BOS to discuss Tax Classification and Fayville Hall Disposition on Tuesday

by beth on September 27, 2018

The Board of Selectmen posted its agenda for Tuesday night. With two items that some readers care passionately about listed, I’m giving you an advance heads up.

The agenda includes Fayville Hall Disposition with a note that the board may vote. The packet provides no insight to the status of the project or intent of discussion.*

Back in July, selectmen agreed to put the historic property back out to bid. At the time, they had received only one offer from the original bid. The developer would have paid only $5,000 for the property but promised to preserve the building. There were also other conditions and caveats related to affordable housing, septic, etc.

I haven’t seen anything or heard more about the project since. (You can read more background from my earlier coverage here.)

The other item is the annual Tax Classification Hearing. This year’s presentation by the Board of Assessors is previewed in the agenda packet. It highlights an increase in overall property values, with this impact in Southborough:

Towns total valuation increased by $76.29 million to a new high of $2.518 billion in FY19

Assessors are recommending adopting the single rate as follows:

FY2019 tax rate would increase 3.72% from $16.14 to $16.74

The average single family tax bill would rise from $9,632 in FY2018 to $10,275 in FY2019, a $643 or 6.68% increase *

*Excluding the Community Preservation Act surcharge (Avg. Single Family Home = $86.01)

Some residents have passionately argued for a split tax rate to reduce residential taxes. It’s an option that a 3 member board agreed to in 2010 but reversed their decision on after major blowback from businesses and promoters of economic development.

Since then selectmen have consistently supported the stance that a higher tax rate for commercial would drive away existing businesses and deter prospective new ones. With far more residential property in town, a small increase to residents would require a proportionally larger increase for businesses. 

In some years there is little public comment after the assessor presentation. In other years, attempts by split rate advocates to sway the board have prompted longer discussion and public comment debate.

One resident who has long-lobbied for a change is Carl Guyer. He claims that his data shows that economic development arguments are flawed. In his most recent letter on the blog last fall, Carl wrote: 

As evident by this data, holding down commercial and industrial tax rates with a single rate is not been the key to a substantial commercial and industrial tax base. It is mistake to continue to believe otherwise.

(You can read his argument and commenter response here.)

Back in 2014, a citizen-petition Town Meeting Article to advise selectmen to select a split rate was publicly advocated for by Guyer. Voters shot it down.

This year, assessors say that a 1.2% decrease in the residential rate would save the average homeowner $125 while requiring a 5% increase for businesses with an extra $2,351 on the average Commercial and Industrial tax bill.

The assessors also analyzed and rejected two alternative means to reduce tax burdens for some – tax exemptions for residents and small businesses. The first was a reduction for owners of residential properties who list them as their primary residences. It was dismissed as only appropriate for communities with a large percentage of vacation or seasonal rental properties. The second seemed to be rejected for requiring an increase in taxes for businesses that aren’t small. 

The hearing is scheduled for 6:30 pm on Tuesday, October 2nd in the Town House Hearing Room. You can read the agenda and presentation here

*(Note: The packet could be updated on the website between now and the meeting. To check if there is a more recent version, click here.)

 

{ 11 comments… read them below or add one }

1 SB Resident September 27, 2018 at 11:26 AM

The federal state and local tax (SALT) deduction being capped at 10k is specifically designed to increase taxes on residents of upper middle class towns like ours. At the same time, the new tax code also significantly reduces taxes for businesses. The fact that so many communities are splitting the tax rate creating higher taxes for businesses is one of the driving forces for the federal business tax reduction in an attempt to reeven the playing field. By not reacting and adopting the split tax we are voluntarily letting ourselves to be the ones to lose out in this rebalancing.

Reply

2 Kelly Roney September 27, 2018 at 3:27 PM

Very astute analysis.

Reply

3 Carl Guyer September 27, 2018 at 5:55 PM

What would it take for the Southborough Board of Selectmen to adopt a split real estate tax rate? Could they ever be convinced to require commercial property owners to pay a rate greater than the rate on 80% of the commercial property in the state? Would they increase commercial tax rates to provide the residents with the benefit of paying a tax rate lower than the rate on 75% of the residential property in the state?

This all may sound absurd, however, our current Board of Selectmen are unswerving in their efforts to create the reverse situation. In believing a single tax rate for residential and commercial property in Southborough is sound fiscal policy, they compel residential property owners to pay a real estate tax rate greater than the rate on 80 percent of the residential property in the state. At the same time they create a commercial property tax rate that is lower than the rate on 75 percent commercial property in the state. It is simple mathematics, require a single rate with our town’s demographics, you mandate high residential rates and low commercial rates. What may seem so fair on the surface is a disturbing financial snare for residents; it may even be an absurd situation.

