FAMILY 4,990 4,938 $4,695,040,900 $4,851,630,100 105 THREE FAMILY 2,253 2,236 $2,645,109,600 $2,722,074,500 109 2 OR MORE RES. BUILDINGS/1 LOT 73 73 $108,426,200 $114,218,000 111-125 APARTMENTS 4+ 659 657 $1,750,474,480 $1,836,120,024 130-132,106 VACANT RES. LAND 174 179 $19,750,800 $22,402,600 300-393 COMMERCIAL 594 591 $1,613,775,030 $1,895,798,155 400-452 INDUSTRIAL 94 94 $374,474,600 $411,238,800 012-043 MIXED USE RESIDENTIAL 261 261 $540,514,650 $663,936,570 MIXED USE COMMERCIAL $174,988,823 $174,747,273 501-508 PERSONAL PROPERTY 1273 1354 $326,987,090 $407,549,990 TOTAL REAL & PERSONAL PROPERTY VALUE 18,711 18,978 $17,996,460,586 $19,297,891,798 900-990 EXEMPT REAL ESTATE 402 391 $2,013,116,152 $2,169,941,878 3

Parcel Count Changes FY20-FY21: • Added 272 residential condo units (216 conversions/72 new) • 52 fewer two family properties • 17 fewer three family properties 4 Market & Growth Growth Only Single family 6% 1% Two family 3% 1% Three family 3% 1% Condominiums 9% 2% Res/Mix & Apartments 4+ 9% 8% Commercial 18% 19% Industrial 10% 11% Personal Property n/a n/a Average Valuation Changes FY20-FY21

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Average Assessment Changes By Neighborhood: Single Family FY20 Value FY21 Value % Change 20-21 1001 West Somerville South & Cambridge Line 980,255 1,038,181 5.91 2001 Ward 2 Union Square South 874,369 923,414 5.61 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 1,158,734 1,221,526 5.42 5001 Winter Hill North 611,660 650,316 6.32 6001 Ten Hills 638,490 719,690 12.72 7001 Winter Hill & Magoun Square 727,005 770,084 5.93 8001 Central, Spring & Prospect Hill 867,947 918,046 5.77 9001 East Somerville 655,028 689,706 5.30 City Average 855,033 904,867 5.83 6

Average Assessment Changes By Neighborhood: Two Family FY20 Value FY21 Value % Change 20-21 1001 West Somerville South & Cambridge Line 997,853 1,045,346 4.76 2001 Ward 2 Union Square South 946,884 995,011 5.10 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 1,096,312 1,127,863 2.88 5001 Winter Hill North 678,183 712,119 5.00 6001 Ten Hills 676,165 744,265 10.07 7001 Winter Hill & Magoun Square 790,552 833,512 5.43 8001 Central, Spring & Prospect Hill 921,564 967,314 4.96 9001 East Somerville 760,503 809,207 6.40 City Average 940,604 982,509 4.46 7

Average Assessment Changes By Neighborhood: Three Family FY20 Value FY21 Value % Change 20-21 1001 West Somerville South & Cambridge Line 1,320,418 1,362,578 3.19 2001 Ward 2 Union Square South 1,300,244 1,333,943 2.59 3001 Ward 2 Cobble Hill n/a n/a n/a 4001 West Somerville 1,289,981 1,332,193 3.27 5001 Winter Hill North 1,024,964 1,062,188 3.63 6001 Ten Hills 780,360 868,060 11.24 7001 Winter Hill & Magoun Square 1,006,536 1,044,696 3.79 8001 Central, Spring & Prospect Hill 1,162,492 1,213,541 4.39 9001 East Somerville 987,540 1,038,552 5.17 City Average 1,174,076 1,217,386 3.69 8

Average Assessment Changes By Neighborhood: Condominium FY20 Value FY21 Value % Change 20-21 1001 West Somerville South & Cambridge Line 734,325 777,980 5.94 2001 Ward 2 Union Square South 640,816 666,521 4.01 3001 Ward 2 Cobble Hill 600,761 640,548 6.62 4001 West Somerville 725,612 758,886 4.59 5001 Winter Hill North 472,694 507,546 7.37 6001 Ten Hills 562,286 580,197 3.19 7001 Winter Hill & Magoun Square 518,838 541,235 4.32 8001 Central, Spring & Prospect Hill 637,235 664,244 4.24 9001 East Somerville 527,123 558,895 6.03 City Average 626,502 653,489 4.31 9

