Commercial properties to see larger increases
By Brendan Clogston
City officials presented the FY19 tax rate to the city council Monday night, and while residential taxes will rise somewhat – and commercial taxes somewhat significantly – better than expected revenues are preventing the tax hike from hitting the 11 percent increase that had been anticipated during city budget negotiations this summer.
According to CFO Eric Demas, the residential tax rate will be set at $12.38 per $1,000 of value, while the commercial/industrial/personal property rate will be $35.27 per $1,000.
These figures actually represent a reduction in the residential tax rate, which was $13.78 last year. Because housing values continue to skyrocket in the city, however, resident’s actual tax bills will continue to increase.
As a result, taxes on the average single family home are expected to go up by $194 (about five percent), the average two family home by $116 (two percent), and the average three family by $385 (six percent).
Commercial tax rates will see a more marked increase, however. According to the city’s finance department, the average convenience store in the city will see a 35 percent increase, from $24,529.49 in FY18 to $29,023.68 in FY19. Similarly, the average fast food restaurant will see an increase from $49,780 in FY 18 to $62,159.85 in FY19, and the average warehouse/distribution property from $20,820.95 in FY18 to $28,050.23 in FY19.
According to Demas, this shift is in part due to a reversal of trends from over a decade ago, when commercial property values stagnated while housing values skyrocketed. Now, as housing prices begin to slow down, commercial property values are catching up with a vengeance.
“With all of the new growth that’s going on, not just through the resort but with the value of property – we’re seeing sometimes an acre of land going for $2 million now –what’s happening is it’s actually shifting back, where the commercial industrial is now growing. … It’s going back to historically it was over a decade ago. Everything right now is really being driven by land.”
As in previous years, the council approved a 25-percent residential exemption for owner-occupied properties, and also approved an approximately 1.75 percent shift of the tax burden from residential to commercial properties. If the council had not approved the shift, the single rate would have been $20.21.
According to Demas, FY19 was a fiscally challenging year for the city, as it absorbed the increased costs and housing evaluations as a result of the Encore Boston Harbor casino without yet enjoying the benefits of the multi-million dollar annual payments that will begin after the casino opens next year.
“We’re very pleased with where we are, and it’s only going to get stronger,” said Demas. “We’re just in some uncharted waters right now, given the fact that we have the largest construction project going on the Eastern Seaboard right here in our city, it’s having an impact on evaluations. Things are all over the board. There are some growing pains, but it’s positive in terms of where the city’s going. … When the casino becomes operational, that’s when it’s going to balance off.”
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FY 19 Residential Tax Breakdown
The following is a breakdown of the tax impact on the average property evaluations in the city in comparison to last year’s rates, provided by the city’s finance department.
FY18 value: $310,100
FY18 tax: $4,273.18
FY18 tax with exemption $2,837.57
FY19 value: $363,500
FY19 tax: $4,500.13
FY19 tax with exemption $3,032.37
FY18 value: $446,400
FY18 tax: $6,151.39
FY18 with exemption: $4,715.78
FY19 value: $508,900
FY19 tax: $6,300.18
FY19 tax with exemption: $4,832.42
FY18 value: $540,100
FY18 tax: $7,442.58
FY18 with exemption $6,006.97
FY19 value: $634,900
FY19 tax: $7,860.06
FY19 tax with exemption: $6,392.30