Fiscal Year 2010

Tax Classification Hearing

Jan Dangelo, MAA

Director of Assessing

November 16, 2009

The purpose of the classification hearing is to determine the percentage share of the tax levy that each class of property will pay. The Board of Selectman must determine a residential factor. The residential factor is used by the assessors to determine the tax levy paid by each class of property andcalculate the tax rate.

Fiscal Year 2010

Tax Classification Hearing

Property Assessment ReviewProperty Assessment Review

This year for the third consecutive year, there is a shift in value from residential to commercial. As a result, commercial taxpayers will pay a larger share of the tax levy.

Overall, single family homes decreased slightly this year for the second year in a row. Small condominiums had the largest decrease. The average single family assessment dropped from $471,000 to $452,620.

Commercial and mixed use property values increased. Commercial condos, small retail, office and various other commercial buildings continue to perform well. Industrial properties also increased after a year of virtually no change.

Property Assessment Review

New Growth was certified at $193,644,320. Condominiums contributed the largest increase. This is a direct result of the condos at Nouvelle, South Ave, and the armory location. Single family home new growth has slowed. Telecommunication companies and retail properties contributed to our personal property new growth of $12,182,950.

New Growth

The maximum levy allowed for fiscal year 2010 is

$77,024,748

Maximum Allowable Levy

Levy Limit Calculation

TO CALCULATE THE FY2010 LEVY LIMIT  

A. FY2009 Levy Limit from I. 72,154,997  

A1 ADD Amended FY2009 Growth 0  

B. ADD ( IIA + IIA1 ) X 2.5% 1,803,875  

C. ADD FY2010 New Growth 2,147,515  

D. ADD FY2010 Override    

E. FY2010 Subtotal 76,106,387  

F. FY2010 Levy Ceiling 164,890,904 $ 76,106,387

    FY2010 Levy Limit

TO CALCULATE THE FY2010 MAXIMUM ALLOWABLE LEVY

A. FY2010 Levy Limit from II. 76,106,387  

B. FY2010 Debt Exclusion(s) 918,361  

C. FY2010 Capital Expenditure Exclusion(s)    

D. FY2010 Other Adjustment    

E. FY2010 Water / Sewer    

F. FY2010 Maximum Allowable Levy $ 77,024,748

MAXIMUM LEVY

This years excess levy capacity is $53,673.89

This is the difference between the maximumlevy and our actual levy. We are at our maximum allowable levy, since increasingthe tax rate by one cent would exceed the limit.

Levy Limit – Actual Levy = Excess Levy Capacity

Excess Levy Capacity

The minimum residential factor is 84.3758%. This is the factor that would split the tax rate toward commercial at 150%. This would increase the commercial tax rate by $5.83 per thousand and reduce the residential rate by $1.82 per thousand. A residential factor of 1.00 will maintain a single tax rate. A residential factor below 1.00 will result in a split tax rate.

Residential Factor

Classification Impact Examples

      Tax Levy Shift

TypeTypical

Property Assessmt 100% 110% 120% 130% 140% 150%

Resid Condo 250,000 $2,917.50 $2,827.50 $2,735.00 $2,645.00 $2,552.50 $2,462.50

Resid Single or Multi 500,000 $5,835.00 $5,655.00 $5,470.00 $5,290.00 $5,105.00 $4,925.00

Resid Single Family 750,000 $8,752.50 $8,482.50 $8,205.00 $7,935.00 $7,657.50 $7,387.50

Resid Single Family 1,250,000 $14,587.50 $14,137.50 $13,675.00 $13,225.00 $12,762.50 $12,312.50

Resid Sm. Apartment 1,500,000 $17,505.00 $16,965.00 $16,410.00 $15,870.00 $15,315.00 $14,775.00

Resid Lg. Apartment 15,000,000$175,050.0

0 $169,650.0

0 $164,100.0

0 $158,700.0

0 $153,150.0

0 $147,750.0

0

Commerc Gas Station 750,000 $8,752.50 $9,630.00 $10,500.00 $11,377.50 $12,255.00 $13,125.00

Commerc Small Retail 1,250,000 $14,587.50 $16,050.00 $17,500.00 $18,962.50 $20,425.00 $21,875.00

