ORDER-2018-38 : Request to set a Public Hearing on Classification of Property for November 30, 2017 at 7:30 P.M. and subsequently determine the Classification of Property

Transcript (~17 min @ 7:29)

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▶ 7:13 Peter D. Mortimer: would be coming as well so we'll have the hearing first and then then uh we'll see if he arrives and we'll then we'll uh proceed to your order okay so we're going to have the public hearing that that has been duly posted and put in the newspaper. It is on order 2018-38. It is a request to set a public hearing on classification of property for November 30th, 2017 at 7.30 p.m. and subsequently determine the classification of property.

▶ 7:47 Speaker 2: Motion to open the public hearing.

▶ 7:48 Peter D. Mortimer: Alderman Medeiros has made a motion to open the public hearing, duly seconded by Alderman Lemmerman. All in favor, please say aye. Aye. Any opposed, hearing none, the public hearing is hereby open. We see no members of the public coming forward to opine or comment on this order, so Alderman Medeiros has made a motion to close the public portion of the public hearing. Second. Duly seconded by Alderman McAteer-Margolis. And now we will hear from the city officials, Members of the Assessor Board and Mr. Wilcox

▶ 8:29 Speaker 3: from the Assessor's Department. The Board of Assessors is here.

▶ 8:35 Peter D. Mortimer: Lee Fallon and Ms. Galino, nice to see you.

▶ 8:39 Speaker 3: Good evening. Good evening.

▶ 8:43 Speaker 4: Good evening. The reason that we have this classification airing is actually to shift the tax burden either from the residential to the commercial side And we have a table that we can do that with. There's currently two different tax rates for the city. This meeting actually will set where that tax rate is going to be for this year coming. If we did not choose a shift, the tax rate for the whole city would be $11.74 per thousand. Currently, we have two different tax rates, so there's a table that's provided in this handout that shows you all the shifts. and i actually added an additional shift document for more shifts outside of that the tax levy for this year is estimated at 57 million dollars roughly the whole city the valuations at 4.8 billion dollars this year it's been the highest year the real estate market's been unbelievable with single families and residential which melrose is predominantly residential the history on the levy last year was 55 million this year it's gone up from last year's growth and proposition two and a half we still have one debt exclusion that sits in there so the difference is up to 57 million for this year that we would need to operate the actual market for real estate is is unbelievable again this year I said I think the last two years last year we had 238 sales for calendar year 2015 which we use for our assessments for calendar year 2016 for this year we have 268 sales the average days on the market for last time this year was 42 days it's actually down to 37 so not only are we getting record high prices but they're selling a lot faster the assessed value does does impact it the the average sale price is what I take from MLS so in In 2015, the average sale price was $5.28. This year, for 2016, it was $5.73. So we're seeing a steady increase, and our real estate is actually really going up. On average, we're about 7% over what we were last year for all classes. Single families are actually 7.5%. Condos are 11%. So each class goes up independently depending on what the need is and what the sales are. Commercial, for the most part, has had a 1% to 2% increase. It's remained increasing, but pretty flat.

▶ 11:20 Speaker 4: As far as the shift options with our neighboring communities, almost everyone around us shifts to the max. Last year, our shift was 1.525. Most people go all the way up to 1.75, which is the max allowable by law. So we're still way below that compared to other communities. On page 8, the shift options that I actually prepared, the top shift option was if we left it at the same shift last year. So if we pick the same minimum residential factor, it would mean a decrease in the real estate taxes for commercial properties. What we're having is an appreciation of residential value far greater than the commercial, industrial, and personal property. so at some point the impact of the shift is really getting smaller and smaller and this is what that table illustrates so for this meeting i would like you know to pick a minimal residential factor on this page or the other pages provided the next slide just goes over the average tax bills for our surrounding communities last year melrose was at 5909 saugus was at 44.90 Saugus has a lot more commercial industrial properties, which does impact their percentage that they pay on single families. Stoneham was at $5,700, and Wakefield was actually at $6,100, and we're at $5,900. So Wakefield has surpassed us on average tax bill.

▶ 12:57 Speaker 4: I've provided some other slides, but at this point I'll open it up to questions from the board.

▶ 13:03 Peter D. Mortimer: President Kahn.

