ORDER-2020-42 : Request to set a Public Hearing on Classification of Property for November 25, 2019 at 7:30 P.M. and subsequently determine the Classification of Property

Transcript (~34 min @ 2:49:56)

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▶ 2:49:50 Kate Lipper-Garabedian: by Councillor McMaster and seconded by Councillor Zwirko. All in favor? All right. Any opposed? We will make a recommendation to the full committee for that. Thank you very much for being with us tonight. We'll turn now to the last agenda item that we have, which is order number 2020-42, request to set a public hearing on classification of property for November 25th, 2019 at 7.30 p.m. and subsequently determine the classification of property. And we do have the city assessor with us tonight

▶ 2:50:29 Speaker 10: we're under suspension of rules thank you for being with us we learned a lot

▶ 2:50:31 Speaker 4: in this chamber so so the classification hearing it's pretty much a routine every year there's four items that we're looking at I hope everyone had a time I had time to both look at the attached presentation but the online presentation because there are some benefits for for the presentation using power bi what we did this year was we tried to make an interactive presentation just so you could see surrounding communities and change some of the the data as displayed in the report so the required actions for tonight one would be granting a small commercial exemption selection of an open space discount granting of a residential exemption and then the selection of a minimum residential factor also known as shifting the tax rate if you go to the second tab these are actually the numbers of the budget this year we had the override so this slide right here will show exactly what portion of the levy is attributed to the two and a half percent the new growth and the override and this is how the breakdown actually goes down for this year's numbers The total levy is $66,629,218 and that includes the $5.18 million for the override. So if you look at this second tab, it will actually put a percentage as far as all those different factors. The other important tab is the third tab and what this is is just a reader's digest of all of these tabs. Last year's numbers. This year, the average assessed value for single families has risen to $634,884 from $580 last year. That represents a 9% and some change increase. On the second line below that, you'll see the tax bill. What it was last year was $6,200. This year, depending on the shift, that's the range. So that goes from a 1.00 to a 1.75, which is the max allowed by law. In the second block below it, that's the average commercial bill. And as you can see, the assessment went from 730 to 801, roughly a 7% increase. And the tax bill could actually go from 9,100, which is a reduction from the $13,000 previous year, all the way to 15,995. so this one slide right here basically dictates going from a factor of one all the way to 1.75 so just what the impact is for single families and commercial properties the last slide that i have and there's a lot of good information and i'm more than happy to go over any of it but the last slide actually has all of our shifts so what i chose to do is not only include the shifts for this year but also to give you a um a history lesson all the way back to 2003 to see where the board has voted as far as shifts and then i displayed everything from 1.5 all the way to 1.75 with the estimated tax rate and the increase based on single family or commercial valuations the only recommendation that i have is that you pick one of the shifts from 1.00 to 1.75 and i can take any questions at this point council circle thank you very much madam chair

▶ 2:54:11 Michael P. Zwirko: thank you for being here thank you for burning the midnight oil with us this evening i do want to start off not only with praise but i i really want to drill down as to why i am going to be so effusive in that praise very often we're asked for non-static data very often um we either get a powerpoint or a spreadsheet that's put in a pdf form that we have to kind of look like look at and analyze and what's before us this evening and that also is available to the public on the city assessor's website is a very um active and um i'm forgetting the word i'm trying to think of here but interactive type of a format where you can take all of this data that you have graciously compiled across the Commonwealth you can go all the way into the Berkshires and look up tax rates you can manipulate that data to really kind of ask your own question and find your answer where we are asked routinely by members of the public to you know further analyze data that's provided to us not get something that's static and here you've done that this is for Melrose maybe not you know in the private sector and other other mediums this is a change and it's a lot of work and it's deeply appreciated that we can in real time while you're speaking and while counselors can even do it while I'm speaking look at various what the effect of the shift is and there's other data points that they can move to so it's a long-winded way of saying this is great I hope that the pen the public benefits from this it's good for all of us here in this chamber and I just wanted to say thank you for aggregating all this data and putting it in this type of a format versus something that's static so thank you I will also add that we are greatly served by Chris here because he is the are you the president now you're a current president of the mass association of assessing officers that's great so we you know able to leverage the benefits that he brings to us in that role so that all being said I want to take care of some low-hanging fruit here first if we scroll over to the first slide I'll just note that you stated the four essentially dispositive actions that are required by the City Council three of those four we usually get rid of really quickly because what we're really supposed to do is select the minimum residential factor so the first three items we always don't take any action on or at least we we move forward without taking action because we don't we've never granted a residential exemption here nor the same with a small commercial exemption and open space well it doesn't apply here in Melrose so because of that the business before this evening is really the selection of residential factors so before I get to my questions I would like to move that we I will move that we will not be taking any action on the first three items and that puts us with only what with the business that we have to take care of this evening which is the selection of a minimum residential factor second

