ORDER-2019-19 : Request to set a Public Hearing on Classification of Property for November 26, 2018 at 7:30 P.M. and subsequently determine the Classification of Property

Transcript (~34 min @ 9:50)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 9:51 Peter D. Mortimer: Rather than have a lot of Q&A on it, could you just give us a quick explanation of the residential exception?

▶ 9:59 Speaker 2: residential exemption sure the residential is a shift in tax burden in the class so what would happen is everyone we wouldn't collect one dollar more what we would do is we would take the tax burden from the lower end and shift it to the high end for taxes so in most cases single and single families and condos would shift the burden to more expensive single-family houses or apartment buildings or a higher priced residential property as far as the amount that we collect it would be the same amount of money thank you very much

▶ 10:36 Peter D. Mortimer: I'll make a motion that we do not accept the residential exemption second you

▶ 10:44 Jennifer L. Lemmerman: have a motion by Alderman Mortimer to not accept the residential exemption seconded by Alderman Medeiros on discussion with President Swirko in the

▶ 10:56 Jennifer L. Lemmerman: you or do you wish to speak until after wait until after we vote on this motion

▶ 11:00 Michael P. Zwirko: yeah we can proceed with the motion that's on the floor Thank You madam

▶ 11:05 Speaker 4: chair any further discussion Alderman Lipper-Garabedian is it appropriate to

▶ 11:07 Kate Lipper-Garabedian: ask a couple of questions about this before we go okay thank you so thank you for being here tonight and for this really helpful slide deck I'm just interested in hearing if you're aware of other communities that employ this exemption how common it is and what would it what is sort of the general

▶ 11:30 Speaker 2: justification for it I am aware I believe it's under 20 I want to say it's either 13 or 17 communities out of 351 communities like Cambridge Boston Malden Somerville they're also communities down south and don't quote me on this but capes and islands seasonal communities have adopted this but it's a small percentage of the 351 communities and

▶ 11:58 Kate Lipper-Garabedian: and what would be the general justification for it what is the theory

▶ 12:05 Speaker 2: behind it the theory is its owner-occupied so in those communities I think they have a low percentage of owner-occupied properties and they shift tax burden to those non owner-occupied right and I noticed in the slide that

▶ 12:18 Kate Lipper-Garabedian: you have it that's available in the public record page packet page 17 you note that about 90% of our residential or part residential parcels are owner occupied so we're a very different type of community from those that have employed this exemption that's correct thank you i don't have any questions alderman wright

▶ 12:46 Francis X. Wright Jr.: along that line if we had a residential exemption it would be based on value we can't simply

▶ 12:54 Speaker 2: shift it to the non-residential property owners isn't that correct that's correct there's a minimum threshold it is based on value one of the slides in here i believe it's a slide before slide 18 um does go through the valuations of the average and there's a break-even point also so you get to a point where there'd be no effect and i believe it's in the 500 to 530 range okay and for those people watching at home we can't simply just say non-residential properties will be taxed at a higher rate or residential properties a 90 will be taxed at a lower rate it has to be correct the the percentage would be voted on by this board there's an application process we would field about 7 000 applications so i might need an extra body in my office to do that but that is correct it would be based on an amount and it would be an application every year making sure that they live at that property as their primary residence and it would have to be confirmed every year and people would have to provide you with evidence that you'd have to review

▶ 14:01 Francis X. Wright Jr.: and it would be require a lot of um staff hours that is correct right thank you thank you thank

▶ 14:10 Manisha Bewtra: you any further discussion alderman Bewtra thank you um mr wilcox and i had a good conversation over the phone and by email over the last day and um a couple of other things that you know i was looking at this residential exemption as would it be a way to um maybe reduce the tax burden for those who might be um who may need it the most and i think it the way i understood our conversation was that while it might reduce the tax burden for properties of lower assessed value it wouldn't necessarily benefit um lower income whether it's renters or owners in our community because um one shifting it only it only applies to owner occupied properties and um apartments for example landlords are likely to pass on that cost to renters and um so they may actually see a

