Loading...
HomeMy WebLinkAbout2015-11-03 Board of Selectmen HandoutDRAFT MOTIONS BOARD OF SELECTMEN MEETING NOVEMBER 3, 2015 Ensmineer, Halsey, Sexton, Arena, Berman LeLacheur 5a) Move that the sale of the $39,050 Sewer Bond of the Town dated November 16, 2015, to the Massachusetts Water Resources Authority (the "Authority ") is hereby approved and the Town Manager is authorized to execute on behalf of the Town a Loan Agreement and a Financial Assistance Agreement with the Authority with respect to the bond. The bond shall be payable without interest on November 15 of the years and in the principal amounts as follows: Year Installment 2016 $7,810 2017 7,810 2018 7,810 2019 7,810 2020 7,810 and that each member of the Board of Selectmen, the Town Manager, the Town Clerk and the Town Treasurer be and hereby are, authorized to take any and all such actions, and execute and deliver such certificates, receipts or other documents as may be determined by them, or any of them, to be necessary or convenient to carry into effect the provisions of the foregoing vote. 5b) Move that the Board of Selectmen close the hearing establishing the FY2016 tax rate. Move that the Board of Selectmen grant/not grant an open space discount for Fiscal Year 2016. Move that the Board of Selectmen adopt /not adopt a residential exemption for Fiscal Year 2016. Move that the Board of Selectmen adopt a residential factor of _ for Fiscal Year 2016. Move that the Board of Selectmen grant /not grant a commercial exemption for Fiscal Year 2016. 6a) Move that the Board of Selectmen approve the minutes of October 20, 2015 as amended. 6b) Move that the Board of Selectmen approve the minutes of October 6, 2015 as amended. 6c) Move that the Board of Selectmen approve the minutes of September 16, 2015 as amended. 8a) Move that the Board of Selectmen approve the Executive Session minutes of October 6, 2016 as written. JH DE KS BB Move that the Board of Selectmen adjourn the meeting at p.m. DRAFT - BOARD OF SELECTMEN 2015 AGENDAS 2015 Staff s ima e October 28, 2015 PSC 7:30 Financial Forum with School Committee, Library Trustees and Finance Committee FY17 budget November 3, 2015 Office Hour Barry Berman 6:30 Authorize MWRA debt LeLacheur 7:20 Public Hearing Tax Classification SantanielloBrd of Assessors 7:30 Discuss HRAC & Board/Committee communication policy LeLacheur 8:30 Town Meeting November 9, 2015 Monday Town Meeting November 12, 2015 Thursday Town Meeting November 16, 2015 Monday November 17, 2015 Liquor License Renewals LeLacheur 7:20 Police Master Planning Cormier 7:30 Climate Committee LeLacheur 8:15 December 1, 2015 ` Office Hour Dan Ensminger 6:30 MAPC presentation on Economic Development opportunities Delios 7:30 RMLD update O'Brien 8:30 Economic Development models Delios 9:00 December 15, 2015 Approve Licenses - non - alcohol 7:20 Confirm appointment of Police Chief LeLacheur 7:30 Library Project Update - joint meeting with Library Building Committee Huggins 8:00 Birch Meadow Master Plan joint meeting with Recreation Committee 8:45 Disability Commission LeLacheur 9:30 Future Agendas ■ LEGAL NOTICE TOWN OF READING To the Inhabitants Of the Town of Reading: Notice is hereby given that a public hearing will be held in accordance with the Massachusetts General Laws, Chapter 369 of the Acts of 1982 on the issue of deter- mining a residential factor in assessing the percentage of tax burden to be borne by each class of property for Fiscal year 2016. The hearing will be held on Tuesday, November 3, 2015 at 7:30 p.m. in the Selectmen's' Meeting Room, 16 Lowell Sheet, Reading, MA. The five classes of property involved are residential, open space, commercial, industrial and personal property. A copy of the proposed docu- ment regarding this topic is available in the Town Manager's office, 16 Lowell Street, Reading, MA, M -W- Thurs from 7:30 a.m. - 5:30 p.m., Tues from 7:30 a.m;- 7:00 p.m. and is attached to the hearing notice on the website at www.readingma.gov All interested parties are imjt- ed to attend the hearing, or may submit their comments in writing or by email prior to 6:00 p.m. on November 3, 2015 to townmanao rP i a�rrO ma ui By order of Robert W. LeLacheur, Jr. Town Manager 10.20.15 U Residential Exemption Analysis Residential Assessed Value Range January2014 Number of Housing Units in Range January2014 