HomeMy WebLinkAbout2018-05-29-REPSC-min.ppt Residential Exemption Policy
Lexington
First Public Hearing
May 2018
Presented by Mark V.Andersen
1
Committee Chair
Committee Members
Mark Andersen, Chair
Sara Bothwell Allen
Vicki Blier
Howard Cloth
Katie Cutler
Thomas Whelan
John Zhao
Selectmen Liaison: Joe Pato
2
Committee Charge
Preserving affordability for residents is the Board [of
Selectmen's] top financial goal.
This ad-hoc committee will. . .study the Residential
Exemption and analyze if adopting the exemption
could help reduce the property tax burden and
make it easier for residents to remain in their
3
What is a Residential Exemption?
A policy whereby owner-occupied
residential properties receive a partial
exemption from property taxes.
4
Key Question
How would a residential exemption
impact Lexington demographics?
5
What is the Exemption Process?
1 . Selectmen determine exemption amount
2. The residential tax rate is increased to offset the town's
total exemptions
3. Owner occupied parcels subtract the exemption and
then apply the revised tax rate. Other parcels apply the
revised tax rate.
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1 . Selectmen Set Exemption Amount
Exempt 4
Exemption _ Per Owner Occupied Res.
• Selectmen select exemption M Property
rate (0-35%).
• Exemption amount is the rate •, �::�1-11 uii,
multiplied by the average
parcel assessment , ��1� � .•
FY2018
Average Assessment: $918,772 7
2. Residential Tax Rate is Increased
• Assume $100,000 exemption
• Assume 9,665 owner occupied
9,665
Owner Occupied#
Assessed Value Pre-Exempt $ 9,952,138,700
Exempt from Assessment 966,500,000
Tax rate increased to keep total Taxablew/Exemption 8,985,638,700
tax constant.
3. Impact o n Taxes
occupied « .«
Assesse
Value Difference • ,
!1 11 1 I I I` �w���� lui���l I.M I'I •.�" III �"l €€€ �G/O�///�,
000/ 000/ /n
Residential exemption lowers taxes for some while raising for others
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Who Might Have Lower Taxes?
Under $1 ,000,000 Assessed
Value: Occup,Jed O
61% of 1 Family Homes*
81% of 2 Family Homes y - -
93% of Condominiums
y
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Ripple Effects: What We Don't Know
Impact on:
• Ability of seniors (and others) to remain in Lexington
• Rents
• Number of Rental Units
• Housing Prices
• Tear Downs and Remodeling
• Demographics (Renters / Owners)
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Exemptions in Massachusetts
9 Cities — significant rental markets
• Boston, Brookline, Cambridge, Waltham, Watertown...
5 Summer resort towns - significant non-resident ownership
• Cape towns: Barnstable, Provincetown, Truro
• Island towns: Nantucket, Tisbury
1 Other town
• Somerset
-----------------------------------------------
2 cities discontinued Residential Exemption
• Marlboro, Weymouth 12
Key Points - Residential Exemption
• Selectmen have authority to set residential amount each year
• Lexington tax revenue is unchanged (short run)
• Tax burden shifts
• Unknown Impacts:
— Demographics (Seniors or others leaving Lexington)
— Rents and Rental Units
— Housing Prices
— Residential Development
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Format for Session Input
• Questions: Please write down questions
(We have distributed FAQs.)
• Comment Period after Questions
14
5/29/2018
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Appendix
15
,y MQRW/
ingle Fan-Hy Horne A: c ,sinents
Mi 4
J,
APW 14gr
96
1,069
• • r��„c%, i 902
L r f ';' 721
1 1 • • _1r,ry Median:edian:$888,000
479 Average:$44 ,422
:306
• • • J ,(, /%%%%%%%//%//%%/249
• • •
/a 200
13,2
74
p 44
• 2G
26
o i9
0 35
'r. • . .. •��r� 0.,( ; 15
,,aP�,ty r�A Ch-g,
*� a V"(Illl Allmm
8
Condominium
Impact
($100K Exemption)
Color=Tax effect if owner
occupied
Count= Properties in
assessment bucket, which if
occupied would have this effect
Properties notowner occupied
wouldalways have negative
impact(not shown) 17
Lexington, FY2018
Warning: Illustrations Pose Challenges!
• Exemption % can be 0% to 35%
• Average parcel assessments change
• Tax rate increase depends on # owner occupied
All Figures Shown Are Illustrative Only
$100,000 Exemption Used — Modest Exemption Example
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