▶ 13:05 Speaker 3: Essentially what we need to do tonight is make a couple of votes here to set the tax rate for the coming year. Traditionally what we've always done, at least in my 30 years that I've been coming down here,

▶ 13:17 Speaker 3: is we've adopted a commercial rate and a residential rate. That's what it means to classify. If we didn't classify and had only one tax rate, we would have a much higher residential tax rate. So, we have to make a determination as to whether we're going to classify or not. I'm going to support classification as we always had. The other things that we need to just deal with and discuss tonight briefly, the commonwealth allows you to take some exemptions relative to the tax treatment of properties. Open space, we have no qualifying open space, is that correct? That's correct. And another thing that we discuss, which I adamantly opposed and I opposed in the past and would tonight is whether we adopt some kind of a residential exemption to a certain dollar amount. Very dangerous vote to take, it creates inequity amongst taxpayers based on the valuation of their properties. I would not support that. So, I would suggest that what we need to consider doing tonight Mr. Chairman is to classify, to adopt two rates with no exemptions, send this along to the full board so that we can vote a tax rate at our next meeting and we have to adopt the shift factor. And as Mr. Wilcock has explained, the shift factor, if we adopted one, which we have traditionally always adopted, allows us to tax commercially designated properties at a higher rate, which is less than 1.75% is the max that we could go. We have a very, very small commercial tax base here in Melrose. And I would suggest that what we should do is adopt the ship factor of not less than 1.65. And I could be persuaded to go higher. But I think in a nutshell, we have to take a vote on whether we're going to classify. We have to take a vote on whether we're going to adopt any exemptions. And we have to adopt the shift factor if that's what the board chooses to do. And after seeing whether anyone has any discussion, I will make motions that I think would be appropriate on these issues. Very good, thank you, President Klein. So did you make a motion that we should classify? I'd make a motion that we adopt a residential and commercial classification of real estate tax bills in Melrose for the upcoming year. Second. Thank you. President Connors made a motion that we have a classification of residential and commercial properties for the upcoming fiscal year. Said motion was duly seconded by Alderman Inferna. On that motion is the discussion. Seeing none, all in favor please say aye. Aye. Aye. Any opposed? All right. So next in queue, I have Alderman Zwirko, please.

▶ 16:15 Speaker 1: Thank you, Mr. Chairman.

▶ 16:17 Michael P. Zwirko: So, Mr. Wilcox, thank you for being here tonight, and also the comprehensive documents. I know you put a lot of work into them, and even between last year and this year I've noticed you supplied more information based on comments received last year, so I appreciate all of the shift options. It just helps to kind of give a better landscape view of what we're looking at. And thanks for the presentation. Very well done. helps me kind of work through these issues and one of the questions i had for you is you made a comment that the impact of the shift is actually smaller and so last year we set it at 1.525 this year i know president khan just mentioned something no less than 1.65 but as i look at the the options here i'll just pull one out for example 1.60 where i'm going with this is if we set let's just say we set the rate at 1.60 is it because of the valuation increase in residential properties that we're get almost automatically landing closer and closer to that 1.75 i mean it seems to me that we may be actually catching up and we might not even be able to make a a determination of a shift at some point I'm just wondering if the the value of real estate property residential is outpacing that of commercial to us to I'm just wondering it seems like we're making a big jump in the shift over

▶ 17:39 Speaker 4: previous years sure as the appreciation the residential value goes up the impact of the shift goes down right and that's what you're seeing last year the residential tax rate was $11.80 per thousand an equalized rate for this year eleven dollars and seventy four cents a difference of six cents so that is a absolute you know the observation that i made also we're very close to a uh equalized rate based on last year's tax rate so every year that you know the values on residential go way up and the commercial kind of stays the same or or goes along at one to two percent this is going to happen and we'll slowly itch up to the 175 yeah before um no it's an interesting observation and it's not to say that

▶ 18:17 Michael P. Zwirko: that we're you know impending any cliff or anything it's just it's interesting these jumps are now getting larger just because of that valuation rise so it was just something I picked out and wanted a little bit more clarification on the the

▶ 18:35 Michael P. Zwirko: I just wanted to point out because I don't know here it is I don't know the slide number but it's the one where you talk about fiscal year 2017 tax shift and you give some surrounding communities yes I noticed that we're kind of an outlier here in that we don't go all the way and is is that really just a function of the fact that our commercial property is so small it's a

▶ 18:57 Speaker 4: it's a function of the Board of Alderman members have voted on it so I would say that they're friends not friendly to bit they're more friendly with a lower number to businesses or commercial values so that is something that you know you can go one way or the other this one kind of favors the commercial value a little more compared to these other communities but just to add something when you compare all these surrounding communities the percentage of commercial properties is a lot more right fields at 20% you know so I guess might be 40 or 50 percent so there's a huge impact with that shift that's why they're single-family in Saugus the single-family assessed value and tax bill is so low because the commercial people at that shift at 175 are paying

▶ 19:43 Michael P. Zwirko: the bulk of that tax levy okay all right well thank you those are really all the questions I had has helped help the clarification there Thank You mr.

▶ 19:50 Peter D. Mortimer: chairman thank you very much alderman's work Oh seeing no further alderman

▶ 19:56 Monica C. Medeiros: wishing to be open alma Medeiros thank you yes I just just wanted to touch on that a little bit further and say that you know what is our percentage of

▶ 20:06 Monica C. Medeiros: resident I'm sorry a commercial property here in yes so the percentages that I

▶ 20:11 Speaker 4: have lumped commercial, industrial, and personal property altogether. The slide that Alderman Zwirko referenced, we're at roughly 8% before the shift.

▶ 20:24 Monica C. Medeiros: And so that in and of itself is kind of an outlier compared to the other communities?

▶ 20:29 Speaker 4: Yeah, that's correct. Malden's at 21%, Saugus is actually at 34% before the shift, Stoneham's at 17%, and Wakefield's at 24% before the shift. Well, I just, I know

▶ 20:44 Speaker 2: we have you know one of the things we have been many times in the past I

▶ 20:47 Monica C. Medeiros: wouldn't say every single time but many times in the past this board has chosen to increase the rate so that you know to choose the shift that increases the rate for both commercial and residential around the same percentage and you know I I could see that being somewhere around one point you know three three five percent uh sorry 1.635 or 1.640 and ultimately that's probably where i'd like to see us go we do have uh not that much commercial property but we do have you know what i hear from other communities around us all the time is how nice of a downtown we have and how important that is to the success of the community and why people choose to live here so i obviously would like to see us you know

▶ 21:37 Monica C. Medeiros: you know, provide a benefit to our residents by adopting a shift, but not so much that it could put success that we see at jeopardy.

▶ 21:48 Peter D. Mortimer: Thank you. Thank you, Alderman Medeiros. Seeing no further, Alderman, President Kahn. I have a motion. I move that we adopt the shift factor of 1.650. President Kahn has made a motion that we adopt a shift factor of 1.650. Is there a second on that motion at this time? I'll second it. Alderman Zwirko has seconded President Kahn's motion.

▶ 22:17 Peter D. Mortimer: What I would like to do at this time, if it's pleasing to the members of this committee, is if people have no further questions for the assessor and the members of the Board of Assessors, I would like to dismiss them, put this order on hold until later this evening, hear the order regarding the school department and the huge transfer of funds that we're having there and then we can discuss the shift unless unless we think this is going to be a fairly short conversation i was just trying to be considerate to the people here but why don't we proceed and let's see how far this is going so president connors made a motion to adopt a shift factor of 1.65 said motion was duly seconded by alderman Zwirko on discussion let's proceed then i can see from some of the looks i'm getting that that's not a not a popular concept that i just elucidated delineated so uh we'll just uh the assessor just said we're friendly nobody's called me friendly i'm just i was just trying to get people home but uh No good deed goes unpunished. On discussion of the motion, Alderman Zwerchel, please.

▶ 23:31 Michael P. Zwirko: Thank you, Mr. Chairman. Apologies. I should have asked this earlier. I just wanted to confirm that all of the options that are before us are set in such a way that it's to the levy limit. Is that correct?

▶ 23:39 Speaker 4: That's correct. We will back in. And the tax rate can shift a penny up or down when we finalize all the numbers. So this is our best estimate at this point before the Department of Revenue reviews all of our numbers.

▶ 23:51 Speaker 1: Correct.

▶ 23:52 Peter D. Mortimer: Great. Thank you Alderman Search. Seeing no, Alderman Medeiros.

▶ 23:58 Monica C. Medeiros: Thank you, and just for clarification to the public, at 1.65, that would increase the average single family tax bill by, or residential tax bill by $187 and the commercial by $579, thank you.

▶ 24:18 Peter D. Mortimer: Thank you, Alderman Medeiros. Seeing no further, Alderman, wishing to be heard. All in favor of the motion to adopt a 1.65 shift factor, duly made by President Kahn and seconded by Alderman Zwirko? All in favor? Aye. Please say aye. Any opposed? Hearing none, this order will be recommended with a shift factor of 1.65 to the full board at our next full board meeting on Monday, December 3rd. Seeing no further motions on this order, thank you very much, lady and gentlemen. And we look forward to seeing you next year. Thank you.