Median Assessed Value in Range Residential Exemption for Median Assessed Value in Range FY'16 Tax Rate FY'16 property Tax BEFORE Exemption Est. Exemption Amount Est. Tax Amount AFTER Exemption Oiff.over)+)/ Under ) -)Zero Exemption Tax PO.over)t)/ Under ) -)Zero Exemption Tax x$2501( 460 $182,800 _ 0.0% 5.0% 10.0 %_$15.87 15.0% 20.0% $14.51 $2,652 $ $2,652 $0 0.0% $15.16 $2,771 $ 357 $2,414 _ _ -$238 40% $2,901 $ 653 $2,248 -$404 -15.2% $16.65 $17.51 $3,044 $ 1,177 $1,867 -$786. -29.6% $3,201 $ 1,650 $1,551 - $1,102 43.5% $250K -$350K 788 $316,150 0.0% 5.0% 10.0% 15.0% 20.0% $14.51 $4,587 $ - $4,597 $0 0.0% $15.16 $15.87 $4,793 $ 357 $4,436 -$152 -3.3% $5,017 $ 653 $4,364 -$223 4.9% $16.65 $17.51 _ $5,264 $5,536 $ 1,177 $4,087 -$500 -10.9% $ 1,650 $3,886 -$702 -15.3% $350K $450K 2,922 $408,250 0.0% 5.0% 100% 15.0% 20.0% $14.51 $5,924 $ $5,924 $0 0.0% _ $15.16 $6,189 $ 357 $5,832 -$92 -1.5% $15.87 $6,479 $ 653 $5,826 -$98 -IJ% $1665 $6,797 $ 1,177 $5,620 -$303 -5.1% $17.51 $7,148 $ 1,650 $5,498 -$425 -7.2% $450K $550K 2,197 $489,200 0.0% 5.0% _ 10.0% 15.0% 20.0% $7,098 $ $7,098 $0 0.0% $7,416 $ 357 $7,059 -$39 -0.5% H$176--551 $],]64 $ 653 $7,111 $12 0.2% _ $8,145 $ 1,177 $6,968 -$130 -1.8% $8,566 $ 1,650 $6,916 -$182 -2.6% $SSOK -$650K 883 $588,500 _. 00% _ 5.0% 10.0% $14.51 $8,539 $ - $8,539 $0 0.0% _ $15.16 _ _ $8,922 $ 357 $8,565 - $26 0.3% $15.87 $9,339 $9,799 $ 653 $8,686 $147 1.7% 15.0% $16.65 $ 1,177 $8,622 $82 1.0% 20.0% 517.51 $10,305 $ 1,650 $8,655 $116 1.4% $650K -$750K 404 $695,950 _ 0.0% $14.51 $15.16 $10,098 $ $10,098 $0 0.0% 5.0% _ 10.0% 15.0% $10,551 $ 357 $10,194 $95 0.9% _ $15.87 $11,045 $ 653 $10,392 $293 2.9% $16.65 $11,588 $ 1,177 $10,411 $312 3.1% 20.0% $17.51 $12,186 $ 1,650 $10,536 $438 4.3% $750K -$g50K 287 $789,650 _ 0.0% _ $14.51 $15.16 $11,458 _ 5.0% $11,971 $ 357 $11,614 $156 1.4% 10.0% 15.0% $15.87 $12,532 $ 653 $11,879 $421 3.7% $16.65 $13,148 $ 1,177 $11,971 $513 4.5% 20.0% $1].51 $13,827 $ 1,650 $12,177 $719 6.3% SSOK - 950K 144 $883,100 0.0% 5.0% 10.0% 15.0% 20.0% _ $14.51 $12,814 $ $12,814 $0 0.0% _ $15.16 $13,388 $ 357 $13,031 $217 1.7% 515.8] $16.65 $14,015 $ 653 $13,362 $548 4.3% $14,704 $ 1,177 513,527 $713 5.6% $1].51 $15,463 $ 1,650 $13,913F $999 7.8% 1$950K 69 $1,018,500 0.0% _ 5.0% 10.0% 15.0% 20.0% $14.51 __$15.16 $14,778 $ - $19,778 $0 0.0% $15,440 $ 357 $15,083 $305 2.1% $15.87 $16.65 $16,164 $ 653 $15,511 $732 5.0% $16,958 $ 1,177 515,781 51,003 6.8% $17.51 $17,834 $ 1,650 $16,184 $1,406 9.5% IWIA 11/3/201511:27 AM LINS 11/3/20 15 11:22 AM Residen4al Factor Worksheet Av8 -Unit Ax essd. Vahre Residendal Property Tax Rate Propeft Tax on Av8 Unit Avg-Unit P,op Tax s / -vs. Pm, FY Pot. Tax Incense"oar" FY Res. UVP Factor Res UI /P Res. UVP We. UI /P Res. UVP 2002 $461,656 $1,394,s29 1 $12.02 $12.02 $5,522 $14,418 2008 $452,1%6 $1,263,953 1 $1160 $12.60 $5,696 $15,926 $124 $1,508 2.2% 10.5% $413,438 $1,226,308 1 $13.21 $J3.21 $5,858 $16,860 $162 $934 2.8% 5.9% 20 $432,939 $1,321, $13.25 $13.25 $5,953 $18,1 $95 $1384 1.6% 2 .7% 2011 $442,655 $15661208 1 MW $13.W $6,109 $21,614 $156 $3,449 2.6% 19.0% 2012 $W,500 $1,563,322 1 $14.15 $14.15 $6,290 $22,121 $Ml $502 3.0% 2.3% 2013 $432,300 $1,502, 1 $14.94 $14.94 $6,459 $22,52 $169 $402 2.2% 1.8% 2014 $446,100 $1,439)00 1 $14]4 $14.24 $6,526 $21,221 - $112 - $1,307 1.8% -5.8% 2015 5464,250 $1,419,200 1 $14.21 $14.711 $6,829 $21,325 $254 $104 3.9% 0.5% W16 $499,518 $1,493,108 1 $14.51 $14.51 $2,298 $21,665 $419 $ 81% 1.6% W 201 $499,518 $1,493,108 1.1 $14.38 $15.% $],183 '$23,830 $ "5 ... 1L7 G 2016 $499,518 $1,493,108 1.2 $14.24 $12.4 $7,113 $25,995 $,28b .:..,.. 2016 $499,518 $1,493,108 1.3 $14.11 $18.86 $2,448 $28,160 $219 $6,835 3.2% 32.1% 2016 5499,518 $1,493,108 L 113.98 $20.31 $6,983 $30,325 $154 59,000 2.3% 42.2% 2016 $499,518 $1,493,108 1.5 $13.85 $21.26 $6,918 $32 ,490 $89 $11,165 1.3% 52.4% PR An UnR Tax l... 2002 -MOJ 22.6%1 42.9% LINS 11/3/20 15 11:22 AM TAX CLASSIFICATION INFORMATION 10/27/2015 Since 2003, Walkers Brook Drive has been developed in various stages and currently accounts for 36.60% of our total commercial property value, 44.1 % if you include I General Way. Given that Reading has a CIP sector less than 10%, any commercial project would have a greater impact on those totals. On the residential side, Reading has become increasingly more desirable and values have