▶ 2:57:48 Kate Lipper-Garabedian: we have a motion made by counselors worko and seconded by president forbes to take action on the first three of the four items that are on slide number one this is granting of the small commercial exemption selection of an open space discount and granting of a residential exemption on discussion maybe just from my own edification for anyone watching at home as i recall from a year ago when you had this presentation for us you explained that the reason we don't do any of these um or partake in any of these three options is because we just don't have

▶ 2:58:26 Speaker 4: property that qualifies to two of the options the small commercial exemption and the open space require certain parcels to meet those qualifications the assessing office is not aware of any small commercial properties that would qualify for the exemption Melrose does does not have any land classified as open space so those two are off the off the table the residential exemption still is is something to discuss or or that there's we are a city and Malden has and

▶ 2:58:58 Speaker 10: different that's right so can you remind us a little bit about how we do we talk about this last year with the Cape Cod is a place that does this but I can talk

▶ 2:59:07 Speaker 4: about the communities that's historically have this our large municipalities Boston Cambridge Somerville Malden some of the other communities are actually vacation kind of communities with not a high percentage of owner-occupied units so those are the dynamics I won't sway either way but that's the that's what the 13 communities are comprised of

▶ 2:59:33 Kate Lipper-Garabedian: thank you that's helpful reminding me so maybe my colleagues as well or folks at home so we have a motion duly second in any other discussion on the motion all in favor to recommend that we not accept the motion is to not accept all in favor Aye. Any opposed? Okay. So that will be recommended to the full City Council.

▶ 2:59:58 Speaker 1: Thank you, Madam Chair.

▶ 2:59:59 Speaker 10: Of course. Other discussion?

▶ 3:00:02 Michael P. Zwirko: Yeah. So, again, just to really just to get out there, so this we are going to the levy limit here of 2.5%, and that is additional. Now, again, this doesn't factor in growth, as we know, but that figure here is on slide 2, and that's 1.438 million. Is that correct?

▶ 3:00:22 Speaker 4: On slide two, we actually have, so when you're talking about the levy, it's going to be everything on there. So it's going to include the override. The 2.5% increase does not apply to the override on the first year. Next year it will be part of the levy. But the new growth is a variable every year. This year it's roughly at $600,598. So the levy is comprised of all of those numbers, that $66 million.

▶ 3:00:49 Michael P. Zwirko: Yes. Thanks for clarifying. Yes. Correct.

▶ 3:00:59 Michael P. Zwirko: we will see I want to talk now about this shift so this is kind of where we do a little bit of a dance every year and it's important you know we hear a lot and we heard a lot certainly in 2019 earlier this year about how the difficulty that Morales is faced with is that we're you know 95% residential so if I could ask my colleagues just to follow along in my questioning if you to go to the last slide and on the right hand in blue green and i guess pink or magenta you'll see that the shift that's defaulted for us although we can because this is a dynamic presentation we can move those figures along but we'll take what's been defaulted to us at 1.50 i i would ask that you follow in green the single family increase so if we chose a shift of 1.50 the single-family increase property tax would be seven hundred and eighty seven dollars is that correct and if we went all the way up to the limit of the shift which is one point seven five that's again that's shifting the burden we would see if this the increase of property taxes go below to six ninety eight so if we were to choose a one point seven five residential property taxes would increase 698 so what that means is it's actually about a hundred and nine dollars less than if we chose 1.50 that's on the single family property now when you flip it you look at commercial and this is where it gets into the fact that the swings are so much higher because we only have five percent commercial property on the 1.5 end there's going to be an actual decrease commercial property will decrease 26 from last year but if you go all the way up to 1.75 it increases two hundred two two thousand two hundred and fifty eight dollars that is a i mean that is a curve that's almost exponential so um you can see how just incremental movements in the in the shift really sway much larger on the commercial side than they do on the residential so when i look at this i try to think to myself well geez you know property owners single family homeowners in the community um you know they don't have the benefit of making money off of their property they live in their home their tax rate isn't something that they're you know able to obviously they can get the benefit of the valuations going up etc but you know a Starbucks or a CVS or Shaw's or even a boutique firm I mean yeah they're paying taxes but at the same time they're a profit center too so that they are in commerce but we also want to think about creating a business environment where when folks are looking to come to Melrose to open a business that they're not in a prohibitive environment and if I you know opened up the newspaper and january and i read that commercial property taxes increased two hundred two thousand two hundred and fifty eight dollars i would say to myself wow that seems like a very large jump so here's where we have to do a little bit of a dance and look at what shift we we feel is not only an affordable burden on our property owners uh residential wise but also something that is still creating an environment that's favorable for um our small but yet important uh commercial uh tax base so i just want to go over those swings because every time i see this chart every year i am just amazed at the the the difference between the very incremental rises in gains on the residential side and the huge swings on the commercial given the makeup of our parcels here in melrose so those are the only questions that i had at this time but um i just wanted to hear from my other colleagues and i wanted to point that out and once again seriously i this format is