▶ 15:19 Manisha Bewtra: rent increase but also um it's based on the assessed value not an income so anyway i just wanted to point out that you know like we are looking at different ways to you know preserve income diversity in our community but i ultimately after reviewing um the formula in some great detail there's an excel formula online it's quite complicated but also through our conversation i came to the conclusion that this doesn't seem like the right fit for our community but is there

▶ 15:49 Speaker 2: anything else you would want to add to in that vein or just yeah just to reiterate um it's based on the value of the house not the income and assets of the applicant so that would be completely separate than the exemptions that we offer through our office for people that do need the financial

▶ 16:07 Robert A. Boisselle: assistance thank you thank you on your slide calendar year 2016 to 2017 single family sales activity the average sale price for 2016 was 573 000 2017 was 650 000 and if you go to to the slide, where is that slide? Fiscal year 28,000 tax rate for Melrose and surrounding communities, year 2018, you used the average single family value of 538,000. What happened to the 650,000 for 2017? Is this downgraded for 2018?

▶ 16:52 Speaker 2: So the 2017 is a sales sampling of 209 homes. had a lot of single family million dollar sales this year yeah that would skew that number the other number is 6 300 single family houses across the city so that that's different inventory so you'll have your sale sampling each year and then you'll also have what makes up melrose the 580 makes up melrose that's a better representation of the number but these numbers are from our sales activity which we did have a lot of high-end sales this year good i just wanted to get that

▶ 17:23 Robert A. Boisselle: clarified out for everyone and so forth thank you thank you madam chair any further discussion

▶ 17:30 Jennifer L. Lemmerman: we have a motion made and seconded to not grant a residential exception all in favor of the motion any opposed that portion passes and the balance of the order is before you um i have alderman's work our president's work oh first thank you madam chair um

▶ 17:50 Michael P. Zwirko: so you you stated and thank you for being here this evening and for the packet of information the deck and the newly fashioned slide I appreciate the one pager so you had stated earlier at the beginning of your introduction excuse me that the levy limit this year is now 59 million and change that correct that's correct and is that a levy limit which we got to because we are going to the the limit allowed meaning we are we are at the cap of the 2.5 through 59 million dollars that's correct this is a maximum allowed levy and I've noticed that on the I apologize I don't have page numbers here but the slide that shows the shift options the fiscal year 2019 tax shift options that we're getting closer and closer to 1.75 on the shift and I say that because this is now the third year in which I will be voting to classify the property and I think three years ago we were somewhere around one point five six five and it just seems that we're moving northward where eventually work it appears that eventually we're just going to get to one point seven five isn't that the case granted where growth and commercial and residential tax tax parcels lay the the shift is up to the board but the impact of the shift is going towards well and the reason I raised that is because if you look at this the potential shifts as you're climbing up towards one point seven five you're knocking down maybe in a best case scenario eight bucks from a residential annual tax bill whereas on the other side the needle moves in much greater increments and clearly that has to do with the amount of the percentage of the parcels commercial and the values of residential and as well as held correct point of order this and I

▶ 19:45 Francis X. Wright Jr.: apologize for interrupting my understanding by law you're not in a position to make recommendations or predictions the board is historically not often recommend any ships correct I'm saying your job is not to make a recommendation for us as to what our vote should be or predictions as to

▶ 20:08 Speaker 2: where we should go or will go I try not to do that if I I don't think I recommended but I I typically do not make any recommendations but I do not know the legal terms of it I can check with the city solicitor okay it's my

▶ 20:28 Francis X. Wright Jr.: understanding and my understanding from years past that when you or your predecessors have been here that the it's always been understood that it's not your job to make a recommendation in charge job to provide us with information and I just I'm trying to avoid us going down a road where you shouldn't go I guess in the absence of the city solicitor thank you I apologize