risen accordingly. Condos totaled 665 units in 2003 and will total 1238 units for 2016! Additionally, the rise in residential values combined with more residential construction has served to increase the residential base at rate much higher than the CIP sector and, therefore, is responsible for the greater share of the tax burden. Of 195 commercial properties, 70% are valued under $1,000,000 and 41 %are valued $500,000 or under. Tax Shift Options: Residential Savings CIP SHIFT MRF RES % RES TAX RATE EST 2016 BILL TAX SAVINGS 1 100 91.7487 $14.51 $7,248 Ajggtlg 1.1 99.1007 90.9235 $14.38 $7,183 $65 1.2 98.2013 90.0984 $14.24 $7,113 $135 1.3 97.3020 89.2733 $14.11 $7,048 $200 1.4 96.4026 88.4482 $13.98 $6,983 $265 r5_1 95.5033 87.6230 $13.85 $6,918 $330 Of the surrounding communities, only North Reading doesn't shift the taxes. Also, Reading has the smallest CIP sector at 8.6 % for FY 2015. Furthermore, I have worked in Chelsea, Melrose and Wakefield, all of whom split their tax rates and I have not found there to be a higher number of tax appeals than we have here in Reading. (9 Commemiai Properties - Effect of CIP Tax Shift and Small Commercia l Properly EXemptlon ,6mm6VYM 19mr10n Aunw m.6& Yra%m nae lav mwnn 2&61 =31 manes Yun m.Rx .nxean mom saLmw 65602 uw %.m Si app S3,963 _ _ M 71 Ss,su S%N3 51980 01 MYn Sweet $4420 55,001 $6,363 52168 56959 $205 $500x -$URA 137 Mlln SUM %) 7% $13,]M 53.911 $ 01 $1,693 186 wins OMIW SN $]3366 $3823 $11,312 $11]R 398mae5neet $sw1W S11,218 511501 $km $K315 51,106 Sw -Sam MMYn SmnA $l, $16.3 522,619 %525 M4AW $6,156 tl MIlnS W $19700 $27,07 $7.90 $29663 M183 3 mo.wm $143L 0(1 $28,022 $39.W.I $1 1003 $12223 $m 0M- iw tlWYws &p0h R0e6 51212.20 $W609 us N $ 1 $69,19 $23,iae 275U.Rrm $9 ) $v6p1I SK357 $13)15) 545 ,$WM WWeIwE &p WnJ $22, $324.23 $153$35 $MAW $4116)36 $162001 WWY1en &9 RN6 $21,611.200 $3571131 SMAM $112. $535.559 $I TNEESTIMATF iFKUOFSMALL.e0emeew+HenflONpW MOW M SMAU MM ME KIRL EXE FEFEETOF SMRLLMMMFRORL UWMN ON MOa mourn UUNDER 5a Y. whn my1Fm nm ls.sa MIWON Le. Mh ne MIR,)O% fnell rammtl enmgm RmenwwM ))Noes p.06Fw Im.11 mmi mmp mvwM W%slat loss my wren i& hn 610Y .1 E nmra mmR m.dW w"WX Fhm6 IOl rmll t W 1Mnp wW%hM mlft 9 bxvfth 1F FM1Ihf101E sme mmmml mmp m6WMIR 50%MM8 iffl` e corona mmp 2$300 _ nla 56m 52]3.100 $5,% sa, $%2 S%601 $5.001 _ sfi W 55.1001 $1137 01MYn$NM $4MM $3.9]1 %226 -$SK 0.M1 $7,600 $1Q6 tl.M5 %,141 $2,167 -$6M $3.551 5500 -$Lm IllMYn Snell $671100 $9.791 $13.MO $13.50 $12,156 $11.166 $10,155 5310 su= $]3303 mS Man Mrm $6MAW $9161 $8.6% -$an $3,03 $MAN $13,033...— $3,669 39Orcan5L1M $ K2 18 $7,666 5)50 $11.617 $2137 $ ]1,199 $2,961 MF F2F11 %,] $lM -MM 126M.I.Ww tl MYn SOM $11]25000 $16M. 200 $144 S0,681 $156 $23.071 $K7w so $ $19,972 $191 $27,9 % Ain $29%0_ $wM 110MYn Smm 54"n2 M8p22 $28]91 $2 $39,09 $1118 $12.88 $11,10 Mm— lm sewsimmo $3,2 W $47 $150 $6502 $ h3 $70,58 523.90 2755Yemw. 3tl M2939 58m $W,2 >S 0710 $1%In $47= 4M NWntrn &a Rwa $22 IW S324,2 M37,360 53.iu 5131.oT2 $pg9u $10 WWelw7&op d $116 10D 57 ) . M7,M Ili 606 10130/20151P " FY 2016 Classification Information Presented by the Reading Board of Assessors November 3, 2015 Required Actions by BOS • Selection of a Minimum Residential Factor. • Selection of a Discount for Open Space. • Granting of a Residential Exemption. • Granting of a Small Commercial Exemption. (a) Minimum Residential Factor • Reading has never adopted a split tax rate. • The MRF will be 1. • (Tax Levy / Total Value) x 1000 = TR • The anticipated tax rate is $62,514,360 / $4,309,708,047 = 0.01451 x 1000 = $14.51 • Single Tax Rate $14.51 est. The average single family home value for FY 2016 is $499,500 The table below summarizes the anticipated FY 2016 average tax bill amounts at various shift intervals. CIP SHIFT MRF RES % RES TAX RATE EST 2016 BILL TAX SAVINGS 1 100 91.7487 $14.51 $7,248 1.1 99.1007 90.9235 $14.38 $7,183 $65 1.2 98.2013 90.0984 $14.24 $7,113 $135 1.3 97.3020 89.2733 $14.11 $7,048 $200 1.4 96.4026 88.4482 $13.98 $6,983 $265 1.5 95.5033 87.6230 $13.85 $6,918 $330 Average single family tax bill history from 2003 to present. M Fiscal Year Single Family Assessed Values Single Fam Parcel Single Family Avg Value Residential Tax Rate Avg Single Family Tax gill Percent Change 2003 2,295,207,400 6,473 354,582 11.49 4,074 2004 2,532,435,800 6,470 391,412 12.23 4,787 