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HomeMy WebLinkAbout2018-11-16-REPSC-min Residential Exemption Policy Study Committee(Ad Hoc) Friday, Friday, November 16,2018 Hudson Room,Cary Memorial Building Attendance: Mark Andersen, Chair;Vicki Blier; Howard Cloth;Thomas Whelan;John Zhao, Katie Cutler and Board of Selectman Liaison Joe Pato. Guest Speaker—Mr. Lane Partridge Concord Assessor Not in Attendance:— Sara Bothwell Allen Mr. Andersen called the meeting to order at 8:02am. Ms. Cutler volunteered to record the meeting minutes. Public Comments:There were no public comments. Approval of Minutes: Ms. Bothwell Allen was not in attendance so the November 101h minutes were not approved. Guest Speaker Lane Partridge—Town of Concord, MA Assessor and Chairman of the Legislative Committee of Massachusetts Assessors Association Mr. Partridge reviewed with our committee Concord's Means Tested Senior Exemption which was made available in 2018. The goal of the exemption is to help lower-income seniors whose property tax bill exceeds 10%of their income and/or whose high house assessment disqualifies them from receiving the State's Senior Property Tax Circuit Breaker Credit.The cost of Concord's Means-Tested program is shifted onto all property tax payers through an increase in the tax rate. Concord's exemption is based on Sudbury's model with the difference of setting the house assessment limit to the town's median house value instead of the average house value. They are now dealing with how to integrate the accounting for this program into their existing municipal software. Mr. Partridge handed out and reviewed with the group the FY2019 Means Tested Senior Exemption application for the town of Concord, MA. He stated if residents qualify for the state Circuit Breaker(CB) then they qualify for Concord's exemption unless their house value exceeds the Circuit Breaker house value limit. However, he was upfront about the application's challenging calculation method based on asset limits and house values which is often filled out inaccurately by taxpayers. - Concord's median house value of$839,000 vs the states CB house value of$702,000 makes it a complicated calculation.The CB worksheet is so challenging that Mr. Partridge had to hire an outside CPA to help his assessing staff understand how to use it. There were 49 residents who were evaluated in this manner.The CPA designed a plug in spreadsheet to calculate who was eligible for the exemption and explained the process to Mr. Partridge's team.The challenges stem from the high house values in Concord which would be similar to Lexington. The total value of the exemptions granted was$191,000 which was made revenue-neutral by increasing the tax rate.There was extra cost including staff time and accountant's help. In addition, Mr. Partridge,who is the Chairman of the Legislative Committee of the Massachusetts Assessors Association,stated that his Association has drafted legislation to allows any town give means- tested exemptions based on CB income requirements but basing home values on the median home values of the participating town.The bill will be filed in January 2019, and at this time the sponsor is unknown.The benefit will be scalable in the benefit offered by the CB, so the town can match, double or cut it in half. Towns can decide how much to give away and it will be a tax shift vs a budget item. Mr. Partridge stated that it is important to figure out who you are you trying to help tax policy wise. There were questions regarding the Concord program 1. Regarding Assets The Concord's Board of Assessors chose the asset test based on the following logic. If you have a house worth 839K and assets of$250K (gross)then the resident filing is worth one million dollars.The town's mission was to help the resident with one million dollars. They are trying to help the smaller homes with lower assets and assist as many residents as possible. In addition,they looked at straight assets (gross). They believed residents with other generated income 2nd homes or parcels of land would work themselves out of the equation. He felt this did occur and the asset test was based on trust. 2. Assessors vs Board of Selectman In discussing existing proposals for new versions of means-tested exemptions, Ms. Blier commented on versions where Assessors set the policy for qualifications. Mr. Partridge indicated that it is Wakefield that has that policy, but stated that he and his association do not agree with this view. Tax Policy should be set by the selectmen or legislative body. and that is what is proposed in the means-tested law proposed by the Assessor's association. He as an Assessor can comment on the difficulty of implementing the plan but direction and policies are set by BOS. 3. Review of Concord's Asset testing and senior means exemption. Mr. Partridge reviewed the steps - 250 Concord property tax payers qualified for the State CB program which also made them qualified for the Concord Means-Tested program unless they had assets above the Concord criteria. 