JERRY P. McDERMOTT
Phone call deluge
While many Boston homeowners were delighting in receiving holiday greeting cards in the mail from family and friends last week, many were also startled to receive some unwelcome news: notices that they will be facing higher property taxes next year.
The revaluation assessment notices, sent out by the city’s assessing department, informed homeowners that they will likely have to pay hundreds to thousands of dollars more in property taxes next year as a result of rising home values. Accompanying the tax estimates was a letter from Boston Mayor Thomas M. Menino touting his efforts to help homeowners by getting state legislators to shift more of the tax burden to businesses and commercial property owners.
Now, housing advocates – concerned about the impact such steep tax hikes will have on low- and moderate-income homeowners who are already struggling to make ends meet – are preparing to assist residents and pushing for lawmakers to pass legislation filed by Menino last year.
“This is serious for a lot of homeowners,” said Florence Hagins, assistant director of the Massachusetts Affordable Housing Alliance, who along with other affordable housing activists and officials attended a briefing last Wednesday organized by the city’s assessing commissioner.
In upcoming weeks, MAHA will be contacting clients and prospective homebuyers who have participated in the group’s mortgage and homebuyer programs to inform them about the implications of the tax increases. The estimated tax increase won’t just hurt homeowners, according to Hagins, but could also deter prospective homebuyers who are unable to afford such tax bills.
“It might keep people out of homeownership,” she said.
Others fear that the tax increases will most affect tenants and small property owners in some of the city’s lowest-income neighborhoods. At the briefing last week, it was noted that owners of two- and three-family homes in neighborhoods like East Boston, Roxbury, Mattapan and Dorchester will face some of the harshest increases, according to Roxan McKinnon, assistant coordinator for the Boston Tenant Coalition.
Owners of multifamily properties will likely hike rents to cover the tax increases, according to some housing activists.
“Unless the legislation that Mayor Menino filed or something very close to that is passed, it will be a real disaster for people trying to live in Boston,” said McKinnon.
The tax notices come after a boom in the residential real estate market that saw the median selling price for single-family homes escalate as much as 40 percent in some Boston neighborhoods in the last three years, according to The Warren Group, parent company of Banker & Tradesman. The rise in values means that the average tax bill will rise by $800 next year, according to city estimates, although homeowners in some parts of Jamaica Plain, Dorchester and other city neighborhoods could see their bills increase as much as $1,500 or more.
For example, House Speaker Thomas M. Finneran, who lives in Mattapan, is likely to see his tax bill jump $1,073. According to city records, Finneran’s home was assessed at $306,300, up from $210,600 in fiscal year 2003, meaning his tax bill will increase from $1,389 to $2,462.
Mayor Menino, a Hyde Park resident, will see a smaller increase in his tax bill. His bill is estimated to rise to $785, as his home’s assessment increased to $390,300 from $218,300.
Meanwhile, Senate President Robert E. Travaglini, who owns a two-family home in East Boston, is expected to face a $2,907 tax bill, up about $678 from the prior year. His home’s new assessment jumped from $285,000 to $341,800.
Cities and towns are required by the state Department of Revenue to revalue each property every three years. Boston’s revaluation was based on property sales that occurred between January 2000 and December 2002 – a time when the residential real estate market was going strong. At the same time, commercial property values have fallen.
Assessing the Situation
In addition to Boston, cities like Medford, Fall River and Waltham completed revaluations this year, and homeowners in those communities are going to be dealing with similar tax spikes.
Menino, who said in his letter to homeowners that his administration “anticipated the problem,” filed legislation to change the state formula so that cities could raise commercial tax rates above the current state limits. Other mayors have supported Menino’s efforts, arguing that it’s unfair to hammer homeowners with such high tax bills.
Under state law, cities and towns can set different tax rates for residential and commercial property, but the residential rate cannot be less than 50 percent and the commercial rate cannot exceed 175 percent of what the rate would be if the city didn’t distinguish between residential and commercial properties.
Menino wants to raise the commercial rate to 200 percent, which would drop back to the 175 percent limit after several years. Some say that even if the measure is approved, most commercial property owners would still see their property taxes drop this year because of a decline in commercial property values.
However, opponents maintain that such a measure would hurt businesses and commercial property owners who have suffered through an economic downturn.
A five-member commission has been established by the Legislature to draft a bill by Jan. 12 that will enable towns and cities to increase, at least temporarily, commercial tax rates beyond the current limits. However, Gov. Mitt Romney has expressed concerns about how such a measure would affect business and job creation.
Some Boston City Councilors have already been flooded with calls from angry homeowners and are anticipating a rise in applications for tax abatements.
“We really have been deluged with phone calls more so than this recent snow storm,” said City Councilor Jerry P. McDermott, who represents the Allston-Brighton.
Calls have come from homeowners of all ages, but McDermott said senior citizens are going to be “particularly hard hit.”
To help homeowners, McDermott will be asking the mayor’s and the assessor’s office to conduct taxpayer assistance seminars in each city neighborhood to let homeowners know about the types of exemptions that are available to them. McDermott said he particularly wants seniors to be aware of a tax deferral program that enables them to defer payments until their home is sold or until they die.
McDermott said he also plans to urge the mayor to extend the application deadline for filing for abatement by about a month.
To minimize the sticker shock that some homeowners experience when they get their new assessment notices, the state Department of Revenue recommends that communities update their assessments on a yearly basis instead of waiting every three years to do revaluations of all property.
The annual adjustments could mean that fewer homeowners apply for abatements because they’ll have a chance to see their property values go up gradually year-by-year, according to experts.
Some communities, like the city of Newton, make annual interim adjustments using computerized appraisal systems and personal computers to help with the process. But some town officials say they can’t do annual adjustments because they don’t have the necessary resources and staff.