17.50% 2005 2,722,599,400 6,483 419,960 12.57 5,279 10.28% 2006 2,912,273,100 6,490 448,732 12.08 5,421 2.69% 2007 2,994,759,900 6,487 461,656 12.07 5,572 2.79% 2008 2,933,909,900 6,490 452,066 12.6 5,696 2.23% 2009 2,882,787,600 6,501 443,438 13.21 5,858 2.84% 2010 2,816,270,800 6,505 432,939 13.75 5,953 1.62% 2011 2,880,796,500 6,508 442,655 13.8 6,109 2.62% 2012 2,895,475,600 6,514 444,500 14.15 6,290 2.96% 2013 2,816,675,700 6,516 432,300 14.94 6,459 2.68% 2014 2,910,595,200 6,524 446,100 14.74 6,575 1.76% 2015 3,030,663,500 6,528 1 464,250 14.71 6,828 3.84% 2016 3,266,065,400 6,539 499,500 14.51 7,248 6.15% Single Family Home Sales Activity Sales Activity Days on Market Avg Sale Price 2014 259 54.5 $492,362 2015 234 41.85 ( -23 %) $519,863(+5.59%) The average commercial property valuation for FY 2016 is $1,493,100. The table below summarizes the anticipated FY 2016 average commercial tax bill amounts. CIP SHIFT MRF CIP % CIP TAX RATE EST 2016 BILL TAX INCREASE 1 100 8.2514 $14.51 $21,665 1.1 99.1007 9.0764 $15.96 $23,830 $2,165 1.2 98.2013 9.9016 $17.41 $25,995 $4,330 1.3 97.3020 10.7267 $18.86 $28,160 $6,495 1.4 96.4026 11.5519 $20.31 $30,325 $8,660 1.5 95.5033 12.377 $21.76 $32,460 $10,795 Commercial Property Value Breakdown for FY 2016 81 properties < $500K 57 from $500K - $1M 32 from $lm to 2M 19 from 2M to IOM 6 Properties above $10M <500K 500K - IM IM -2M 2M - 10M > 10M Average commercial tax bill history from 2003 to present. Fiscal Year Total Commercial Value Comm. Parcels Average Commercial Value Tax Rate Average Commercial Tax Bill Percent Change 2003 156,623,500 175 $894,991 11.49 10,283 2004 155,560,000 176 $883,864 12.23 10,810 5.12% 2005 1 186,339,900 178 1 $1,046,853 12.57 13,159 121.73% 2006 219,005,200 179 $1,223,493 12.08 14,780 12.32% 2007 236,516,816 198 $1,194,529 12.07 14,418 -2.45% 2008 256,582,400 203 $1,263,953 12.6 15,926 10.46% 2009 262,919,463 206 $1,276,308 13.21 16,860 5.87% 2010 270,816,033 205 1 $1,321,054 13.75 18,164 7.74% 2011 319,506,376 204 $1,566,208 13.8 21,614 18.99% 2012 320,481,055 205 $1,563,322 14.15 22,121 2.35% 2013 300,063,400 199 $1,507,900 14.94 22,527 1.84% 2014 285,068,700 198 $1,439,700 14.76 21,221 -5.7% 2015 1284,141,800 1 196 1 $1,449,700 14.71 21,325 1 .488% 2016 1294,140,500 1 197 1 $1,493,100 14.51 21,665 1 1.59% Discount for Open Space • MGL C59, sec 2A defines class 2 open space as: "land which is not otherwise classified and which is not taxable under provisions of Chapters 61A or 61 B, or taxable under a permanent conservation restriction, and which land is not held for the production of income but is maintained in an open or natural condition and which contributes significantly to the benefit and enjoyment of the public." • An exemption of up to 25% could be adopted for property classified as Class 2 Open Space. • Reading has never adopted a discount for Class 2 Open Space. 0 Residential Exemption • BOS may adopt a Residential Exemption for residential properties in town that are owner occupied. • Amount up to 20% of the average assessed value of ALL residential properties, including vacant land. • Adopting this would raise the residential tax rate to $17.51 from the $14.51 est. This would apply to all residential properties before the exemption which is estimated to be approx. $1,650 off for all owner occupied residential properties. The est. break -even point is $550,000 and a tax amount of $7,980. • 74.4% of Single Family Values fall below the break even point. • Adopted by only 13 communities including Boston, Chelsea, Cambridge & Waltham. • Since the shift is only in the res class, higher valued homes will pay for the exemption for those homes of lower value. N, Small Commercial Exemption • Up to 10% of prop value for commercial properties only. (No industrial or personal property). • Total Property Value less than $1,000,000 • Not more than 10 employees as certified by the Dept. of Employment & Training. • One business in a building of several would qualify only if all other businesses qualified. • Exemption goes to the real estate owner and not the business owner. • Less than a dozen communities in the Commonwealth have adopted this exemption. N Neighboring Communities / FY 2015 Community Res% Split Shift Avg. S. F. Tax Bill Tax Rate /$1000 RES / CIP Lynnfield 87.20 Yes 1.16 $8,021 14.49 / 17.28 