▶ 20:58 Michael P. Zwirko: for interrupting so what I was saying is when you move the shift either up or down from where it's highlighted on the on the slide that I indicated the needle moves in much greater frequency or much greater increment either up or down depending on where that shift moves and my question for you is is that because of the large discrepancy between residential and commercial property tax parcels within the city of Melrose the impact of the shift is lessened by a larger increase of residential value in a smaller increase of commercial or industrial value correct okay so then going back to the one-page slide it's indicative here and we'll just use commercial tax given the reference that I made it states that a 1.0 percent shift there would be a 40 percent decrease whereas if there was a 1.5 percent shift excuse me 1.75 percent shift there would be an increase of six hundred and forty dollars I mean that that's that's us that's a shift of about 45 percent in each each way I mean that's just a larger there's a larger movement than there is above shown above on the on the residential side so I raised that because a lot of times when we talk about increasing commercial or trying to increase commercial property parcels or how a burden could be lessened on the residents the impact of this ship is I think indicative in the answer alone it's very difficult given the makeup of the parcels in this community to to move those needles where we would like to for our residents so it's really more of an observation so I just wanted that clarification appreciate it that's all the questions I

▶ 22:42 Peter D. Mortimer: at this time thank you alderman mortimer um i would make a motion to not accept the open space discount i'm trying to dispose of the ones we're definitely not going to be discussing we've delved into uh from the president and uh from alderman boyce else comments some of where we will actually make the residential factor kind of the meat of the motion the meat of the order tonight so for now i would like to make a motion that we do not select the open space discount we don't have open space we don't qualify for it i would anticipate would

▶ 23:18 Jennifer L. Lemmerman: have a quick vote on this we i have a a motion made by alderman mortimer that we do not select the open space discount it was seconded by alderman medeiros is there any discussion on this motion all in favor aye aye any opposed the balance of the orders before you i would make

▶ 23:31 Peter D. Mortimer: I make a motion that we not accept granting the small commercial exemption, since we have no qualifying businesses for that one.

▶ 23:38 Jennifer L. Lemmerman: We have a motion made by Alderman Mortimer to not grant a small commercial exemption. Second. Seconded by President Search. Any discussion? All in favor? Aye. Any opposed?

▶ 23:51 Peter D. Mortimer: And I will reveal the floor to allow motions on the actual number we're going to have for the differential to other aldermen at this time. Thank you, Madam Chair.

▶ 23:59 Jennifer L. Lemmerman: Thank you.

▶ 24:03 Monica C. Medeiros: maderas thank you um thank you very much i wanted to ask you um we see the differences in

▶ 24:11 Monica C. Medeiros: obviously we don't know exactly what the tax rate will be until we make our decisions tonight

▶ 24:16 Monica C. Medeiros: but is sometimes i see the comparison of the tax rate between us and other communities is that a

▶ 24:26 Speaker 2: meaningful comparison the uh i i think it's a combination of the value of the homes and the the tax rate if you have the same value homes then it is a comparison but some of these communities have a either a lower for instance on the extremes we were comparing ourselves to Winchester they might have twice the value we have for the single-family so I would say it's not a good representation there's surrounding communities that have a lot of commercial which would drop the value on the other side which would be Saugus so that wouldn't be a good comparison But there are, you know, through 351 different communities, possibly some communities we could compare ourselves with.

▶ 25:06 Monica C. Medeiros: So we would want to look at communities that have similar overall assessed value

▶ 25:13 Monica C. Medeiros: and those that may have a similar proportion of residential versus commercial, and then we would probably get a good comparison.

▶ 25:21 Speaker 2: The Department of Local Services actually has a community comparison guide, and um depending on school budgets population total overall budgets you can kind of dial into comparable communities across the state i haven't prepared that for this meeting i tried to just pick the ones around us there are variances with the other communities yeah i think the more

▶ 25:49 Monica C. Medeiros: meaningful comparison is the average tax bill probably and the the hole that people are paying so I think I saw that that's just six thousand ninety six dollars I want to

▶ 26:02 Speaker 2: say on one of these slides here that's good six thousand in change and so we've

▶ 26:07 Monica C. Medeiros: seen I mean so I see on the tax shift options page the 2019 average single

▶ 26:13 Monica C. Medeiros: family is five hundred and eighty thousand two hundred sixty five dollars

