FY2026 Property Tax Classification Public Hearing

Transcript (~30 min @ 26:10)

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

▶ 25:51 Leila Migliorelli: Okay. Um, we will recess from public comment and open it back up after the public hearing. So, since we were running seven minutes late, um, I will motion by unanimous consent to open the public hearing for the FY26 Property Tax Classification, um, discussion. We have with us tonight, um, the, uh, Head of the Assessing Office, um, Sarah McLellan, I believe. Yes. Um, and she will be presenting, she will present the information. Councilors will have opportunities to ask questions. And if there are, if there's any public comment on this, um, we can do that after, um, the questions. So, uh, with no further delay, um, Ms. McLellan?

▶ 27:08 Speaker 10: Good evening, President Cicoreale, um, City Councilors, and members of the

▶ 27:13 Speaker 5: public. I'm Sarah McLellan. I'm the Chief Assessor and Chair of the Board of Assessors. And joining me this evening are my fellow board members, Cathy Collino and Lee Fallon. And we are presenting information for the Property Tax Classification Hearing for the fiscal year 2026. This presentation is posted with the meeting agenda packet this evening, and it's also ac- accessible on the Assessor's page of the city's website. (clears throat) Each year, the Assessor's Department is responsible for developing values of all real and personal property in the city. For fiscal year 2026, Melrose has a total of 9,490 real estate parcels and 298 taxable personal property accounts. The purpose of this hearing and subsequent vote by the City Council is to adopt the city's tax policy by allocating the tax levy among, among the five classes of property. Those are residential, open space, commercial, industrial, and personal property. After the hearing, the City Council, with the approval of the mayor, must select a residential factor or tax shift. This factor governs the percentage of the tax levy to be paid by residential properties in the city. The difference is then shifted to the commercial, industrial, and per- personal property classes.

▶ 28:37 Speaker 5: Before discussing the tax shift, I'd like to review the Senior Means Tested Exemption program. This is a home rule petition that began in Melrose in fiscal year 2023. (coughs) Governor Healey signed a bill into law this past September which renewed the program and allows the Melrose Board of Assessors to grant this exemption to elevl se- eligible seniors in fiscal years 26, 27, and 28. The legislation allows the Board of Assessors to qualify senior applicants for tax relief by a state income tax credit referred to as the Circuit Breaker Credit. Qualified applicants receive a property tax exemption equal to 100% of their State Circuit Breaker Income Tax Credit. The total amount of the exempted value is to be allocated within the tax levy or shifted to the residential taxpayers. This year, the Board of Assessors received 88 applications for this program. Of those, 85 exemptions were granted by the board. The total cost of the program this year is $157,239, which is borne only by the residential class. This adds two cents to the residential tax rate, which is two cents per thousand dollars of assessed value, or about $17 on the average single family tax bill.

▶ 29:59 Speaker 5: So, the total amount that can be raised in taxes remains the same whether or not there is a tax shift. The shift does not raise more revenue, it simply changes the allocation of the tax burden among the classes of taxpayers. For fiscal year 2026, adopting a factor of one would result in a residential tax rate of $11.93 per thousand dollars of property value.Adopting a factor of less than one to as low as the minimum residential factor results in an increasingly greater tax burden shift from the residential class to the commercial, industrial- (gavel bangs) ... and personal property classes. The minimum residential factor is determined annually by the Department of Revenue, and this year again allows for a full shift of 175%. The tax shift of 175 refers to CIP owners paying property taxes at 175% of the rate that would apply if all properties, residential and commercial, were taxed at a single rate.

▶ 30:58 Speaker 3: Hold on (whispers) can you see? I lost the... (light switch clicks) It'll come back. Oh wait, that's wrong from the... Sorry.

▶ 31:05 Speaker 5: I hope someone's got a little (both talking) . It's okay. Oh, right there. Okay. Okay (laughs) We're good.

▶ 31:09 Speaker 7: A little wonky.

▶ 31:10 Speaker 3: (laughs) .

▶ 31:11 Speaker 5: Okay. So, this slide is showing the percentage of the levy class before any shift. So 95% of the property value in Melrose- (coughs) . ... is residential. There's also a breakdown of the number of parcels by property type. The total taxable value in Melrose is now at about $8 billion.

▶ 31:34 Speaker 5: Uh, on November 13th, the Department of Revenue certified Melrose, Melrose's fiscal year 2026 new growth of $780,859. This adds an additional 1% to the tax levy this year. This graphic shows the breakdown of new growth over the past five years. There are several, several recently developed or under construction mixed-use properties which will contribute growth in the upcoming years. About 20% of new growth this year is from four large top taxpayer utilities and telecommunication personal property accounts. For residential growth, we had 12 to 16 Essex Street and 453 Franklin Street mixed-use building projects and a number of new homes and condos. And I just want to recognize our Assistant Assessor, Tina Salerno, who played a key role in analyzing and capturing the new growth with me during this busy year.

▶ 32:34 Speaker 5: (phone rings) So for the next one, um, this shows how we arrive at the tax rate for the fiscal year. So on the left is, um, a Department of Revenue form (laughs) uh, that shows the s- total values in Melrose by property type. It may be a bit difficult to see, but, uh, the number's in each class, but at the bottom it shows the total taxable valuation at roughly $8 billion. So we start with the tw- fiscal year 2025 levy limit. We add the amended growth from the previous year, we add 2.5% as allowed through Massachusetts Law Prop 2.5. We add the certified new growth and then we add the 13.5 million from the override vote, then add the fiscal year 2026 debt service to a- to arrive at the max allowable levy of $95,789,625. We take that number and we divide by the fiscal year '26 total taxable value in the city to arrive at the single tax rate of $11.91 per $1,000 of assessed value. For the residential tax rate, we add the two cents to the single rate to cover the cost of the circuit breaker exemption to get $11.93 if there's no further shift. The commercial rate would remain at $11.91. So as I mentioned earlier, the assessors determine the full and fair cash value of all real and personal property in the city as of January 1st. The market values for the fiscal year 2026 are determined using arm's length sales from calendar year 2024. The average value of a single family home for this fiscal year '26 is $853,264, a 4.4% increase from last year. I have factored in the exempted assessed value from the senior circuit breaker exemption to determine this, um, average single family value as of now, but it could change slightly once the fa- um, final tax rates have been set.

▶ 34:36 Speaker 5: So this slide just shows the, um, changes year over year and total assessed value by the property type. Um, there were- wasn't any, any significant value changes in any property type this year.

▶ 34:50 Speaker 5: Um, this is showing the assessed values by class over the last six years. So the residential class was around $5.8 billion in 2021, and for fiscal year 2026, the value is now at $7.6 billion.

▶ 35:10 Speaker 5: Um, and then this slide is a comparison of Melrose and some of its surrounding communities' fiscal year 2025 average single family assessed values, tax bills, and residential tax rates.

▶ 35:26 Speaker 5: Um, the next slide here shows the fiscal year 2025 residential to CIP percentage of total value in Melrose versus its surrounding communities. I just want to make a note here 'cause I received a question about it. Um, Lynnfield, Malden, Saugus, Stoneham, and Wakefield typically shift to their maximum allowable shift. Um, Reading this year chose a 1.14 shift, and Winchester has historically chosen to maintain a flat rate, no shift.

▶ 36:04 Speaker 5: Um, this shows the, um, historical levy p- percentage paid by the residential and CIP classes after the shift. While the residential class has made up 95% of the property value over the last decade and beyond, the City Council has chosen a shift so that the residential class (clears throat) has paid only 91 to 92% of the levy.So

▶ 36:32 Speaker 5: these are the shifts that have been chosen for the past 10 years, the average single family tax bill, and the average impact year over year. Last year, a shift of 1.73 was chosen, which increased the average single fam- family tax bill by 3% or $238 over the prior year. In the absence of override years, the average single family bill has increased an average of 3% per year in the last decade. And it's not shown here, uh, but the last year, last year, the average commercial bill increased $495 or 3.6% from 2024 to 2025.

▶ 37:15 Speaker 5: So this graphic demonstrates the effect of the tax shift. So we're looking at the tax rate options applied to the average single family value and the average commercial value. I just wanna make a note here that the average commercial value is calculated only from commercial parcels and the commercial value of mixed-use parcels. Industrial and personal property accounts also pay the CIP rate, and some of the city's top s- taxpayers are in those sectors. For example, our top utility companies are valued at 54 million and 43 million. An average commercial building would be similar to the medical office buildings along Main Street. With no shift or choosing a residential factor of one, the single family tax bill would increase by about $2,084, and the commercial bill would de- decrease 32% by S- $4,614. With the max shift of 1.75, the average single family bill would increase 1,683 at about a 20.8% change, and the commercial bill would increase 2,718 or about 18.9%.