No. Reading 87.30 No 1.0 $8,022 16.62 Stoneham 88.90 Yes 1.58 $5,411 12.96 / 22.08 Wakefield 84.90 Yes 1.75 $5,608 13.48 / 27.22 Wilmington 76.40 Yes 1.75 $5,466 14.37 / 32.74 Woburn 69.90 Yes 1.75 $3,728 10.17 / 26.30 READING 91.4 No 1.0 $6,824 14.70 Only Reading has a CIP sector less than 10 %. W Middlesex League / FY2015 Community Res% Split Shift Avg. S.F. Tax Bill Tax Rate / $1000 RES / CIP Arlington 94.2 No 1.0 $7,306 13.55 Belmont 94.4 No 1.0 $10,938 12.90 Burlington 62.7 Yes 1.63 $4,768 11.35 / 29.40 Lexington 87.6 Yes 1.75 $12,191 14.86 / 29.10 Melrose 94.1 Yes 1.42 $5,549 12.96 / 18.90 Stoneham 88.9 Yes 1.58 $5,411 12.96 / 22.08 Wakefield 84.9 Yes 1.75 $5,608 13.48 / 27.22 Watertown 81.2 Yes 1.75 Res Ex 15.03 / 27.87 Wilmington 76.4 Yes 1.75 $5,466 14.37 / 32.74 Winchester 95.0 Yes 1.0 $10,588 12.14 / 11.40 Woburn 69.9 Yes 1.75 $3,728 15.03 / 27.87 READING 91.4 No 1.0 $6,824 14.70 s Largely Residential Comparable Communities Fiscal Year 2015 Data Community Res% Split Shift Avg. S.F. Tax Bill Tax Rate / $1000 RES / CIP Arlington 94.2 No 1.0 $7,306 13.55 Belmont 94.4 No 1.0 $10,938 12.90 Concord 91.0 No 1.0 $12,890 14.29 Lincoln 96.5 Yes 1.30 $14,367 14.15 / 18.60 Lynnfield 87.2 Yes 1.16 $8,021 14.49 / 17.28 Melrose 94.1 Yes 1.42 $5,549 12.96 / 18.90 Milton 96.1 Yes 1.57 $7,880 13.94 / 22.40 Sudbury 93.6 Yes 1.38 $11,598 17.60 / 24.88 Wakefield 84.9 Yes 1.75 $5,608 13.48 / 27.22 Winchester 95.0 Yes 1.0 $10,588 12.14 / 11.40 READING 91.4 No 1.0 $6,824 14.70 Reading had the third lowest average single family tax bill of those listed. �� All communities except Wakefield and Milton had a 1.5 shift capacity. . Community Res% Split Shift Avg. S.F. Tax Bill Tax Rate 1$1000 RES / CIP Andover 80.20 Yes L47 $8,648 14.97/ 24.77 Bedford 78.60 Yes 1.75 $8,607 14.62 / 32.12 Belmont 94.40 No 1.0 $10,938 12.90 Burlington 62.70 Yes 1.63 $4,768 11.35 / 29.40 Canton 77.40 Yes 1.66 $6,066 12.82 / 26.36 Danvers 74.00 Yes 1.29 $5,350 14.91 / 21.42 Dedham 80.50 Yes 1.75 $6,375 15.87 / 33.95 Lynnfield 87.20 Yes 1.16 $8,021 14.49/ 17.28 Mansfield 76.50 Yes 1.24 $5,816 15.50 / 20.75 Marshfield 92.10 No 1.0 $5,139 13.29 Milton 96.10 Yes 1.57 $7,880 13.94 / 22.40 Natick 77.40 No 1.0 $6,630 13.82 North Reading 87.30 No 1.0 $8,022 16.62 North Andover 87.20 Yes 1.34 $6,851 14.39 / 20.29 Shrewsbury 87.00 No 1.0 $5,030 13.20 Stoneham 88.90 Yes 1.58 55,411 12.96 / 22.08 Tewksbury 81.80 Yes 1.50 $5,355 16.37 / 27.62 Wakefield 84.90 Yes 1.75 $5,608 13.48 / 27.22 Walpole 86.40 Yes 1.28 $6,693 15.70 / 20.93 Westborough 64.50 No lA $8,045 18.59 Westford 84.70 No LO $7,543 16.24 / 16.44 Wilmington 76.40 Yes 1.75 $5,466 14.37 / 32.74 Winchester 95.00 No 1.0 $10,588 - 12.14/ 11.40 READING 91.4 No 1.0 $6,824 14.70 IMPORTANT TERMS v MON Levy The property tax levy is the revenue a community can raise through real and personal property taxes. Levy Limit The maximum amount a community can levy in a given year equal to last year's levy plus 2.5% plus new growth plus debt exclusion / override if applicable. Levy Ceiling Equal to 2.5% of the total full and fair cash value of all taxable real and personal property in the community. New Growth Increase in the tax base due to new construction, parcel subdivisions, condo conversions and property renovations, but not due to revaluation. It is calculated by multiplying the increased assessed value by the prior year's tax rate for the property class. Override A permanent increase to a community's levy limit. Override The difference between the levy ceiling and the levy limit. Capacity It is the maximum amount by which a community may override it levy limit. Debt Exclusion A temporary increase to the levy limit for the payment of a specific debt service item over a specified period of time. Capital Outlay A temporary exclusion for the purpose of raising funds for Expenditure capital projects. Excess Levy The difference between the actual levy and the levy limit. Capacity Tax Classification Committee Report to the Board of Selectmen Fall — 2007 Introduction On February 6, 2007, the Board of Selectmen (the `Board') established an ad -hoc Tax Classification Committee (the "Committee ") of five members`, for the purpose of 1) advising the Board on matters of policy related to the setting of a residential real estate tax factor, 2) determining whether to establish an open space discount; 