FY21 Growth Use Type New Growth Valuation Tax Levy Growth Single Family 11,953,100 Condominium 84,119,383 Two & Three Family 61,089,400 Four+ Units 173,871,380 Mixed-Use Residential & Other 4,686,800 Total Residential 335,824,763 3,388,472 Commercial 305,544,785 4,986,491 Industrial 39,521,700 644,994 Personal Property 77,148,290 1,259,060 Total Commercial, Industrial & Personal Property 422,214,775 6,890,545 Total Real & Personal Property 758,039,538 $10,279,017 10

Major Contributors to New Growth Valuation u/vanhoosear on Flickr 11 Assembly Row New Valuation FY20 Tax (Estimate) Grand Union Blvd – Corporate Office Under Construction – 40% Complete $81.6M $1,332,370 301 Assembly Row – Apartment/Retail Under Construction – 44% Complete $125.6 $1,267,732 Cambridge Crossing – Boyton Yards 250 Dawes Street – Inner Belt (Office/Lab) Under Construction – 17% Complete $90.1M $1,470,412 0 Dawes Street – Inner Belt (Office/Lab) Under Construction – 28% Complete $35.6M $580,928 101 South Street – Boyton Yards (Office/Lab) Under Construction – 15% Complete $72.0M $1,175,584

FY21 Tax Levy & Classification FY21 Levy Limit: $182,757,870 FY21 Debt Exclusion $ 1,335,839 FY21 Levy: $184,093,709 FY20 Levy: $168,272,052 Tax Levy Change: $ 15,821,657 Excess Levy Capacity: $ 0 FY20 Change: 9.4% Commercial Levy: $ 48,222,988.10 Residential Levy: $135,870,720.90 As Assessed With 175% Classification Commercial Value Percentage 14.9723 26.2015 Residential Value Percentage 85.0277 73.7985 12

Tax Levy Share: FY21 73.80% 18.78% 3.73% 3.70% Residential Commercial Industrial Personal Property FY20 Tax Levy Share (For Reference) Residential: 75.79% Commercial: 17.39% Industrial: 3.64% Personal Prop: 3.18% 13

Option 1: No Classification & No ResX • Single Tax Rate: $ 9.54 Use Type FY20 Average Value FY21 Average Value FY20 Average Tax FY21 Average Tax Tax Change FY20-FY21 CONDO 624,756 653,489 $5,823 $6,234 $411 1 FAMILY 854,994 904,867 $7,969 $8,632 $663 2 FAMILY 940,890 982,509 $8,769 $9,373 $604 3 FAMILY 1,174,039 1,217,386 $10,942 $11,614 $672 4-8 FAMILY 1,587,380 1,652,492 $14,794 $15,765 $971 9+ APTS 6,397,258 7,499,645 $59,622 $71,547 $11,925 COM/IND 2,279,493 2,623,451 $21,245 $25,028 $3,783 NOT RECOMMENDED 14

• Residential Rate: $ 8.28 • Commercial Rate: $16.69 Use Type FY20 Average Value FY21 Average Value FY20 Average Tax FY21 Average Tax Tax Change FY20-FY21 CONDO 624,756 653,489 $5,129 $5,411 $282 1 FAMILY 854,994 904,867 $7,019 $7,492 $473 2 FAMILY 940,890 982,509 $7,725 $8,135 $410 3 FAMILY 1,174,039 1,217,386 $9,639 $10,080 $441 4-8 FAMILY 1,587,380 1,652,492 $13,032 $13,683 $651 9+ APTS 6,397,258 7,499,645 $52,522 $62,097 $9,575 COM/IND 2,279,493 2,623,451 $37,201 $43,785 $6,584 Option 2: With Classification & No ResX 15 NOT RECOMMENDED

