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Home My WebLink About2018-03-02-REPSC-min Residential Exemption Policy Study Committee (Ad Hoc) Minutes Friday,March 2,2018 Hudson Room,Cary Memorial Building ATTENDANCE Mark Andersen,Chair,Vicki Blier,Howard Cloth,Katie Cutler,Secretary for the meeting,Charles Mabardy,Thomas Whelan, John Zhao,Joe Pato,Selectman Liaison. All members were present,and one member of the public attended—Mr.Pressman Review and approval of the February 16'minutes with a few amendments Members were concerned regarding the charge of completing the recommendation by mid-June.Discussion ensued and we will revisit and evaluate the timeline at the March 16'meeting along with each future meeting. Meetings minutes were approved There was a lengthy discussion regarding the current Comprehensive Study.Members'concerns consisted of understanding the demographics regarding the senior population in Lexington as well as the tax policy side. One member commented that the senior population is approaching 30%. This 30%includes seniors living in apartments and Brookhaven which is tax exempt. The conversation included what would be the effects on the rental market,the rental market relating to seniors renting out their homes and the net-net leases relating to large rental apartments. It was noted that Joe Pato is a liaison to the Comprehensive Plan advisory committee. Topics to Investigate— 1. Comprehensive Study 2. Seniors and Apartments 3. Tax and Lease Aspect 4. Low Income 5. Best way to determine the%of seniors who live in Lexington Reviewing Gaps or Concerns in the Report 1. Concerns about data accuracy-owner occupied resident vs rental vs houses in trust residence 2. Mechanics of the Report 3. Society Impact 4. Study language could be considered extreme(%) 5. Concerns regarding the difficulty of implementation. The study indicated that this issue has been looked at for 11 years and it concluded that implementation would be difficult. A discussion regarding this issue explained the background and why the committee has decided to revisit implementing this policy. The background is that the Assessor's office was unwilling to take this project on based on the following items:office too busy,push back on abatement requests,and it adds to grief that creates extra work in creating differentials that people respond to. They also believed the number of residents it would benefit would be very small. However,there was a broader analysis completed regarding demographics and it indicated that more people may benefit. This is due to changing Lexington demographics. We need to know more about this subject in order to answer questions in an intelligent manner. Committee should delve into this policy looking at arguments pro and con. A comment was made that no town similar to Lexington has taken this issue on and only 14 have a tax exempt policy Committee Communications 1. Discussion or clarification regarding any topics can be sent to Joe Pato(committee liaison) 2. Guidelines state that committee members are not allowed to contact multiple committee members via email or in person to discuss the same committee business. Discussion of the Residential Exemption Committee Guiding Principles Function of these principles are to guide our work as we contribute to the shared work product (report). Principles Proposed and Guiding: •Provide information and facts for Selectmen to make a political decision •Make explicit the principles of fairness and consequences of adopting or not adopting a policy with regard to principles •Articulate policy consequences both direct tax payments and broader social and economic consequences as well •Inclusiveness of concerns of any committee members(and indirectly members of public) •Document items not examined •Be conscious and explicit about how town principles might be impacted by policy •Use neutral language(Do not use language suggesting a preference for or against a residential exemption) •Use broad range of%examples(not just 35%) in illustrations •Be explicit and considerate about the examples chosen(and document rationale) Proposed Principles to Revisit Later: •How principles,policy consequences,classes of affected parties will be dealt with •Whether committee also feels strongly about conclusions and wants to make an overt value statement about this policy Sign up for REC areas to Research Possible objectives ofpolicy •Briefly enumerate all possible objectives which adopting the residential exemption could have. Report-Task List Glossary-Vicki •Prepare glossary of all terms Benchmarking residential exemption—Mark •Enumerate municipalities which have policy and contact in asssessors office at each town and the year in which the threshold was first implemented per municipality. •Enumerate the thresholds set by each town(0-35%)and when possible trace its history. • Collect any reports from towns which have had a residential exemption and distribute those to members of this committee(digitally). •Relate the%threshold set for each town to its dollar value •Inquire as to any driving considerations which are used in these towns to set the thresholds annually. •Which municipalities discontinued use of the residential exemption and why? •Are there ways in which non-residents attempt to game this exemption and what are done to stop those methods? •Document#of municipalities using each alternative tax mitigation system Mechanics—mathematical—John • Calculation of break-even point •Looking backward,how would the break-even point have moved over time in relation to average home value,median home value,average single family home value •Does raising the residential tax rate due to a residential exemption in turn impact the commercial and industrial maximum rates available to the town? Mechanics—legal Vicki •Review and document rules for multi-family dwellings •Review and document rules for rental properties •Review and document rules for apartments •Review and document rules for various types of trusts •Review and document rules for unoccupied property •Identify how non-owner occupied dwellings are treated under municipal tax law even if this policy is not adopted(i.e.personal property taxes for non-owner occupied dwellings) •Are car excise taxes tied to residency status? •How would condominiums be impacted? •How would moderate income housing be impacted? Leases and Agreements Vicki •How do typical private leases reflect property tax increases? •How do the apartment leases reflect property tax increases?(Mention of net-net in Oct 2017 report) Mechanics—Practical Thomas •How would assessor determine residency?What evidence would be required? o What are practices other municipalities are following? •Estimate the implementation cost in man-hours and associated financial cost for the residential exemption.Which departments and committees are impacted and to what extent? Societal Impacts - Howard •Perception of Lexington's Taxes-will higher rates with a residential exemption impact home prices or other percpetions.(Real Estate agents as source of data?) •Local understanding of tax rates--what%of people understand residential exemption explanations,and does fidelity of understanding matter materially? •Development impact for purchases and developers.Develop the argument from the Oct 2017 report with more supporting detail •Estimating the impact of residential tax exemption on delaying sale of homes?What is the expected impact and why? •Estimate the impact on aggregate tax bill if sale of homes were delayed according to the above model? •What data exists on income or wealth thresholds at which people begin to have difficulty paying(Lexington)property taxes? Lexington Specific Impact if Had Been Implemented for FY2018 - John and Katie •Estimate of%owner occupied •Is there historical trend data on%owner occupied? •Degree of reliability for owner occupied •Report on frequency of ownership structure for Lexington housing •Provide matrices showing the impact of various%s of owner occupied housing v.% exemption and the impact.Perhaps separate matrices for different scenarios? •Large properties-i.e.apartments o Provide information on equivalent rate per unit if these$were passed through o Take into account that some#residents have section 8 vouchers and recalculate as if the entire increase were passed through to those who could absorb it • Show information on Lexington housing divided into apartment and non-apartment.Both equalized valuation and#of residents in each class.(Presuming we don't have information on income.) •Document number of residents taking advantage of existing alternative tax mitigation systems in Lexington •Correlate age of residence and value of property held(for units with data) •What data do we have on snow-birders declared residence? •Number of medicaid trusts known to be in place,and proportion of trusts. •How would new tax laws have impacted this • Seniors living in apartments Alternative Tax Mitigation Systems - Thomas, assisted by Howard •Enumerate the alternative tax mitigation systems available in Lexington •Document the extent of use of alternative tax mitigation systems in Lexington Fairness Arguments—Chuck •Enumerate the various arguments which can be made indicating whether a residental exemption would be more or less fair than the current system.(Among these consider the`burden sharing'argument about apartments v.homes.) •Compare the various systems for tax mitigation in terms of fairness On March 16,2018:"Mechanics-mathematical"and"Mechanics-legal"will be presented Meeting was adjourned and next meeting confirmed for 3/16/18 at 8:30am