Assessor's Assessment Hearing Presentation — File 198087

November 25, 2014 Adoption of Tax Levy Percentages for FY15 City of Somerville FY 2015 Classification Hearing Somerville Board of Assessors Marc A. Levye, RMA, MAA Chief Assessor and Chairman Michael Flynn, MAA Thomas J Mulhern, MAA, MBREA Mayor Joseph A Curtatone

Fiscal Year 2015 Assessing Highlights Residential Exemption Increase Assembly Row Development Levy Limit Reduction Reduced Residential Rates New Growth Strong & Active Markets

Recommendations That the Board of Aldermen adopts a minimum residential factor of 86.6735, the legal minimum for the City of Somerville for FY2015. 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 FY15. That the Board of Aldermen accepts the provisions of Section 4 of Chapter 73 of the Acts of 1986 and votes an additional statutory exemption of up to 100% for FY15. The assessors, at the request of the Mayor, also recommend adoption, in a separate submittal, of MGL 59 section 5L allowing deferral of property taxes for reservists and national guardsmen.

Statutory Exemptions The City of Somerville offers 12 statutory exemptions for eligible residential property owners who may include seniors, widows/widowers, disabled veterans, persons with certain disabilities, orphans, and those with extreme hardship. The City requests and the Assessors recommend that the Board of Aldermen allow up to double the exemptions for FY15. The Assessors also recommend in a separate submittal an increase from $750 to $1000 of the 41C exemption for eligible seniors over age 65 for FY16

Allowing Up To Double Statutory Exemptions Can Prevent Tax Increases for Some Owners With Limited Incomes This has the potential to eliminate any tax increase If their remaining tax bill is higher than last year, they can deduct the amount of the net tax increase or the base statutory amount and the increase over last year’s tax First, they deduct residential and statutory exemptions Many residents on limited incomes are eligible.

How It Works FY14 FY15 $485,000 Home value x $12.66 Tax rate $6,140.10 -$1,907.53 Res Exemption $4,232.57 -$750.00 Statutory Amount $3,482.57 Net tax $535,000 Home value x $12.70 Tax rate $6,794.50 -$2,498.34 Res Exemption $4,296.16 -$750.00 Statutory Amount $3,546.16 Net tax $3,546.16 FY15 Net Tax $3,482.57 FY14 Net Tax $63.59 Increase CERTIFICATE $750.00 Statutory Amount +$63.69 Increase $813.59 Effective Increase In Taxes: $0

Key Changes Overall residential values are up Industrial , Commercial & Personal Property up $52M MBTA took control of $20M in value for GLX maintenance yards: Short-term loss for long-term benefit Net increase of $32M Total Assessed Value By Use: Residential:$8.9 billion Commercial: $1.056 billion Industrial: $311 million

Continued Demand for Condominiums -11 Single Family -31 Two Family -24 Three Family +198 Condominiums

Assessment District Map

2015 Assessment Changes: Single Family Union Square South: Highest Increase 15.94% West Somerville: Highest Average Value $743,600

2015 Assessment Changes: Two-Family Union Square South: Highest Increase 15.7% West Somerville: Highest Average Value $698,800

2015 Assessment Changes: Three-Family Union Square South: Highest Increase 15.73% West Somerville & West Somerville South: Highest Average Value $790,900 & $789,200

2015 Assessment Changes: Condominiums West Somerville: Highest Average Value $467,100 Winter Hill & Magoun Square: Highest Increase 17.99% & 19.43%

Property Value Change By Ward Residential + Commercial + Industrial Ward 1 2 3 4 5 6 7 Ward

Residential & Commercial Value Changes 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 <0% 0+% to <5% 5% to <10% 10% to <15% 15% to <20% 20% to <25% 25% to <50% 50% to <100% 100+% Number of Properties Residential Commercial 71% of properties within 5% and 15% increase

Average Somerville Home Sale Price Trends 15.9% 24.6% 22.4% 10.9% -7.4% 4.6% 20.8% 6.3% -10 -5 0 5 10 15 20 25 30 Single Family Two Family Three Family Condominium % Change '12-'13 % Change '13-'14 ’13-’14 figures are year-to-date raw numbers and not all have been verified as market sales.

Continued Demand for Condominiums 198 New condos 25 from new construction 173 from conversion Looking ahead: Signs of stabilization

Foreclosure Levels Stabilizing 56 38 23 7 9* 0 10 20 30 40 50 60 2010 2011 2012 2013 2014 Foreclosures Return to pre-recession levels * Through September

Regional Real Estate Market Change: Median Sale Prices 0 10 20 30 40 50 60 70 80 90 Percent Change '11-'14: Single Family 0 10 20 30 40 50 60 70 80 90 Percent Change '11-'14: Condominiums

Increase in Value Due Solely to Market FY14-15 Single Family 12.0% Condo 12.4% 2 & 3 Family 11.7% Multi- Family 5.6% Commercial 1.0% Industrial 0.5%

Record New Growth New Growth: Tax dollar benefit from property improvements Over $4M in new tax levy growth based off of $243M of new valuation growth 56% (more than $2.2M) of new tax levy growth is from commercial sources, of which 37% ($830k) is from Assembly Row Source: Flickr u/vanhoosear

New Valuation Growth $138.8m $64.3m $40.3m Residential Commercial Personal Property

Major Contributors to Commercial & Industrial New Valuation Growth 40% 60% Other FRIT (Combined) Major Development Projects $26.1m FRIT Legoland & Theatre $7.2m FRIT Office/Retail Block 2 $3.2m PS Northeast Storage $3.0m FRIT Retail Block 1 $2.3m FRIT Burger Dive & Starbucks

Tax Levy Impact on the average Two- Family Parcel: Increase From 2014 $2107 No Classification No ResX $1,187 With 175% Classification No ResX $369 With 175% Classification 30% ResX $199 With 175% Classification 35% ResX Recommended

Average 2-Family Tax Avoidance: $263 35% Residential Exemption Assembly Row Development Other Receipts & Revenue $170 $60 $33

Reduction From the Levy Limit First time since FY2007 that the City will not tax to the maximum allowed under proposition 2 ½. FY2015 Tax Levy Limit: $123,036,937 Proposed FY2015 Tax Levy: $122,194,951 Reduction of $841,986, saving the average two-family household $33 in taxes. First time since FY2007 that the City will not tax to the maximum allowed under proposition 2 ½.

$12.66 down to $12.61 Tax Rate Change 2014 2015 $21.51 down to $20.38 Residential Commercial

Tax Bill Impact for the Average Property • +0.4% $11 Condominium* • +3.9% $157 One Family* • +4.1% $199 Two Family* • +5.7% $322 Three Family* • +5.4% $429 4-8 Family* • +5.7% $2,028 9+ Multifamily • -3.7% -$1,399 Commercial & Industrial *Includes Residential Exemption

Tax Levy Share for Residential & Commercial 84.9% 15.1% 73.6% 26.4% Without Classification With Classification Residential Commercial

Average Two-Family Tax Avoidance $170 $60 $33 $263 in taxes avoided 35% Residential Exemption Assembly Row Development Other Receipts And Revenue

Thank You