3) determining whether to establish a residential exemption; and 4) determining whether to establish a commercial exemption. In selecting the Committee members, the Board gave consideration to a member or designee of the following community groups: ➢ The Economic Development Committee; ➢ The Finance Committee; ➢ The Board of Selectmen; ➢ The Community Planning and Development Committee; and ➢ The Reading/North Reading Chamber of Commerce. (The Policy sheet establishing the Committee is attached as Exhibit A.) The Board appointed the first three members on March 27, 2007. At an appointment hearing on May Id, 2007, the Board reviewed applications from three qualified citimns to fill the remaining two spots. Because of the quality of the applicants, the Board decided to expend the sin of the Consumes $om five members to six members and appointed all three applicants. Page l of 8 q0 The Committee Members and participants are as follows: Committee Chairman: Richard McDonald - Town Meeting Member and Former Chairman of the Reading Finance Committee. Committee Vice Chefrm m: Neil L. Cohen Town Meeting Member and Former Member of the Reading Finance Committee. Committee Members: Karen Herrick Town Meeting Member, Reading Business owner, Assoc. Member of the Reading Historical Commission and the Community Preservation Act Committee. Leslie McGonagle Reading resident and business & business property owner and designee of the Economic Development Committee. Kenneth Rossetti Reading resident and business owner and designee of the Reading/North Reading Chamber of Commerce. Ben Tafoya Member, Board of Selectmen, Town Meeting Member. Participants: Steven Cool Reading resident, Chairman of the 1993 Tax Classification Task Force Cynthia Cool Reading resident Town of Reading Staff: Robert W. LeLacheur, Jr. Committee Secretary, Assistant Town Manager and Finance Director David Billard Town Appraiser Page 2 of 8 U v 1O The Committee held public meetings on the following dates: Monday, May 21, 2007 Monday, June 11, 2007 Thursday, June 28, 2007 Thursday, July 12, 2007 Monday, July 30, 2007 Monday, August 20, 2007 Thursday, September 13, 2007 Conclusion of the Committee On July 30, 2007, by a vote of 2 to 4, the Committee did not approve a motion to recommend to the Board that the residential property and commercial and industrial property (CIP) rates remain the same and that a residential real estate tax factor of 1.0 be established at the Board's Tax Classification Hearing in the Fall of 2007. It was the majority's opinion that a shift in the tax rates from residential property to CIP should be recommended to the Board. Thereafter, the Committee, by a vote of 4 to 2, approved a motion to recommend to the Board a 10% shift from residential property to CB' at the Board's Tax Classification Hearing in the Fall of 2007 and a further shift of 15% (to bring the total shift to 25 %) be instituted at the Board's Tax Classification Hearing in the Fall of 2009. It was the majority's belief that a shift in the real estate tax rate was proper and necessary. The majority felt that a gradual phase -in of the shift will give CIP property owners a chance to adjust to the change as well as give the Board a chance to reconsider their actions. Although not requested by the Board, by a vote of 5 to 1, the Committee approved a motion to recommend that the Board consider establishing a similar tax classification committee to study the issue within the next five years. Page 3 of 8 i {3a It was the feeling of the majority that the considerable period that had elapsed since the previous study should not be repeated. This issue is too important to the residents and business owners of the Town of Reading, and too critical to the health of the Town, to not be revisited within a reasonable time. The Committee, by a vote of 6 to 0, approved a motion to make no recommendation to the Board on the open space discount. The Committee, by a vote of 6 to 0, approved a motion to recommend to the Board that no residential exemption be established. The Committee, by a vote of 6 to 0, approved a motion to recommend that, if the Board follows the majority's recommendation to shift the tax rate from residential property to CB', the Board should implement the maximum commercial tax exemption available under law. The Committee hopes