Commerc Office Bldg 40,000,000

$466,800.00

$513,600.00

$560,000.00

$606,800.00

$653,600.00

$700,000.00

Commerc Retail Mall 405,000,000

$4,726,350.00

$5,200,200.00

$5,670,000.00

$6,143,850.00

$6,617,700.00

$7,087,500.00

Mixed Use

Residential w/ Office 1,250,000 $14,587.50 $15,093.75 $15,593.75 $16,093.75 $16,593.75 $17,093.75

Residential Change -3.08% -6.26% -9.34% -12.51% -15.60%

Commercial Change 10.03% 19.97% 29.99% 40.02% 49.96%

Mixed Use Change 3.47% 6.90% 10.33% 13.75% 17.18%

 Residential Factor 1 0.9687 0.9375 0.9062 0.8749 0.8437

0.01284 0.014 0.01517 0.01634 0.0175

The board may also adopt a residential exemption of up to 20% of the average residential value. The average residential value is $404,679. The residential exemption shifts the tax burden within the residential class. It does not split the tax rate. Non-owner occupied and many residential properties would actually pay a higher tax. The residential exemption works well in communities with a high percentage of non-resident property owners such as the Cape and communities with a large number of apartments and rental units. Natick does not have a high percentage of non-resident owners.

Residential Exemption

Residential Exemption Examples

Selected Exemption

No Exempti

on 5.00% 10.00% 15.00% 20.00%

Residential Exemption $0 $20,234 $40,468 $60,702 $80,936

Residential Tax Rate 11.67 12.19 12.76 13.38 14.07

Commercial Tax Rate 11.67 11.67 11.67 11.67 11.67

Assess Tax Tax Tax Tax Tax

Owner Occupied Home

400,000.00

4,668.00

4,629.35

4,587.63

4,539.81

4,489.23

Commercial400,000.0

04,668.0

04,668.0

04,668.0

04,668.0

04,668.0

0

Non Occupied Home

400,000.00

4,668.00

4,876.00

5,104.00

5,352.00

5,628.00

Vacant Land400,000.0

04,668.0

04,876.0

05,104.0

05,352.0

05,628.0

0

Owner Occupied Home

800,000.00

9,336.00

9,505.35

9,691.63

9,891.81

10,117.23

Commercial800,000.0

09,336.0

09,336.0

09,336.0

09,336.0

09,336.0

0

Non Occupied Home

800,000.00

9,336.00

9,752.00

10,208.00

10,704.00

11,256.00

Apartment2,500,000.

0029,175.

0030,475.

0031,900.

0033,450.

0035,175.

00

Commercial2,500,000.

0029,175.

0029,175.

0029,175.

0029,175.

0029,175.

00

Fourteen communities adopted a residential exemption in 2009.

Barnstable Everett SomervilleBoston Malden TisburyBrookline Marlborough WalthamCambridge Nantucket WatertownChelsea Somerset

Owner occupied condominiums in West Natick would benefit most from a residential exemption.

Residential Exemption

The board may also approve a small commercial exemption of up to 10%. This is only available to businesses that employ less than 10 people annually (as certified by the Department of Labor and Workforce Development) and are valued less than $1,000,000. All businesses at the property must qualify. Approximately 75 properties would qualify.

Small Commercial Exemption

Six communities adopted a small commercial exemption in 2009.

Avon SomersetBellingham WestfordBraintree Wrentham

Adopting a small commercial exemption without classifying taxes would result in an effective tax rate for some commercial properties that is less than the residential rate.

Small Commercial Exemption

Single Family Tax Bill Comparison

5,493

11,194

4,735

6,157

7,5088,057

5,7335,223

6,907

8,043

12,446

7,879

10,123

5,159

10,603

9,907

6,784

15,293

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Fiscal Year 2009 Average Single Family Tax

Natick’s average single family tax bill increased 47.9% since 2001. The statewide average increase is 50.4%. The average increase of the area communities is 61.1%. Sixteen of the seventeen area communities increased more than Natick.

Average Single Family Tax Bill Comparison

Classification Percentages

Property Class Percentages

Resid 76.1914%

CIP 23.8086%

This year we experienced a value shift toward commercial. Commercial property owners will pay a greater share of the property tax in FY2010.

The board must adopt a residential factor. A residential factor of 1.00 will result in a single tax rate.

Conclusion

A residential factor less than 1.00, will result in a split tax rate.

You may also adopt a residential exemption.

You may adopt a small commercial exemption.

Conclusion

Questions

Fiscal Year 2010

Tax Classification Hearing

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