▶ 38:29 Speaker 5: So, historically, the city has always budgeted to levy at the maximum allowable amount under Prop 2 1/2. However, because the tax rate and levy calculation involves rounding and we cannot go over the maximum allowable levy, the actual tax levy often falls slightly below the true maximum. The di- this difference between the maximum allowable levy and the amount we are able to levy at the chosen shift is referred to as our excess levy capacity. It's not a tax policy chose- choice, but simply a r- result of rounding when the tax rate is applied to each class of property. So this brings us, uh, to the shift options. Um, this, the complete list of shift options is on the next slide, but here I included only the range that the council has conside- considered and chosen from in the past decade. On the left in green, you will see the residential rate, the corresponding average single family tax bill, the dollar increase, and the percent increase from last year. On the right in blue is the corresponding CIP rate, the average commercial bill at that rate, the dollar increase, and the percent increase. As a reminder, the t- fiscal year 2025 residential rate was 9.90 and the commercial rate was 17.75. And while we speak of the shift in discussion, when voting, the council must select the residential factor that corresponds to the co- the chosen shift. Please note that the final tax rates and excess levy capacity may change slightly when we submit these numbers to the Department of Revenue, again, due to rounding. And then the la- the next slide is, um, the list of all the options available and the effect at each interval from 1 to 1.75. And the final slide, for reference, I included definitions of some of the terms we used during the tax classification hearing. Um, and just another reminder about the resident, selecting the residential factor, not the shift number. Uh, we can go back to that slide, um, so that you can review the options. Um, otherwise, that concludes my presentation, and I am happy to answer any questions that you have.

▶ 40:45 Leila Migliorelli: Thank you. That presentation was very helpful. Um, I will now entertain any questions from my colleagues. Councilor Vandiver?

▶ 40:55 Kimberly Vandiver: Thank you, Pres- (clears throat) thank you, President Migliorelli. Thank you, uh, Assessor McClellan. Um, I had two primary points I wanted to, to hit on. Um, so the first is, uh, a- as you were, um, talking about on the slide showing our peer communities and, and, um, their commercial industrial property percentages, um, you mentioned what they do with their tax shifts, um, and in particular, Winchester, who, other than us, has the lowest CIP percent, has chosen the, the flat shift, the, the 100%. Um, and you mentioned as well, I believe, Reading, uh, which is the, the next lowest after us, chose a, a 1.1, so also on the lower end. Um, so, uh, it is my view that whether it's this year or in a future year, I think Melrose should move towards that policy direction of closer to the 100% than the 175%. Um, because we have such a low, um, proportion of commercial industrial property that what we're doing is we're making their tax bills much larger, 175% of what they would pay if it was flat, and we're not helping ourselves that much. There's not that many of them. There's not that many dollars there. And I don't think, uh, you know, if you look at the differences between the 100% and the 175% for residential and for commercial, it's a swing of, I think, 600...... for, per average residents and it's swim of like, what? 8,000 for the businesses or something? It's a much bigger impact and drag on the businesses than it is a boost to the residents. So I just, I, I feel like we should strongly consider moving in that direction. I, uh, I understand, you know, I think for this year, I don't know if we wanna swing all the way over, especially in a year with the override passing, um, but, uh,

▶ 43:03 Kimberly Vandiver: uh, that, that is, uh, my general, um, sense of things. Um,

▶ 43:13 Kimberly Vandiver: a- and so for that reason, I guess, I, I would be in favor of, you know, on the slide where you ha- of choosing something on the lower end that also doesn't leave a, a lot of estimated excess levy capacity. So personally, I would lean towards, for example, a .9675. Um, I, I also wanted to ask you a question about, obviously this is a year where we are looking at a tax increase because of the override passing. Mm-hmm. Um, and I was wondering if you could also, while you're here with us, give us a reminder of what people could do regardless of the rate that we choose tonight if that is a financial difficulty for them?

▶ 43:48 Speaker 5: Mm-hmm. Yeah, so we do have, um, all of our, exemptions that are available listed on our website, and we encourage, um, everyone interested to, um, contact the Assessor's Office. We did, um, do a release about it in the weekly newsletter last week, the mayor, from the Mayor's Office. Um, but we also have a deferral program that is not widely util- utilized in Melrose, um, available to adults, uh, 60 and older. It does have, um, income limit of 60,000, um, but de- deferred taxes accumulate just with simple interest at 4.5% as a lien on the property until it's sold or the owner is deceased and that interest is not compounding. Um, but yeah, so that's just another option that's not widely used here in Melrose. Yeah.

▶ 44:42 Kimberly Vandiver: Th- thank you for that, um, reminder. Um, I guess with that, can I make a motion or?

▶ 44:52 Speaker 7: I mean, we can do questions and then... Okay. Um, Councilor Stewart?