▶ 3:05:08 Scott M. Forbes: very helpful other counselors wishing to speak president forbes thank you so we talk about the shift at 1.68 um is that something that you collectively after you crunch the data look at and say this is this is what your recommendation is i know we have the capability to ask you questions and to you know go up and down the the chart and i appreciate uh council's work for kind of you know doing the overview on that and taking the lead because I feel like that a lot of us were in the same area in terms of questions and data gathering so you just explain how you got to your you know analysis of one point six eight or why you feel like that that's really in the in the realm of where you think we need to be as a municipality one point six eight is just

▶ 3:05:50 Speaker 4: a historical figure from last year the Board of Assessors does not have an official uh recommendation anywhere from one to 1.75 but we have no that's up up to the board to make that decision i mean it depends on you know how how you want the factor to work and that's completely up to you and i i would never want to recommend anything i know you're supposed to be

▶ 3:06:18 Scott M. Forbes: unbiased i i get that um when you look at the data and like we saw the range here you you look and see that it's pretty much like ninety dollars on the residential side when i've always looked at this i was like where's the middle you know it's around 35 to 45 dollars um on the residential side and then obviously likewise if you look you know where the where the middle would be you're talking about 736 dollars as far as the increase is concerned when you look at you know the colored slides that we have but as you go down where 1.68 is where it would be a 723 increase And you move over to where the $736 increases, it's $13 on the residential side, yet it's about a $350 shift on the commercial side. Again, a smaller sample size of what Council's work I was talking about. I think we need to kind of be mindful into that, making that determination if we're going to stay in that factor. Obviously, we want to make sure, because we are upper 90s in the percentile for residential, We have to be wary and mindful of commercial properties here as well and try to find the right balance. From a data perspective, I think this is probably the best presentation we've ever seen by far. So I know in subsequent years, the council will be benefited by the information that's presented. I wish this was here six years ago. I feel like that those meetings could have been more streamlined in terms of time and process. So again, I appreciate all the work you do. I know you put forth Yeoman's work in the assessor's office, so I'll yield for right now.

▶ 3:07:55 Speaker 10: Thank you.

▶ 3:07:56 John N. Tramontozzi: Council Chairman Josie. All right. So if you want something more of a balance, you can go with 1.60 or 1.59. 1.59 would be $755, 1.60 is $755 for the residential, but 1.59 is $791, so it's pretty close to commercial 1.60 adds almost a hundred dollars additional to the commercial but yet keeps the residents residential rate the same so if if you're looking for more of a balance of the shift between the commercial and the residential i would suggest a 1.59 shift any other comments right now

▶ 3:08:44 Manisha Bewtra: okay uh counselor petra thank you um all right so another continuing the dance um looking at so i mean i think my inclination would be maybe hold steady at 1.68 um which would be an increase across the board or um the other thing you know that came to mind was if the rate on the commercial side was about um 18.82 last year then if that would bring us to the 1.65 is another way of thinking about it yes it would mean a greater increase um for the total tax bill but that additional increase if i'm understanding correctly would be more based on the increased assessed

▶ 3:09:34 Manisha Bewtra: value versus um you know so the the property owner would still kind of receive the benefit so that was just a proposal and then i think i mean i want to reiterate the comments from my colleagues regarding the interactivity of this um on the city assessor website if folks at home wanted to peruse these maps i found those to be particularly useful to kind of better understand where Melrose is in relation to other communities across the state that are more heavily residential like us, but also how we relate with regards to other communities in our region. And I don't think we have a perfect answer in terms of what we should do, but certainly, you know, encourage folks at home to play around with the maps you can kind of zoom in and zoom out uh sort the tables by the shift or the rate um to just kind of get a better sense of how we might arrive at that number so those are um i don't have a specific proposal but i think my i guess just to make one for the sake of argument i

