LARGEST RESIDENTIAL TAX BREAK IN STATE PROPOSED BY MAYOR

SOMERVILLE

- Somerville homeowners would receive the highest property tax exemption in the

state under a proposal submitted by Mayor Joseph A. Curtatone to the Board of

Aldermen this week, and the City continues to explore increasing exemptions for

seniors, veterans, widows and those with disabilities that are already double

the state limits.

The

proposed home rule petition, which requires approval by the State, would boost

Somerville's residential property tax exemption from 30 percent to 35 percent. Homes

in Somerville with a residential exemption this year account for 58 percent of

the homes in the city. The average effect the 35 percent exemption would have

had this year on residences receiving the exemption by category, compared to

the current 30 percent exemption, is as follows:

This year, two-thirds of the properties in the city saw

modest tax bill increases between 1 and 9 percent. However, even while the

property tax bill on the average $400,000 home in Somerville remains third

lowest among 15 of the city's neighboring urban communities, the state's

required triennial revaluation resulted in more substantial increases in

assessed values for the first time since pre-Great Recession FY2007, which led to

some homeowners seeing larger increases. The approximate breakdown of

Somerville residential properties and the change in their property tax bill

from FY13 to FY14 is:

• 180
  
  properties had a decrease of 5 percent or more

• 270
  
  properties had a decrease between 1 and 5 percent

• 10,500
  
  properties had an increase between 1 and 9 percent

• 4,000
  
  properties had an increase between 10 and 24 percent

• 530
  
  properties had an increase between 25 and 49 percent

• 110
  
  properties had an increase of 50 percent or more

"This is no different than investing in any of the

programs we have to help people in our community who are vulnerable. The

property tax is perhaps the most regressive tax, levied without taking into

account a taxpayer's income or ability to pay the tax and disproportionately

affecting the middle class, retirees and small businesses," said Mayor Joseph

A. Curtatone. "Cities and towns across Massachusetts have been forced to increasingly

rely on the property tax as state aid has been severely cut since 2000. Residential

property tax bills in Somerville are still lower than in most neighboring

towns, but our families and seniors could face greater burdens in the future without

action. I said last month that we would act decisively, and increasing the

residential exemption is one of several steps we can take, along with all that

we are already doing and while continuing to explore more options for relief."

"I am pleased

that the City has undertaken the analysis of increasing the residential

exemption as I requested at the Board's recent public hearing on taxes and that

the Mayor is putting forth a proposal for discussion among the aldermen," said

Board of Alderman President Bill White. "When I authored the legislation that

increased the exemption from 17 to 30 percent, I sought to protect the families

and residents who, without this exemption, might have been forced to sell their

home years ago. The great progress that Somerville has made over the past decade

has made our city ripe for real estate speculation. An increase in the

residential exemption is one tool that should help us in our efforts to keep

Somerville affordable for our residents who wish to stay here."

Mayor Curtatone is also reconvening the Financial

Advisory Committee (FAC) to explore additional options for relief, including

for small business owners, as well as increased exemptions for seniors,

veterans, widows and those with disabilities. The FAC will develop

recommendations seeking to balance an equitable tax burden with preserving

investments in schools, public safety and City services.

The

City also examined increasing the residential exemption to 40 percent. However,

because exemptions do not drive down the tax burden but only shift it from one

group of taxpayers to another, increasing the exemption to 40 percent would

lead to larger tax bill increases for ineligible residences and those higher

costs would be passed on to renters living in those buildings.

For

example, there are 136 nine-plus family residences in Somerville that were

ineligible for the residential exemption this year. The average nine-plus

family residence has a value of $2.8 million and saw a $1,383 tax bill increase

this year. If the residential exemption were 40 percent this year, the tax bill

on the average nine-plus family home would have increased an additional $2,634;

if it were the proposed 35 percent, it would have increased an additional

$1,289.

"Today's Somerville renters are tomorrow's two-bedroom

condo owners and two-family home owners, who will settle in the community and

raise a family here. Neighborhoods should have a variety of housing types for a

variety of people, and we need to strike the right balance between supporting

homeowners and renters," said Mayor Curtatone. "Increasing the exemption to 35

percent instead of 40 percent means that we can still provide relief to the

middle class and retirees, while mitigating the burden Somerville renters could

face in the form of higher rents due to the building owner seeing a larger tax

increase."

The proposed residential property tax increase is one of

several strategies addressing affordability in Somerville:

• The share of total taxes paid by residential
  
  property owners decreased by 3 percent this year, more than three times the
  
  decrease in any previous year as the City continues to expand its commercial
  
  tax base through strategic community-driven development.

• Seeking new efficiencies have reduced
  
  discretionary spending in the City's budget. Somerville spends less per capita
  
  than most cities and towns in Massachusetts while maintaining nationally lauded
  
  services.

• The City's inclusionary zoning requires that
  
  affordable units be built alongside new units at rates far above the state's
  
  benchmark.

• The recently increased affordable housing
  
  linkage fee and passage of the Community Preservation Act bring in funds that
  
  are used to build more affordable housing through our Affordable Housing Trust
  
  Fund.

• Mayor Curtatone has also announced the City is
  
  pursuing the creation of a new affordable housing program specifically for
  
  working middle class families, and an overhaul of the City's zoning ordinance will
  
  create new fabrication and arts districts that preserve artist and maker spaces
  
  and live-work buildings.

• The community-developed 20-year comprehensive
  
  plan SomerVision sets a goal of creating 6,000 new homes in Somerville, with
  
  1,200 permanently affordable, putting downward pressure on both rents and
  
  property costs by increasing supply.