In 2017, the average real estate tax rate on residential property in Massachusetts was $13.02 while the average commercial rate was $22.64. That same year Southborough’s tax rate was $16.03. As you can see, the results are a relatively high rate for residents and a low rate on commercial property.

The 30% of Massachusetts’s communities with split tax rates contain 78% of all the commercial property paying an average tax rate of $24.84. For these same communities the average residential property tax rate is $12.45, which is lower than the state average of $13.02. The common perception of fleeing commercial property and higher residential taxes in split rate communities is just wrong.

With residents paying a high residential tax rate, is it too much to ask for our commercial property owners to pay something close to the average commercial tax rate? Bring our commercial tax rates in line with the state averages and the impact to the average residential property owner would be dramatic. The average residential tax bill would see a reduction between $1,000 and $2,000. Even with this, the residential tax rate would still be above average. Can we possibly have a condition in the future with a slightly below average commercial rate and a closer to, but still above, average residential rate? Who would think this is not fair?

Reply

4 Lucy September 28, 2018 at 8:04 AM

First, majority of the BOS will not do this because the largest commercial owners really run the town. Dipietri and others will not like a split tax rate so Kolenda will never adopt it.
Stop allowing them to control this and make them limit the spending in areas that are not schools. It’s our own fault as citizens because most are asleep and vote for the popular candidate

Reply

5 my town sb southborough October 3, 2018 at 8:06 AM

After watching the BOS meeting, I find I must ask, if we really do have 5 selectmen. We voted for 5, but Mr. Kolenda is absent more than in attendance at BOS meetings.
What are the rules for members of boards and their persistent and frequent absence.
This is a ongoing problem, and needs to be addressed by all boards now.

Reply

6 southsider October 3, 2018 at 10:43 AM

Dan Kolenda has a job, spends time with his family and his kids sports, serves our country and our town. And that’s just what I know! Given his nature, he’s probably involved in church/charity things also!
I wish there were a dozen more like him living in Southboro.
I’m very willing to give him some slack for missing a BOS meeting now and then.
His attendance record was well known before the last election and we gladly voted him back into that Office.

Reply

7 Carl Guyer September 28, 2018 at 8:23 AM

“This year, assessors say that a 1.2% decrease in the residential rate would save the average homeowner $125 while requiring a 5% increase for businesses with an extra $2,351 on the average Commercial and Industrial tax bill.”

Who came up with this? 20% of Southborough’s tax base is commercial property. That is a four (4) to one (1) ratio of residential to commercial property. The implication in this statement is a ratio of 18.8 to 1.

The only way this could happen is if the value of the average commercial property was assessed at 4.7 times the average home value. That puts the average commercial property at a value of $2.7 million with current tax bill of $43,471. So, using the assessors information that would cause the average commercial tax bill to be $45,822 in the future. For 78% of the commercial property owners in the state, their tax bill on a similar property would be $67,068.

This is all based on the assessors being accurate in their claim.

Maybe the assessors can explain how they derived their results and how they thought it was an accurate financial representation.

Reply

8 beth September 28, 2018 at 9:40 AM

I pulled the numbers you refer to from the presentation which does give more detail on the data behind it. The story provided the link to the agenda packet with presentation. The numbers are taken from page 18 of the packet. You can read that here.

Reply

9 beth September 28, 2018 at 9:42 AM

I’m not sure that is all the data you are looking for – just wanted to make sure that you are looking at their presentation and not assuming my pulled highlights were all the data they gave.

Reply

10 Carl Guyer September 28, 2018 at 10:16 AM

I looked at the slide, it is still a deceitful presentation. It simply slices the potential savings to residents down to a small amount while ignoring statewide demographics. They are proposing a split rate ratio of 1.05 when the average ratio in split rate communities is closer to 2.0.

They even make the statement that a spilt tax rate would provides no real benefit to residential tax payers. Of course it looks like no big deal when you divide the potential savings by 20. Can’t we think beyond one year and start a year to year correction to bring Southborough in line with the rest of the state.

Reply

11 Sign Me Up September 28, 2018 at 8:55 AM

Very reasonable position. Can we bring it to Town meeting to make it happen?
Facts vs hysteria always catch my attention!

Reply

Cancel reply

Leave a Comment

Previous post:

Next post: