Letter: Rebutting Assessors’ Tax recommendation

by beth on October 30, 2018

[Ed note: My Southborough accepts signed letters to the editor submitted by Southborough residents. Letters may be emailed to mysouthborough@gmail.com.]

To the Editor:

At the Southborough Board of Selectmen meeting on October 2, 2018, the Principal Assessor for the Town of Southborough made a presentation on behalf of the Board of Assessors containing their 2019 tax policy recommendations (the “Presentation”). In the Presentation was an analysis of a potential split of real estate tax rates. The Presentation can appropriately be described as a financial circus—erroneous analysis methodology based on a confusing array of data that, not surprisingly, produced misleading conclusions. The Presentation distorts the consequences of a split tax rate to exaggerate the tax increases to commercial and industrial property owners while understating the tax reductions for residential property owners. The analysis is so distorted that it seriously erodes the credibility of the Assessor’s office.

The first distortion in this analysis is a false equivalency. The analysis compares the average residential property value to the average commercial property value. This analysis would be valid if the two averages were close in value, but they are not. The average commercial property value is 4.5 times as large as a residential property (or about $614k for residential property and about $2.8MM for commercial property). Comparing the actual dollar cost that any tax rate adjustment would have on these two “average” properties is invalid and it implies a lack of financial understanding. This comparison of “averages” produces an exaggerated and misleading representation of the impact of adopting a split tax rate. 

If the false equivalency error is not serious enough, the Board of Assessors adds another degree of inaccuracy in the Presentation. To understand this second error, it is important to understand that 78% of the commercial and industrial property in Massachusetts is taxed in communities using a split tax rate. The average split-rate ratio (commercial tax rate divided by residential tax rate) for these communities is 1.98. For some reason, the Presentation uses a case study with a split-rate ratio of only 1.06 (or a split-rate ratio one seventeenth (1/17) of the Massachusetts average split-rate ratio)— without illustrating the potential impact of increasing this ratio in the future to provide additional benefit for residential property owners. The Presentation declares that the resulting residential household savings of $123 is insignificant and therefore it deems the entire idea of a split tax rate to be not worthy of adoption. The Presentation includes no illustration of the potential savings to residential property owners in the future, or no discussion of the possibility of a gradual split tax rate adjustment to bring Southborough into closer alignment with split-tax-rate communities. “Shortsighted” is a kind description of the Presentation’s analysis process.

It is not clear why the Board of Assessors would present the Selectmen with such an erroneous comparison of a $123 residential savings versus a $2,351 commercial cost increase and represent this comparison as fair or accurate. The Selectmen, and the Town’s residential taxpayers, should consider asking for the answer to this question.

Was the Presentation a circus? Yes, it was. It appears that the residents of Southborough are being, as they say, “thrown under the bus”. The Board of Selectmen was given a biased perspective of this issue and they never had a chance to make an informed decision. Why this was done and what motivations may have been behind this biased Presentation are topics that certainly seem worth looking into.

Carl Guyer
Southborough

{ 4 comments… read them below or add one }

1 dazed October 30, 2018 at 4:10 PM

From the content of the letter above, it sounds as though the Principal Assessor, as well as the Board of Assessors, has their collective minds made up to continue with a single tax rate for the town – and made a lop-sided presentation to that effect in order to influence the BOS.

I cannot tell from the letter whether the author is in favor of a split tax rate or against it.

Why should a commercial establishment, whose purpose is solely to make money, be paying a property tax rate identical to that for residences (which are not businesses)?

Further, why do our property taxes continue to rise when ever more residential units are build in this town? 168 units have been added in Madison Place alone. Why has this had no effect on lowering what we have been paying in property tax?

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2 SB Resident October 31, 2018 at 11:29 AM

I think the implication is more the opposite. A majority in the BOS has its mind made up and thus the Assessors put together a presentation to support that. The second implication is that the the commercial establishment has enough power in this town to prevent the split tax.

Our taxes continue to rise even though more units are added is mostly because on average the added units are families. (I can’t speak to Madison Place since apartments have different ratios) Families have children and children in the school system is our largest expense, most added units with families are a loss for the town. You can watch the second big reason our taxes are going up being built over on Cordaville Rd.

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3 Publius November 1, 2018 at 3:59 PM

A dual rate is a dangerous road to take and once take nearly impossible to reverse. Communities that have signed on to a dual rate eventually regret it.

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4 Carl Guyer November 2, 2018 at 10:07 AM

Is that because the average residential tax rate for towns with split rates is lower than the overall average for the state and single tax rate communities? Or is it because they have 78% of the commercial and industrial development in the state? Is it one of these facts or do you have a specific reason for their regret ?

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