▶ 3:10:58 Kate Lipper-Garabedian: would suggest 1.65 other comments maybe while we're just all kind of ruminating and thinking this through um i agree it's a really helpful presentation a couple slides of note were the one the two preceding this last one where you provided for us not only a reminder of sort of what our shift was in the in the previous fiscal year fiscal 19 but how we compared to a number of other municipalities around us and it my quick look it appears that a lot of communities tap out they they go to the cip shift of 1.75 the max we could do essentially you know putting the the increase the least amount it can possibly be on residential and the most it can possibly be on commercial but these are communities that have a lot more commercial properties um and also large you know um you know strip malls and um you know you know we don't have that and we certainly want to ensure that we maintain a climate that is um available for access by small business owners

▶ 3:11:59 Speaker 10: you know other commercial property owners so i'm cognizant of that and i think counselors worker was speaking to that some but just to confirm that's sort of what i'm seeing when i

▶ 3:12:09 Speaker 4: look at these slides yeah and just to make a note on the single family stats one of the items is cip percentage um the slide is actually set to five miles from um from the center of melrose and the only community that's like us as far as a cip is actually winchester which has one rate everyone else is at least double as far as cip so when you talk about the swings of the shift it's because we're only about 4.8 percent you're pushing all of that shift to that one little small group and that's where you see the swings and and that's where we are every year so when you have 12 15 20 percent it's it's a little easier but um each step on the shift is is a lot when you have only

▶ 3:12:55 Scott M. Forbes: four percent president forbes thank you um also helps that winchester's assessed value is over a million dollars too so unfortunately melrose doesn't have that luxury uh so when i look at the when i look at the chart and maybe i didn't explain this as as as well as i should have the first time around but um 78 787 increases up at the top at 1.5 uh 698 is at 1.75 which is down below it's 80 i believe it's 89 uh when you cut that in half in the middle the aggregate of that would be at 1.63 which would be an increase of 742 which is right in the middle and then if you look over in the commercial side you can see the the swing is about 2300 from 1.5 to 1.75 at 1.63 it puts you right in the middle so that would be in the in the in the spirit of being balanced it would put you right in that wheelhouse from a residential side in a commercial side whether we go a few ticks up or below i don't think that that would cause much of a much of a shift but i would be i'm i'm looking at that 1.63 and trying to do a balanced approach especially during a year where we did have an override and there was an increase across the board and you know the higher the increase we go as we go down the shift on the residential side you're going to see it in your commercial base as well i'm looking at 1.63 and thinks that and think that it's a more measured approach i'd be more than happy to hear from my colleagues about their feedback um and i yield

▶ 3:14:40 Speaker 10: back thank you is that a hand i'm sorry okay counselor i was waiting thank you madam chair

▶ 3:14:44 Michael P. Zwirko: sure of course so the the i'll just make one last comment on these slides so the the the last one that i thought was very interesting was just the valuations oh excuse me the um i think it's six of eleven um yeah six of eleven this brings me back to my economist days uh value of property class

▶ 3:15:00 Michael P. Zwirko: from 1985 to 2019 there's a lot of data there but i i point folks to about the late 2008 time frame and then to present especially for personal property that that growth is it's just shocking that valuation so it's just really speaking not only to melrose but also you know the greater boston areas just boom in terms of personal property which is when you see graph that way it's nearly it's it's over doubled i mean it's that is a quite quite a spike um so homeowners certainly have benefited from that and then when we talk about the shifts you know and i agree with uh my colleagues um all three of them about where they're trying to land on this and this is kind of you know i'm like a frog i don't know which lily pad i'm going to land on and um you know but i often come back to you know if this for the folks that are looking at this on the city website it defaults from 1.5 to 175 i mean you can go even further and we could you know if we wanted to we could reduce taxes greatly on commercial properties here in melrose right and vice versa but i think it's important to remember that you know for residential homeowners they are the ones that are not only getting the benefit of all of the services they're also the ones that are paying for a bulk of those services and a cafe or a pizza shop or you know is as favorable as we can make these tax rates we're still never going to get the type of industry that we would really want that's going to bring in huge you know commercial uh benefit to to our roles so i i think that thinking about one-to-one um you know trying to get the increase in line on a dollar-to-dollar basis isn't exactly where we want to be i think we want to be thinking more about in terms of the use of the services the cost of those services because for the most part commercials commercial properties i mean they're not putting children in school right they're not all that so i think that their burden could be a little bit higher and they have the benefit of making a profit off of their property we talk about this when we discuss water and sewer right you know starbucks i mean they might have a high water bill but they're literally just passing the costs on to you every time you go in there and get a frap or what have you so you know we don't have that benefit um so i i actually do like looking a little bit further i'm more comfortable with the 1.63 that seems about right to me i don't think it's as prohibitive it's about 100 bucks a month for a commercial property tax owner um you know that that's not a huge lift and i will also my last comment is when i look at the map or the table rather of the cip shift over the years last year i made this comment and looking at the data now i realized how wrong i was but i thought we were generally trending up towards 1.75 and all of a sudden we were never going to be able to move and when you go back to like 2004 this is like an ekg so it actually goes up and down depending on where the numbers fall so it it pleases me so to speak that we're not on a static or a level where we're constantly approaching one or the other um so even though we have seen other towns are generally at 1.75 as the chair chairwoman noted those towns differ a little bit i'm i think i'm getting more and more comfortable with that 1.63 uh shift so thank you thank you i guess i'll just make one final

▶ 3:18:26 Kate Lipper-Garabedian: comment um because i think it's great that we have three i appreciate very much all three of my colleagues for putting stakes in the sand and it is sand so we can move those stakes pretty easily right now but it helps us to sort of frame the conversation and there's always something comforting about finding the right balance which might be the middle stake that you know we're talking about right now the one thing I would just flag is the difference between 1.63 and 1.59 for you know the average the the increase is is small for the average the average increase for the the single family, right? So we're talking a difference of 736, I'm sorry, $742 to $755, so a difference of $13 on average versus the difference for the commercial property is much more significant, a matter of hundreds between what we've heard from 1.63 and 1.59. And it's true we have Starbucks and we have Shaw's and we have Whole Foods, things like lila rose and buckaloos and hourglass and these are people who you know their their margins are tight and so it's quite likely that their rents could go up some so it's just to be mindful of that but that is the nature of the economy in our in our region but I'll just throw that out there and I'm happy to support whatever the will of the committee is here seeing it says no

▶ 3:20:00 Scott M. Forbes: further discussion I would make a motion to recommend a tax shift of 1.63 okay we

▶ 3:20:09 Kate Lipper-Garabedian: have a motion made by President Forbes and seconded by Councillor Bewtra to set the tax shift at 1.63 on discussion Vice Chair Boisselle so last year at 1.63

▶ 3:20:21 Robert A. Boisselle: Well, last year the commercial was paying $1,881, so this year they're going to be paying

▶ 3:20:43 Robert A. Boisselle: $1,859, while the homeowner was paying $1,081, is now paying $1,105, according to these stats. So I'm not going to vote for that at that level. I mean, for 1859 on the commercial, I believe, I mean, last year they had an 1881, 1.65 is 1882, or 1.66, 1893. I mean when you're looking on the green side it's a dollar more per year or per from last year at this point comparison to only a few cents on the commercial side so I'm gonna go with the residents as low as I can and I'm not going to

▶ 3:21:39 Speaker 7: vote for this particular number okay any other discussion counselors work oh thank you um so

▶ 3:21:53 Michael P. Zwirko: i i'm i'm comfortable with 1.63 i think that um i mean i think again we could we could shift one way or the other i think the comments raised by alderman counselor boizel are well taken and i understand where he's coming from there i i do think that um you know we offer our our commercial proprietors an affluent market we offer them you know the resources that this community provides is you know safe for their business to operate in it's if i were a small business owner understanding that budgets are tight i would certainly want to open up shop in melrose it's a different type of commercial economy but it's certainly one that's um that's welcoming and and has an appetite for uh supporting its local businesses so um i i think the difference you know we're talking about in terms of you know per annum of six dollars on the residential side that's certainly uh for a smaller benefit uh to commercial i'm comfortable with 163.

▶ 3:22:59 Speaker 10: Any further discussion? Yeah, just the- Yes, Councilor Tramontozzi.

▶ 3:23:03 John N. Tramontozzi: I just note that on the average single family, the residential rate, no matter where we go, it's going to increase. I don't see anywhere here that it goes down from last year.

▶ 3:23:17 Speaker 7: So try to lessen the burden for

▶ 3:23:20 John N. Tramontozzi: the residential as much as possible, but would keep a relative balance with the commercial 1.6 3 would be reasonable and I think we can go with that I would be able to more discussion so all in favor

▶ 3:23:41 Kate Lipper-Garabedian: of the recommendation to the City Council to set the shift at 1.6 3 and he posed pose okay Julie noted we'll make that recommendation to the full City Council and thank you again for this presentation and for being with us into the late evening so we really appreciate it have a good Thanksgiving yes before