• Residential Rate: $10.20 Commercial Rate: $16.69 RECOMMENDED Option 3: With Classification & ResX Use Type FY20 Average Value FY21 Average Value FY20 Average Tax FY21 Average Tax Tax Change FY19-FY20 CONDO 624,756 653,489 $3035 $3,207 $172 1 FAMILY 854,994 904,867 $5,358 $5,771 $413 2 FAMILY 940,890 982,509 $6,224 $6,563 $339 3 FAMILY 1,174,039 1,217,386 $8,577 $8959 $382 4-8 FAMILY 1,587,380 1,652,492 $12,747 $13,397 $650 9+ APTS 6,397,258 7,499,645 $64,548 $76,496 $11,948 COM/IND 2,279,493 2,623,451 $37,201 $43,785 $6,584 ResX Value Reduction: $339,040 Tax Savings of $3,458.21 16 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $0

17 (ResX included for condo, 1, 2, 3 & 4-8 family) – Excess Levy Capacity = $0 ESTIMATED IMPACT OF THE DEBT EXCLUSION FOR FY 2021 ACTUAL THIRD & FOURTH QUARTER BILLS THE DEBT EXCLUSION IS ABOVE & BEYOND THE LEVY LIMIT - THE DEBT EXCL DIVIDED BY THE LEVY LIMIT = THE RATIO PERCENTAGE APPLIED TO EACH USE THE AVERAGE TAXES OF EACH USE MINUS THE RESX TIMES THE RATIO = DEBT EXCLUSION IMPACT PER USE DEBT EXCLUSION TAX TOTAL FOR EACH USE IS SPLIT BETWEEN THE THIRD AND FOURTH QUARTER TAX BILLS FISCAL YEAR 2021 EST RATES / FY21 CERTIFIED AVG VALUES WITHOUT RES EXEMPTION WITH RESIDENTIAL EXEMPTION RATES/AVG VAL FY21 USE FY21 USE FY21 RES TX RATE $10.20 FY21 LEVY LIMIT 182,757,870 FY21 LEVY LIMIT 182,757,870 COM RATE $16.69 DEBT EXCLUSION 1,335,839 DEBT EXCLUSION 1,335,839 RES EXEMPTION $3,458 MAX LEVY 184,093,709 MAX LEVY 184,093,709 RATIO 0.00731 RATIO 0.00731 101 AVG VAL 904,867 101 - SINGLE FAMILY $67 101 - SINGLE FAMILY $42 102 AVG VAL 653,489 102 - CONDOMINIUM $49 102 - CONDOMINIUM $23 104 AVG VAL 982,509 104 - TWO FAMILY $73 104 - TWO FAMILY $50 105 AVG VAL 1,217,386 105 - THREE FAMILY $91 105 - THREE FAMILY $66 4-8 / 9+ APT AVG VAL 2,794,703 4-8 FAMILY & 9+ APARTMENT $208 4-8 FAMILY & 9+ APARTMENT $183 COM AVG VAL 2,403,218 COMMERCIAL $293 COMMERCIAL $293 IND AVG VAL 4,374,881 INDUSTRIAL $534 INDUSTRIAL $534 ASSUMES RESIDENTIAL EXEMPTION FOR CONDO, 1, 2, 3, 4-8 & 9+ UNIT USES

Reviewing the Impact of the Residential Exemption FY21 Use Type FY21 Average Value Taxes w/o ResX Taxes WITH ResX Difference CONDO 653,489 $5,411 $3,207 $2,204 1 FAMILY 904,867 $7,492 $5,771 $1,721 2 FAMILY 982,509 $8,135 $6,563 $1,572 3 FAMILY 1,217,386 $10,080 $8,959 $1,121 4-8 FAMILY 1,652,492 $13,683 $13,397 $286 18

FY20 Residential Tax Community Comparison Municipality Residential Tax Rate Comm/Ind/ PP Levy Share Average FY20 Res Value ResX Percentage ResX Savings Average Residential Tax Bill Waltham $11.95 58.60% $611,123 35% $2,556 $4,747 Boston $10.56 59.97% $779,164 35% $2,880 $5,348 Cambridge $5.75 65.44% $1,371,052 30% $2,365 $5,519 Somerville $10.09 24.22% $925,745 35% $3,269 $6,072 Watertown $12.14 36.34% $723,586 24% $2,108 $6,676 Newton $10.44 17.43% $1,076,972 no - $11,244 19

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 600,000 SF Inner Belt 1,000,000 SF Davis Square 150,000 SF Boynton Yards 1,000,000 SF Other 600,000 SF Total 7,250,000 SF *Projections provided by OSPCD 20 Source: FRIT