that by implementing the maximum commercial tax exemption available, the small businesses in the Town will be spared some of the additional tax burden. The Committee understands, however, that the definition of a small business (average annual employment of no more than 10 people, as certified by the Commissioner of the Department of Employment and Training and a property valuation of less than one million dollars) is quite limiting. According to information supplied by the Town Appraiser in 2007, only 33 our of 151 CIP owners would qualify for this exemption. In addition, there is little community experience available with this exemption within the Commonwealth; in the fourteen years this exemption has been available only 3 municipalities of 351 have adopted it. Previous Consideration of Tax Classifications The Board conducts a public hearing and considers the issues of the setting of a residential real estate tax factor each year in October or November before setting the real estate tax rate for the or coming fiscal year. The Board has never adopted a tax classification option and has always applied a single tax rate to both residential and CB' property owners. The last time the Board constituted a group to study this issue was 1993 when they established what was referred to as the Tax Classification Task Force (the "Task Force'7. The recommendation of the Task Force Page 4 of 8 tb was that the Board not adopt a shift in the tax rate. There were several reasons behind this recommendation, the most prominent being that they felt the greatest possible benefit to the Town would result from the selling of Town owned property. There was some concern that increasing the tax rate on the CIP tax base would impede the We and development of the Town owned property. A large portion of the Town owned property in question at the time has since been sold and developed. Discussion When this issue was last studied by the Task Force in 1993, the total assessed value of all the property in the Town was $1,375,638,600. This value was broken down as follows: Residential $1,240,608,600 90.18% CB' $ 135,030,000 9.82 ° /a For this same study, the total tax levy on this assessment was $20,689,604. In 2007, the total assessed value of all the property in the Town was $3,785,159,436 and was broken down as follows: Residential $3,509,857,100 92.73% CIP $ 275,302,336 7.27% The total tax levy for 2007 was $45,686,874. These numbers reveal several important facts that lead to the majority of the Committee voting to make the recommendations discussed earlier. First, while the tax levy has increased by 120.82 %, the total assessed value of the property in the Town has increased by 175.16 %. (See Exhibit B.) In addition, the breakdown of the assessed values reveals that the total assessed value of the residential property in dollars has increased by 182.91% while the total assessed value of the CB' property in dollars has increased by 103.88°/x. In other words, the assessed value on residential property almost tripled over that period while the assessed value on CIP property merely doubled. This has lead to an incremental increase in the total assessed value of the residential property in the Town from 90.18% of the total to 92.73% of the total — despite the Page 5 of 8 sale and development and addition to the tax base of such Town owned properties as the former landfill site on Walkers Brook Drive. In fact, the increase in the number of residential units (single family homes and condos) over the period was 8.46% (6,703 units v. 7,270 units) while the increase in the number of CIP units ova the period was 14.06% (192 v. 219). This reveals that the increase in the physical number of CIP units has outpaced the increase in the physical number of residential units over the period by over 5% yet the increase in the assessed value of the residential property has outpaced the increase in the value of the CIP property by 79 %. These numbers reflect the disproportionate increase in the property tax levy over the period that bas been bome by the residential property owners in Town. One would be troubled to contemplate what would have happened to the residential real estate tax base if the Town owned land had not been sold and the CIP tax base increased by such a large amount. Classification issue: The Committee studied