59 Applicants applied for Concord's exemption and 10 did not qualify. 49 applications were reviewed by the Assessor's office in Concord Mr. Zhao asked how many total residential properties are in Concord Mr. Partridge answered 5000 residential properties Mr. Whelan asked about verifying asset. Mr. Partridge stated they sign under the penalty of perjury but the asset testing is based on trust Ms. Blier questioned why the Board of Assessors who set the asset number test. Mr. Partridge agreed that he did not like this but this is what the law stated. He would prefer that the BOS decide on the asset test number. Either way it is complicated to set the number. 4. Tax Return and CB calculations Mr. Andersen was curious about how the calculation is looked at with a tax return and CB. Mr .Partridge explained that If you meet the state requirement you are all set. The issue really is between the state's house value of$702K vs$839K which is Concord's median house value.The tax returns of residents who do not qualify for the CB due to house value do not contain the CB page for review. Mr. Andersen needed more clarification. Mr. Partridge explained how the state's CB income is calculated differently from the effective gross income. Mr. Andersen wondered if it would it be easy to require a copy of the tax return and compare it to the adjusted gross income. His thought was better not to use the state's worksheet Mr. Partridge commented that would not tie it to the CB but you can certainly do this. He stated you can use the effective gross income. However,this line does not include pensions. Ms. Blier asked about tying it to whichever line in the tax return is used to examine tax returns for Clause 41C senior tax exemptions. Mr. Partridge thought that this would be a less complicated way to calculate the number. He restated that not tying it to the CB made sense and using gross income or the line used for 41C would work. However,the levels are lower. 1. Mr. Andersen asked about policy vs implementation and wanted to understand the challenges of implementing a new calculation or policy. 2. Ms. Cutler asked if Sudbury had the same challenges. Mr. Partridge commented that their house values are lower and Sudbury has an outside assessor company who administers and implements their policy. 3. Mr. Andersen asked about how Concord absorbs the tax shift(residential vs commercial). Mr. Partridge stated this was a concern as Concord's commercial and residential are not split.They did not want the commercial rate to be lower than the residential rate. 4. Lexington has a split rate. If you have a split rate commercial vs residential there should be no concern. 5. Mr. Pato explained how the tax rates are calculated in Lexington on the commercial and residential side. 6. Ms. Blier asked about Concord's acceptance of this new policy. Mr. Partridge explained the process and stated that it was approved at town meeting and residents had no issue. 7. Mr. Andersen asked if Mr. Partridge would review an example of the program. Mr. Partridge explained -The tax payer has to pay property tax up to 10%of their income, anything over that is exempt,to a max of%of their tax bill. Concord includes the amount for the CB. To qualify you need to own a house in Concord and have to lived in Concord for 10 years. 8. There was discussion of how the exemption could disqualify the taxpayer from receiving the Circuit Breaker in the following year because the local Means-Tested exemption lowers the amount of property tax paid, possibly pushing the property tax below the 10%-of-income mark needed to qualify for the Circuit Breaker and for the local Means-Tested exemption for some taxpayers for the following year.The Concord Means-Tested law has not been in place long enough to show whether this theoretical problem will be an_issue. Mr. Partridge's final comment was Good Luck and please contact him if we need anymore information. Status update on resident survey The survey remained open after 11/9/2018. Mr. Andersen will close the study when 24 hours have passed with no new submissions. Mr. Andersen handed out the initial survey analysis results to the committee, and went over the findings with analysis charts. Mr. Andersen discussed in length the survey's response relating to stress to our residents. The finding demonstrates that the hypothesis matched the results. Survey stated that owners with greater housing stress are more likely to migrate. For more information, please refer to "What Does the the Survey Tell Us" Public Hearing Meeting Mr. Andersen confirmed the following dates for future meetings—11/30 and 12/7. We all agreed that the public meeting would be 12/11 and Ms. Cutler would send out notices to members to post and she would send the announcement to the Minuteman. Mr. Andersen adjourned the meeting at 9:32am. Respectfully submitted by Katie Cutler, acting secretary.