Financial Sacrifices Last Summer Lead to Property Tax Decreases Across the Board

Everett property taxpayers and water and sewer ratepayers will see no increases – and many decreases – across the board after the City Council and Finance Department took the actions that set the fiscal year tax rate – supplementing that with $8 million in stabilization tax relief to keep residents from having to shoulder more burdens amidst the pandemic.

Chief Financial Officer Eric Demas said the City is one of the few in the region that isn’t seeing property tax increases this year, and that is something he said he was proud of due to the partnerships with the Council and City staff to go through the difficult monthly budgets and furloughs that took place in July, August and September.

“It was a combined effort between the City Council and the mayor,” he said. “I’m proud of the finance staff here in the City. We utilized every single tool we had. That’s why we went through three months of continuing budget resolutions last summer. We did that so we wouldn’t have to raise taxes. We needed to ensure we weren’t adding increased burdens that people couldn’t handle…It’s been a roller coaster ride. We knew what turns we had coming in the road, but we had to weather them to do what was best for the residents.”

On Monday night at a Special City Council meeting, the Council voted to make the maximum shift of 175 percent in the Minimum Residential Factor – shifting tax burden to the commercial/industrial properties. Meanwhile, they also voted in the 25 percent residential owner-occupant tax break. Those two things allowed the residential tax rate to be set at $9.87 per $1,000 of value and the commercial rate at $23.20.

The result is a reduction in tax bills for every residential classification even as values on properties have increased significantly since Fiscal Year 2019. For example, a single family home in 2019 was valued at $388,300 and in 2021 had increased to $435,424. Yet, for this year, the tax bill has gone down to $4,298 from $4,807 in 2019. That’s a decrease of 6 percent.

Other tax bill savings included:

•Two family homes (average): $6,374 in 2019, and 2021 will be $5,812 (-4.4%)

•Three family homes (average):  $7,562 in 2019, and 2021 will be $7,117 (-1.6%)

That is a substantial difference from surrounding communities such as Chelsea, where two-family and three-family properties increased significantly in value and their tax bills went up several hundred dollars on average as well. Chelsea set its tax rate last week.

For Commercial/Industrial properties, the tax bills have gone up, but in no way the same as they did in Fiscal Year 2019 as the Encore Boston Harbor casino opened and sent such property sky high. While values continued to go up, tax bills on those properties have leveled out a bit.

The average convenience store property would see a slight increase in taxes, going from $21,061 last year to $21,318 this year. However, this year will be down 26.6% from 2019 when bills skyrocketed.

Fast Food properties would see an average increase from last year of $564 ($44,516), but that is 28.4% lower than 2019 while the value of the property increased by 8.9% over that same period. So, property became more valuable, and taxes decreased – the best of both worlds for businesses.

Warehouse properties would be up by more than $3,000 this year over last year at $60,297 on average, but that is a 23.7% decrease from 2019.

Demas said it is a pattern on the residential and commercial/industrial that they did predict when he came to the city – saying that due to the Encore opening, property values would likely take a roller coaster ride over a period of years.

“I have been saying this since day one that Everett will go through a roller coaster ride with property values,” he said. “Residential properties were taking off and carrying a large part of the tax responsibility. I said after we get to the opening of the casino, you would see industrial properties take off. They did in 2019. That is the way it looked and exactly what we predicted did come to fruition. It was challenging to explain because we had a $2.6 billion property – one of a kind in New England. You have to expect fluctuations.”

This year, as in previous years, the City was able to supplement the tax levy with $7 million from the Stabilization Fund. It was uncertain if that plan would be able to play out earlier this year when COVID-19 first hit and revenues tanked, but Demas said there was a rebound and they were able to make that supplement.

That reduced the tax levy by $1.1 million. Everett is extremely unique in that it isn’t using its full tax levy, with most municipalities in the area taxing all the way up to the Proposition 2 ½ limit. However, Everett has left an excess levy capacity of $58.21 million on the table, which is the star of the show in reducing the tax burden on residents and businesses. They have the ability to tax $150.18 million before hitting the Levy Limit, and came in taxing at $144.15 million.

That was supplemented by a very healthy New Growth number (which measures new construction and projects added to the property tax base), which was $2.42 million this year.

•WATER AND SEWER RATES STAY PUT

The tax bills weren’t the only think on the docket Monday night, as the Council was to set the Water & Sewer rates as well. With the same approach, Demas said they used $1 million in Free Cash to stabilize the rate and keep it from increasing.

With MWRA foundational water and sewer rates going up by 5 percent this year, Demas said they were challenged to follow the mayor’s vision of not increasing any fees or costs during the pandemic.

“We did use $1 million in Free Cash and that allowed us not to increase our rates this year,” he said. “This is just as much an economic crisis as a public health crisis. Our focus is not to increase fees or costs on residents.”

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