Mayor's Assessment Hearing Presentation — File 198087

Classification Hearing Mayor Joseph A. Curtatone November, 2014 F Y 1 5

Assessors Expand Outreach & Services • Values released six weeks early • Early appeal period added • Property tax update sent to every owner • Mobile and late office hours • Updated webpages • Expanded promotion of all information www.somervillema.gov/assessing

As Somerville grows more desirable, it’s a time to take pride in our community. It’s also a signal that we must remain vigilant in our pursuit of policies that will both make Somerville a great place to live, work, play and raise a family—and that will keep our tax bills manageable. As Somerville grows more desirable, it’s a time to take pride in our community. It’s also a signal that we must remain vigilant in our pursuit of policies that will both make Somerville a great place to live, work, play and raise a family—and that will keep our tax bills manageable..

Assessment Key Updates

New Tax Relief for our Active Duty Guardsmen & Reservists • Interest–free, six-month tax deferrals, • up to 100% abatements, • deferral of excise • Adopting these local options Chapter 59, s. 5; Chp. 59, s. 5L, Chp. 60A, s. 9 will help reservists subject to an unexpected, sudden call to duty out of state that could create financial hardship.

New 35% Residential Exemption •The largest residential exemption in the state $170 in taxes avoided for the average two-family owner.

No override in Somerville We are not even going to the Levy Limit • $842k total excess levy capacity puts us $842k under the limit: • $.5M from additional Partners building permit revenue • $342k from additional local receipts $33 in taxes avoided for the average two- family owner

Since 2000, 220 Mass. Communities have requested 1,423 overrides As of June 2014 Somerville has NEVER sought an override

$1.31M $3.17M $1.65M $4.01M 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual New Growth – FY2003 through FY2014 Most New Tax Levy Growth in a Decade

Commercial Growth Producing New Tax Revenues •56% ( $2.2M+) of new tax levy growth is from commercial sources •37% of new commercial tax levy growth ($830k) is from Assembly Row $60 in taxes avoided due to Assembly Row tax levy growth.

Average 2-Family Tax Avoidance: $263 $170 $60 $33 $462 $199 Original Tax Increase Adjusted Tax Increase Without the 35% residential exemption, Assembly Row growth, and reduction from the levy limit, the average two-family homeowner would have had an increase of more than twice the expected amount.

$6M Increase in Stabilization Funds Fund Increase Capital Stabilization $1.25M Parks Stabilization $750k Street Reconstruction $1.5M Facility Construction & Renovation $2M Rainy Day Fund $500k Allowing us to invest in our city & Reducing our debt service costs

Highest Bond Rating Ever 2004 2014 A+ AA+ S&P 2004 2014 A2 Aa2 Moody’s Ratings guarantee savings for Somerville

Investing in Somerville

A Budget Guided by Our Core Principles and the Community’s Orienting Values Raise a Family Work Live Somerville: A Great Place to: Play

A Budget Unanimously Approved by the Board of Aldermen Raise a Family Work Live Somerville: A Great Place to: Play

$- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Millions Values Driven Budget Continued investment in our schools: 6.6% increase in funding over FY14.

General Fund Expenditures General Government 8% Public Safety 19% Culture and Recreation 1% Public Works 11% Pension and Fringe 17% Debt Service 5% Other 1% School Department 30% Overlay Reserve 1% State Assessments 7% FY15 Expenditures

Affordability in Somerville

We’re Keeping Residential Taxes Lower The Somerville fiscal year 2014 residential exemption was $1,907.53 $1,545 $2,561 $3,156 $4,801 $5,193 $6,220 $6,852 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 FY14 tax with exemption on $400k home Residential exemption No residential exemption

Tax on $400k Property with Residential Exemption $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 FY12 FY13 FY14 Lynn Medford Somerville

We’re Keeping the Commercial Tax Rate Lower $11.91 $13.50 $13.79 $18.50 $18.51 $20.44 $21.51 $24.01 $25.58 $25.62 $27.96 $31.18 $31.55 $34.81 $36.04 $40.95 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 FY14 commercial tax rate

$76m $34m $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 54% drop in state aid between FY2000 & FY2013* *adjusting for inflation

$41.6 M in State Aid cut since 2000* Taxpayers Pick up the Burden 43% 64% 0% 10% 20% 30% 40% 50% 60% 70% 2002 2015 Percent of Budget Covered by Tax Revenue = *adjusting for inflation

Some of the Lowest Spending Per Capita $2,224 $2,246 $2,383 $2,418 $2,663 $2,684 $2,717 $2,726 $3,245 $3,392 $3,574 $3,795 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 FY13 general fund spending per capita

Somerville: $2,383 Spending per Capita (General Fund FY13) Cambridge: $3,795 h // /d /d /dl / d f/ i i l l di / f d 13 l Boston: $3,574

Market Pressures Supply vs. demand 435,000 homes needed by 2040 9,000 needed in Somerville

Greater Boston: One of Most Expensive Housing Markets in the U.S.

Boston: Most Gentrifying Large City in the Nation, 2000-2007 “In Boston, the gentrifying neighborhoods represented about a fourth of the entire city’s population. In other cities, the proportion was much smaller.” -Federal Reserve Bank of Cleveland

MAPC Report: 435,000 Homes by 2040

Sustainable Neighborhoods Building a Comprehensive Plan For Affordable Housing in the City of Somerville

Somerville is thriving because we invest, for the long-haul, in our orienting values Make Somerville a Great Place to Live, Work, Play and Raise a Family WORK LIVE PLAY FAMILY