Assessor: Tax increase largely due to Exelon relocation

  Councillor-At-Large John Hanlon put in a motion to discuss why real estate taxes went up so much in the past year without notification during Monday’s City Council meeting at City Hall.

   Hanlon asked why everyone got a tax increase come February.

   “Why and how did it get changed,” Hanlon asked. “We don’t have amounts that come that high — ever.”

   The city’s Assessor BJ Devereux said the rate was always finalized and that July/August were preliminary bills.

   “November comes around, the value approved by the state,” Devereux said. “We came up with the final tax rate.” 

   Hanlon said Exelon, an electric company, is leaving the city in approximately 16 months, which largely contributed to the tax increase.

   Devereux said the city hired an expert to evaluate the Exelon property in a specialized deal.

   Hanlon said the reason that he put forth this clause was the company won’t be able to sell that property to produce electricity for 16 months. Exelon deactivated many of its generators.

   “I don’t know why someone would say the value is going down,” Hanlon said. “We’re giving them a 16-month break on their taxes, and they’re still producing electricity.”

   However, Devereux said it’s not a tax break, rather, they’re paying taxes on the fair cash value of the property.

   “They only run that plant when it’s absolutely necessary to keep the lights on,” Devereux said. “They’re selling less electricity, which decreases its value.”

   Hanlon asked what role does the city council play in the tax increase. Devereux said the budget was approved in June, adding that any increase or decrease in taxes always occurs on the actual bill.

   “It’s happened every year that I’ve been here, which is 7 years,” Devereux said. “The rate goes on the January bill because the July/October bill is the preliminary bill for the prior fiscal year.”

   Hanlon suggested that a lot of people are skeptical of the increase.

   DeMaria suggested that when Hanlon was mayor there was a huge increase during his term. Hanlon said it was only a three-dollar increase. DeMaria replied that wasn’t true.

   “The tax rate, which the City Council set, was set this past November,” DeMaria said. “The third quarter is when the actual tax bill comes out — this is the actual tax bill.

   DeMaria said there’s only two bills left since the first two bills were preliminary bills, adding it’s always been like that since Everett was incorporated as a city.

   The mayor said they had this discussion in June, based on the type of property from condominium, single, two-to-three family. However, Hanlon said 90 percent of the city’s population didn’t know.

   “It’s a surprise to everybody,” Hanlon said. “I’m not satisfied with your answers — maybe it’s right, but I’m not satisfied.”

   Ward 3 City Councillor Darren Costa asked where does the city sit with peer neighborhoods collecting other sources of revenue. DeMaria replied that the city charges a lot less for fees, such as for camp, Senior Center activities, and the Recreation Center, than neighboring communities. Chief Financial Officer Eric Demas said the city has $7 million of Free Cash and $47 million of ARPA funding.

   Devereux said the decreased value of the power plant has resulted in a nearly $7 million deficit from the power plant relocating.

   “The amount needs to be made up by the taxpayers in the city across the board,” Devereux said. “Residents bear 72 percent of the tax levy — that’s the most significant contributing factor.”

   Councillor Martins asked what is the plan going forward, including short-term options.

   DeMaria replied he’d like to see new growth in commercial revenue, such as unused properties on Route 16, the former Stop & Shop site, and incoming apartments. He added renovating Pope John High School would also increase taxes further.

   “Since commercial revenues are decreasing, residential taxes increase,” DeMaria said. “All we can do is bring new development and continue to grow.”

   DeMaria said a similar increase happened at Orsogna Plaza a few years ago; however, at that time, commercial taxes were increased and residential taxes decreased.

   Councillor-At-Large Richard Dellisola asked if the city’s tax rates are comparable to surrounding communities, such as Saugus, Malden and Revere. Devereux replied that it is.

   Councillor-At-Large Stephanie Smith asked if they expect that assessment will continue to go down. Devereux said at some point the cost to demolish the Exelon building would be offset by the scrap value. Smith said residents should expect another large decrease in revenue because of the power plant relocating. Therefore, tax rates will continue to rise. 

   DeMaria said revenue from Encore Boston Harbor Casino and a forthcoming city-run ambulance service is helping to offset expenses.

   “It’s great for those selling but not for those who live here,” DeMaria said. “If you want us to cut jobs, you may save on your tax bill, but we’d have to reduce city services.”

   The item was referred back to the sponsor.