▶ 26:22 Speaker 2: and that's the assessed value so what that is is it's the whole single family class so you take the total value divided by how many parcels and you

▶ 26:32 Monica C. Medeiros: arrive at that average so that's that seems like quite a lot is is that the

▶ 26:37 Speaker 2: highest we've ever had this is a record year for pretty much all of our values total value of the city residential single-family I mean we have a really booming market here I think based on the surrounding communities where we're a

▶ 26:52 Monica C. Medeiros: a little higher than them also do you see I mean the sales prices that we were looking at were 2017 are you seeing any trends going into 2018 with this job I

▶ 26:58 Speaker 2: try and put on the blinders my year really isn't complete until we go through all the appeals so I try not to look forward and try and stay in the 2017 market so there's some data out there I haven't really fully come through with it

▶ 27:19 Monica C. Medeiros: Okay. And just, you know, some comments. I just want to point out, I hear a lot of kind of fear-mongering, like, you know, if we don't pass an override, our property values are going to go down.

▶ 27:42 Monica C. Medeiros: And, you know, I looked back and I see when we were sitting here in 2015 in the November just after not passing an override, the same number that's on this piece of paper that we have here for the average single family value was $496,000.

▶ 27:53 Monica C. Medeiros: And, you know, now we're at 580,265, so, I mean, that's about a 31, you know, we're at record numbers, the highest ever, and we've seen about a 31% increase in value of our, according to those numbers of comparison. so that was pretty significant and I think there's probably a lot of other factors that might affect property values like interest rates and

▶ 28:21 Monica C. Medeiros: employment and things like that and I did also just want to clarify because I

▶ 28:31 Speaker 1: had from the mayor's proposal for the override the assessed value do we do we

▶ 28:34 Jennifer L. Lemmerman: have another public hearing that has to start at 8. The override is not the issue on our

▶ 28:39 Speaker 5: agenda this evening? No, but it is the assessed value here was listed at $538,000, but yet

▶ 28:45 Monica C. Medeiros: we have for a single family, but now it's $580,000. So I thought that perhaps the assessor

▶ 28:52 Jennifer L. Lemmerman: might want to comment on that. It's not the item. Any materials regarding the override

▶ 28:58 Monica C. Medeiros: are not related to this order. Okay. So then the thing we had last week that said from the mayor's office it is said it was fifty thousand dollars less is not correct because your proposal that we have here tonight is correct right so

▶ 29:10 Speaker 2: the the numbers that we put together for the impact were based on last year's values that's the only certified numbers we had now we have the certified numbers for this year so all the impacts will change but it's just timing we we had to go with our last certified numbers we couldn't do prelims numbers well thank

▶ 29:33 Monica C. Medeiros: you I'll hold off for now thank you thank you

▶ 29:39 John N. Tramontozzi: Alderman Tramontozzi yeah thank you madam chair I just want to take a look at a couple of you know it's just a block of the shift so for example in a shift rate of 1.715 to 1.73 you see that the residential tax rate is the same at ten point seven nine but the but the shift in the that that causes shifts to the commercial basis from 1921 to 1938 and there's similar type of blocks like that Can you explain why, like, for example, the shift at 1.715 to 1.730, that it could be the residential rate remains the same, but the commercial rate differs? I know we talked about the value of properties, but is that also because there's more residential properties to spread out the rate?

▶ 30:36 Speaker 2: That's correct. I believe this is a second year in a row that a shift has been the same rate for three different shifts on the chart. I believe that was the case last year also. It's because the impact is so much by even a penny on the residential side.

▶ 30:51 John N. Tramontozzi: So, I mean, I'm not suggesting we do this, but if we went with a shift of 1.715, for example, where the commercial rate would be 1921 we could go with we could go with that rather than one point seven three with a commercial rate would be 1938 but yet the residential rate would remain the same so we could give the commercial ratepayers a break if we go with for example if we went with one point seven one seven one five instead of one point seven three oh we would not affect the residential rate and the commercial rate would be less you see you see I'm

▶ 31:34 Speaker 2: getting at I do see based on what selection you choose yes the residential rate would stay the same for three different shifts I mean the impact would

▶ 31:43 John N. Tramontozzi: be different right and there are pockets like that throughout the chat I believe

▶ 31:46 Speaker 2: whole chart has them at different different shifts correct what okay i'll leave it at that thank you

▶ 31:55 Jennifer L. Lemmerman: thank you alderman or anyone else we can switch to speak for the first time you just check that

▶ 32:06 Speaker 5: alderman bucha thank you um going back to my efforts to pour over this um in the last 24 hours

▶ 32:09 Manisha Bewtra: i've had it for longer than that but it's when i got an opportunity to look at it in detail a few of the observations that I wanted to point out for anyone looking at home

▶ 32:31 Manisha Bewtra: lost my place apologize so on the slide where it's fiscal 18 tax rates for Melrose and surrounding communities the the tax rate itself is not noted but I just wanted to also point out kind of in reference to alderman Medeiros comment regarding tax rates I I hear what you're saying but I also wanted to point out that average single-family value in Wakefield is lower but the single-family tax bill is higher and of these four communities where the tax rate is where you can calculate the tax rate we are among the lowest and the other thing I wanted to point out was that on the next slide average single-family tax bill for fiscal 9 to 18 I was looking at sort of the trend in terms of economic cycles and noticed that we're actually at a lower residential tax rate currently than we were in fiscal 9 which was in the throes of a recession and I think that kind of further reiterates the limits we're at in terms of our levy I'm getting confused with all the different prop two and a half terminology but I believe that is correct and the other thing I wanted to point out is that we have all of the new growth that we've had at per our conversation earlier today over the last few years because I know residents are really interested in kind of learning about where we are attracting new growth is that that much of the new growth we've had has been related to zoning changes around along our commuter rail corridor as well as around outgrowth station thank you thank

▶ 34:35 Jennifer L. Lemmerman: you Alderman Mortimer I believe you haven't

▶ 34:39 Peter D. Mortimer: get spoken on the balance of the order is that true no I thank you very much listening to the previous comments and in accordance with all the tram a toes these observation I'm inclined first I was inclined to make a motion to accept a differential rate of one point six nine five and that's the closest on this this chart where the increases on residential and on commercial would occur. It's 176 for residential, 176 additional dollars, and it would be 188 additional dollars for commercial properties. That's where the intersection of this Venn diagram comes the closest. But, as aptly pointed out by Alderman Tramontozzi, even if we lower that differential, the tax rate would stay at $10.81 and the rate would stay, the tax rate per thousand would be $10.81, and it would only increase the residential $71 for the same rate. And that would be a boon to our, excuse me, the last word I said was residential, I meant to say commercial. That would be a boon to our commercial community, and it would be no further burden on our residential community. One penny less, I'm sure one penny more for residential at 10.82 and it goes down to negative 17 for the commercial, but that would be less. So at this time, I will make a motion that we accept a differential rate regarding our residential slash commercial property of 1.68. I think that is the fairest between the commercial and the residential. We want to encourage commercial property and business in this community, but we want to put the least possible burden on our residents at the same time. So at this time, I'll make a motion that we accept a differential factor, a differential of 1.68.

▶ 37:00 Jennifer L. Lemmerman: A motion made by Alderman Mortimer to accept the shift of 1.68. Is there a second? Second. Seconded by Alderman Tramontozzi. On discussion, I have Alderman Lipper-Garabedian.

▶ 37:11 Speaker 5: Thank you.

▶ 37:16 Kate Lipper-Garabedian: I just wanted to follow up on Alderman Bewtra commentary on slide 13, which provides a very brief comparison of our average single family tax bills to three other communities. I think Alderman Bewtra point about the actual tax rate is critically important for comparison sake. So if you look at what our rate is per $1,000 of assessed value, we are, in fact, much lower than many surrounding communities. I have a slide from fiscal 17 from a previous presentation that I assume it hasn't changed drastically to fiscal 18 that shows that our tax rate is lower than Saugus, Stoneham, Wakefield, Linfield, Reading, Danvers, Wilmington, Lexington, Salem, and so forth so I just I just wanted to include that in the record as well that just looking at the average single-family bill may not provide enough context it's really important to look at also the value of our homes thank you thank you thank you on the

▶ 38:37 Monica C. Medeiros: charter our levy limit fifty nine million three hundred ninety seven

▶ 38:42 Monica C. Medeiros: thousand seven hundred and ninety nine dollars that's that's the maximum if we

▶ 38:48 Monica C. Medeiros: go up to two and a half percent increase of our levy limit plus new growth that's

▶ 38:56 Monica C. Medeiros: correct and depending on whichever shift option we take here we all would end up

▶ 39:04 Speaker 2: at that number or that's the calculation due to rounding issues there's excess levy capacity and that's basically rounding a penny so it can be anywhere from a couple dollars all the way to twelve thousand dollars depending on

▶ 39:17 Monica C. Medeiros: rounding a penny for a tax rate okay so but give or take we're probably looking at maybe a difference of about 12,000 on the MAC side historically and on the

▶ 39:33 Speaker 1: proposed shift I do appreciate and I think we've done the right thing to not

▶ 39:37 Monica C. Medeiros: go to the maximum shift on our commercial property I think you know we we around the surrounding communities we do have the envy of many of those communities however I do think we could go a little bit higher because we've seen such a high increase in the value of the residential property over the commercial property I would like us to look closer to where the percentage increases are similar and as far as I see that about that would be a shift about one point seven two and which would mean an average single-family home

▶ 40:18 Monica C. Medeiros: shift of hundreds increase of one hundred and sixty five dollars versus an

▶ 40:24 Monica C. Medeiros: increase of three hundred ninety two dollars on the commercial side so it's two point seven one percent increase on the residential and two point eight seven

▶ 40:41 Francis X. Wright Jr.: on the commercial thank you alderman Rita thank you with regards to mr. Wilcox with regards to the communities that alderman Letter Garabedian pointed out if you can recall them isn't it true that Melrose has a much smaller

▶ 40:56 Speaker 2: commercial tax base believe the community she referenced where Linfield

▶ 41:04 Francis X. Wright Jr.: Danvers August Linfield's the only one I'm not sure of but I would say the commercial CIP percentage is the lowest in Melrose okay and yet we have a residential tax rate that is also lower than those communities I would have to verify it with 2018 numbers I will add that to the agenda packet after this me okay but uh alderman Maya i should direct my question to ultimate libra garyvedian it was true that melrose had the lower of the tax rates isn't that's correct so uh it seems like we've done all right by by our residents and hope to continue to do that um it's interesting my notes show that when i look at this as i have for the last 13 years i try to look at somewhere where we can find a dollar match as alderman did or a percentage match as um alderman Medeiros did and to me those are always the two best ways to to look at this to try to be fair to both our commercial and our residential communities um also there's always other issues depending on the state of the economy and the state of the you know the the commercial um properties in melrose but those are the two the two rates that i look at and try to come in somewhere along that line i do note that the variance between the 1.62 and the 1.75 on the on the

▶ 42:41 Francis X. Wright Jr.: residential rate the increase is the difference between the high and the low potential increase is about 52 54 on the residential is that fair to say if i take 1.62 it's 199.88 and once 1.75 it's 153 45 or 40 dollars correct whereas the potential variance on the commercial goes from a minus 426 to a increase of 640 so we're talking about almost a $1,300 difference so that's just indicative of the fact that we are an extremely residentially residential property based community as compared to put other surrounding communities is that fair to say thank you thank you

▶ 43:30 Jennifer L. Lemmerman: thank you any further discussion we have a motion made and seconded to accept a shift of 1.68 all in favor aye any opposed motion passes will be

▶ 43:47 Jennifer L. Lemmerman: recommended to not accept any of the discounts or exemptions and to adopt a shift of 1.68 that would be a recommended to the full board thank you