City Council sets residential/commercial FY’24 tax rates

By Neil Zolot

Residential property tax rates are rising in three of the four property categories in Fiscal 2024. The total for the average two-family home is rising $126 per $1,000 of value from $6,047 to $6,173, reflecting an increase in average value from $671,889 to $710,094. For the average single-family home, it is rising $68 per $1,000 of value from $4,063 to $4,131, the result of an increase in average value from $503,485 to $531,922. For the average three-family home, it is rising $58 per $1,000 of value from $7,661 to $7,819, the result of an increase in average value from $817,421 to $853,662.

The only properties for which taxes are falling are condominiums, albeit slightly dropping $4 from $1,853 to $1,849, despite an increase in average value from $315,879 to $332,744.

The figures are calculated with the City Council adopting a number of measures of relief, at their meeting on Monday, November 27. They include adopting a Residential Tax Factor at .737612%, the minimum factor, to reduce the residential sectors tax burden from 74% of the levy to 55% and raise the Commercial/Industrial/Personal Property (C/I/P) sector from 26% to 45%, which they did at their meeting Monday, November 27. (Personal Property covers items in commercial and industrial parcels, like office equipment and even barbershop chairs.) The Residential Factor governs the percentage of the tax levy to be paid by property owners. Under a Uniform Tax rate each class of property pays a share equal to its share of the total city value, a factor of 1, but communities can shift the burden from one classification of property owner to another.

“30% of cities and towns split the tax rate,” Assessor Bernard Deveraux explained. “It’s significant in communities with a substantial commercial tax base. It doesn’t change the total, but delineates the share for each class.” Medford, a city with some similarities to Everett, does. The rural bedroom town Wenham doesn’t.

Tax rates will be $11.46 per $1,000 of value for residential and $24 for C/I/P for Fiscal 2024. Under a single rate it would be $31.71 across the board.

They also approved a 25% Residential Exemption and appropriating $10 million of Free Cash to reduce the Fiscal 2024 tax burden. Exclusions from the exemption are vacant land and residential properties not occupied as a primary residence by the owner. “Property valued at less than $1.462 million is seeing some sort of benefit,” Deveraux said. “An overwhelming majority of people are benefiting.”

The Residential Exemption moved from 20% to 25% in 2019. “I’m a big supporter of the exemption,” Ward 1 Councilor Wayne Matewsky said in discussion. “It gives relief to homeowners who actually live here.”

Without those measures, the residential tax rates would have risen $92 for condominiums, $165 for single-family homes, $223 for two-family homes and $154 for three-family homes. “The Mayor felt this was in the best interest of residents and the best use of more Free Cash than we have in the past given the inflationary pressure everyone is feeling,” Deveraux said, in reference to use of $7 million in previous years.

Chief Financial Officer Eric Demas shared concerns raised by Councilor-at-Large Stephanie Smith as to whether using $10 million was sustainable. He said growth will help to “potentially offset shortfalls in the future.”

Everett’s Total Residential Value is $5,969,286,519, from 8,706 parcels. The average value of all residential property is $685,652. Last year it was $634,360. Deveraux said the overall growth in the tax base was due to new multifamily homes and personal property at Encore Boston Harbor.

For the 25% exemption, 4,082 parcels qualify, dropping the average tax bill to $171,413. Multiplying that by $171,413 equals $699,707,886 as the value of residential exemptions. Dividing the residential tax levy amount of $60,389,371.36 by the revised residential value equals $11.46.

The Levy Limit is the maximum amount that can be raised in a given year. It can grow 2.5% every year over the prior year’s limit plus new growth and any tax overrides, with a Levy Ceiling of Levy Limit plus Debt Exclusions or other allowable adjustments.

The levy for Fiscal 2024 is $110,509,989, compared to the $108,958,844 in Fiscal 2023. The Fiscal 2024 Levy Limit is $172,197,362.

In addition, the City Council approved appropriation of $700,000 of Free Cash from the Water and Sewer Department to offset rates.