▶ 44:58 Robb Stewart: Thank you, Madam President. And Ms. McLachlan, as always, a, a very clear, concise presentation, I appreciate that. (laughs) Thank you. Um, uh, I differ on the opinion that was expressed, uh, Madam President, and, uh, I believe that with the override and the impact that our residents are gonna have this coming year, I think we should shift to the max. Um, and I would support that, uh, completely. I think there's a tremendous burden already that the, uh, taxpayers are gonna be presented with, uh, and I think we can minimize, uh, the overall impact to the best of our ability that's sitting in this council. And that's my intention, is to recognize that there is a burden, uh, within the community that we need to recognize and have that opportunity to address to the best we can. Thank you, Madam President.

▶ 45:48 Speaker 7: Okay. Uh, next up, I have Councilor Garipay.

▶ 45:51 Mark Garipay: Thank you, Madam President. Um, I, I do agree with, um, Councilor Stewart. I, I made the motion the last few, few years. I mean, I understand businesses. We're a 95% residential community and we are all elected by the residents. So, uh, my goal is to, to make sure that I can keep their increases as

▶ 46:19 Mark Garipay: l- low as possible, b- barring the override. This year, we're looking at a 20, 20%, 20, 20.9% or 20.8% increase for residential as it is with the max shift. Um, r- the businesses can go out and generate, generate more revenue. I, I appreciate everything they do, but I, this is a real burden, especially this year on the residentials. And I will not support anything that is not on the higher end of the shift that can alleviate any, um, any benefits for the, for the residents that elect us to be here. So, thank you.

▶ 46:52 Speaker 7: Any other questions from the council? Councilor Williams?

▶ 46:57 Ryan Williams: Thank you. Um, through the chair, I wanted to clarify Councilor Vandiver comment. Did- was it said the residential factor of .9675, which would, excuse me, would be the shift of 1.62? Uh, yes. Okay, thank you. Um, as I look at the sheet, this is on the, I guess, on the whole sheet, it is definitely on the higher end. For folks who may not be, um, looking at the sheet, uh, or have easy access to it, we're talking about a difference of, at 1.62, we're talking about $1,752 average change, 21.64% percent change. At the maximum shift, excuse me, at the maximum shift, we're talking about $1,683. So that is about $80 a year of residential property taxes. And the shift to commercial at the maximum goes to

▶ 48:01 Ryan Williams: from 1445 to 2,718. So it goes up about $1300 a year. I am, uh, sensitive to the argument that certain taxpayers, um, are looking for relief. I know that in some cities that have high percentages of residential properties such as Newton, they routinely do the max shift every single year. Um, I like to strike a balance where we're not asking too much of the business community, but we're getting something for residents. So I feel like we may be landing somewhere between that 1.62 and 1.75 area, but I'm-

▶ 48:42 Speaker 1: I'd like to hear from more people on the council. Thank you.

▶ 48:46 Speaker 7: Thank you. Councilor Romanul.

▶ 48:47 Devin Romanul: Um, (clears throat) thank you so much for the presentation. Uh, really appreciate the materials beforehand as well as the, the subsequent explanations. So, a-answered all of my questions right out of the gate. Um, so thank you for that. Um, to my colleagues, uh, I, I just want to say, I, I, I hear what all, all of you are saying. My, um... as I was contemplating either making a motion or just trying to figure out what is the, the right balance, some sort of pain sharing if you will, uh, to make sure that we aren't, uh, overly burdening either party. I know we, we've gotten closer to the max the last couple of years. Um, as someone who owns a small business, the, the, the max number kind of makes me raise my eyebrows. I just want to make sure we aren't doing anything that is overly deleterious to their efforts to, uh, run a business in our community. So, I, I think that's one thing I was shying away from, was that, that max number, um, to make sure that we aren't, you know, doing anything overly harmful to operating small businesses. We don't have that many in our city and that's just something I'm, I'm cognizant of, that they're, they're there to serve our populations. One of the wonderful things we have about our downtown is the vibrant, um, shops and businesses that we have there. So, um, my, my instinct had been in that, you know, 1.7, uh, factor of .9631, um, in that territory where you had roughly, you know, the difference between that 1.7 shift and the 1.75 shift was, you know, you're, you're talking like $24 on the resident, but saves the, you know, uh, the small business owner, you know, $400 over the course of the year. That felt like a pretty good bounce to me, but I'm really eager to hear what you all have to say. Um, but I did, I did have that reflex of like, "Oh my God." (laughs) Don't want to go all the way pedal to the metal on one side, so. Uh, but, but eager to hear where, where all of you are at.

▶ 50:38 Speaker 7: Any other councilors, for the first time?

▶ 50:42 Leila Migliorelli: Um, I have just one question. So the, when we're talking about the, the shift to commercial, we're talking about commercial property owners, because it's owning property. So it's not necessarily small business owners, it's the, it's the people, um, that own the property that which small businesses operate. So you could say that they would pass on the, the burden to small business. They may or may not pass it on, but most of our small businesses are tenants within commercial properties. So it would be taxing the commercial property, the space owners, not the businesses themselves. So just that, that, just clarify that that's correct. Correct, yeah.

▶ 51:21 Speaker 7: Okay. Um, thank you. And I just have one other verifying question. Um,

▶ 51:31 Leila Migliorelli: no, actually you answered it. I'm all set. Okay. So Councilor Paniciaro for the first time.

▶ 51:36 Cal Finocchiaro: Yes, thank you President McGillivray. Um, I just want to clarify for the general public, the new apartment buildings that are going up,

▶ 51:43 Speaker 2: the, the buildings, those are taxed at the residential rate, correct?

▶ 51:46 Speaker 5: Or- Um, so some of them have, um, commercial element too. But predominantly residential.

▶ 51:53 Speaker 3: Okay. Thank you.

▶ 51:58 Speaker 7: Anyone else for the first time? Okay.

▶ 52:01 Leila Migliorelli: Uh, Councilor Vandiver.

▶ 52:03 Kimberly Vandiver: Thank you. Um, yeah, uh, I appreciate the discussion and, and certainly want to be sensitive to, um, how, how individuals are going to feel the tax burden this year. I think the two things just to comment along with the discussion, one is that the slide that we're looking at right now is only showing us as, to highlight, it's only showing us 1.6 to 1.75 out of a total range of 1.0 to 1.75. So as was mentioned, we're already looking at the upper- Mm-hmm. ... section of the whole chart. Um, and so I, you know, I, I personally I would like to be on the rest of the chart, not even on that other page. But you know, given that if we're working within that page, I'd like to be on the lower end. Um, and, and also to Councilor Romanul point, I, you know, I just, I think about the small business owners who are, may get these taxes passed through. And I know of small businesses that tried to be in Melrose that have left Melrose, gone to Malden because the rent is too high that, you know, they can't make it work here. And we have vacant business slots. Everybody wants business in these new residential mixed business units, but if the, the economics don't work, we won't have business. And I, I, to Councilor Romanul point, it's not just about the money for residents. It's about the variety of options downtown. It's about the things that you can access. And, and so I think we also do need to be cognizant of what we're asking of the, the local commercial property owners as well.

▶ 53:41 Speaker 3: Thank you. Thank you.

▶ 53:46 Speaker 7: Anyone else with questions? If not, then Councilor Garipay?

▶ 53:52 Mark Garipay: I'll make a motion to do a residential shift factor of 1.73 or residential shift factor of .9617.

▶ 54:00 Leila Migliorelli: Second. Uh, motion made by Councilor Garipay, seconded by Councilor Stewart for a residential shift of 1.73, which is a residential factor of .9617. Correct. Okay. Councilor, on discussion?

▶ 54:18 Robb Stewart: Thank you, Madam President. Madam President, I just wanted to make one observation about this. It's not the absolute number of the tax increase. It's relative to the amount of income that's coming in, to whether it's a residential or a commercial. And a commercial typically has a much greater amount of income on average than a residential. So you know, if you're looking at $80 versus $400, that's looking at an $80,000 a year person versus $400,000 business. And to me, that's... That balances out. So I just wanted to make that point, Madam President.

▶ 54:55 Speaker 7: Thank you. Anyone else on discussion?

▶ 54:58 Leila Migliorelli: Seeing none. Madam Clerk, will you please call the role?

▶ 55:04 Speaker 2: Councilor Finocchiaro? Yes. Council Garopeh? Yes. Council Hamilton? Yes. Council Jamaleddine? Council Karamchandy? Yes. Counselor, Counselor Romanul? Yes. Council Stewart? Yes. Council Vandiver?

▶ 55:25 Speaker 3: No.

▶ 55:27 Speaker 2: Council Williams? Yes. President Migliorelli? Yes. That motion passes.

▶ 55:35 Leila Migliorelli: Okay. Thank you. Um, I'm realizing... So we made that motion, that passed. Are there any... If there's anyone wishing to speak in the public, uh, comment on this? This, this is a public hearing. Um, raise your hand. (laughs) If not, 'cause I'm, I'm assuming not, um, is there anyone online wishing to speak? No one online. Okay. So now that that motion passes, um, and that's a final, final vote, um, I will now motion by unanimous consent to close the public hearing, seeing no objections. The hearing is now closed. Thank you very much for being here tonight and thank you for the presentation. Thank you for joining us.