what surrounding towns have done during it's review and deliberations. As usual, these are the towns that Reading generally compares itself to when studying new issues and revisiting old issue. (See Exhibit C.) Of the twenty towns listed, only three - Reading, Belmont and North Reading - have yet to enact a split tax rate. Statewide there are approximately 100 municipalities out of 351 that have enacted a split tax rate. Most of these municipalities are in the eastern part of the state, and of those, a great portion are within the Rt 495/95 area (See Exhibit D.) In studying the issue, the majority did not take the position that the Town should follow the recent trend of neighboring communities and shift the real estate tax rates simply because everyone else had done it. Nor was the majority concerned with being the last group to the party. The majority studied the issue, looked into why it was not recommended when the last study was conducted in 1993 and tried to understand how the Town had changed since the last study. The Committee also discussed and understood the result of a shift on each of the parties affected; a shift of even a small amount would create minor relief to the residential property owner while creating a larger burden to the CIP owner. The feeling of the majority, however, was that if the burden had been evenly allocated earlier in time, the residential property owners would have bom less of an unbalanced burden from the start. (For a comparison of the changes in the Page 6 of 8 33 property tax liability on three commercial properties and three residential properties for FY 2003 through FY 2007, see Exbibit E.) Effect on Tax Rates: The following is an illustration of the changes to the tax rate with the adoption of the recommended 10% shift, based on FY 2007 numbers, as well as a full 25% shift, with no commercial exemption: *Note — the fall commercial exemption adds an additional 0.075 to each of the CIP rates above. Thus those rates would be $12.14 at 100%; 13.35 at 110 %; and $15.17 at 125 %. Page 7 of 8 Nb13 (9 1000/0 1100/6 125% Res. Taxes $42,636,977 $42,363,977 $42,363,977 Res. Factor 100.0000% 99.2157% 98.0391% =Res. Taxes $42,363,977 $42,031,712 $41,533,261 Div by Res. Val. $3,509,957,100 $3,509,957,100 $3,509,957,100 =Tax Rate Res. $12.07 $11.98 $11.83 Total Taxes $45,686,874 $45,686,874 $45,686,874 Less Res. Taxes $42,363,977 $42,031,712 $41,533,261 =CIP Taxes $ 3,322,897 $ 3,655,163 $ 4,153,613 Div. by CIP Val. $275,302,336 $275,302,336 $275,302,336 =Tax Rate CIP' $12.07 $13.28 $15.09 *Note — the fall commercial exemption adds an additional 0.075 to each of the CIP rates above. Thus those rates would be $12.14 at 100%; 13.35 at 110 %; and $15.17 at 125 %. Page 7 of 8 Nb13 (9 Based on FY 2007 numbers, and the median value of commercial and residential properties, the taxes owed would be as follows: No Shift Shift of 10% Shift of 25% ($12.07312.07) ($11.98313.28) ($11.83/$15.09) Median Value of CIP $454,350 $ 5,484 $ 6,034 $ 6,856 Median Value of SFIf $424,300. $ 5,121 $ 5,083 $ 5,019 Median Value of Condo $283,800 $ 3,425 $ 3,400 $ 3,357 If the Board adopts the recommendation of this Committee, the tax owed by a CIP property owner at the median value would increase by $550 in the fast year and by soother $822 in year three. Conversely, the tax owed in the first year by a residential properly owner at the median values would decrease by $38 for the single family home owner and by $25 for the condo owner. In year three, the tax owed would decrease by an additional $64 for the single family home owner and by an additional $43 for the condo owner. ' Single Family Home— although we he" lumped single family homes and condos under the category of Residential throughout this report, the Assessor's Office is not able to supply the median value of residential Property; they are only able to supply the information broken down mto he two components. Page 8 of 8 qo y 3-� Exhibit A: Polkv establishine an ad-hoc Tax ClassiBcallon Committee There is hereby - established a five (5) member ad -hoc Tax Classification Committee (Committee) to advise the Board of Selectmen on matters related to the tax classification process. The purposes of the Committee are to advise the Board of Selectmen and the Town Manager on matters of policy related but not limited to: • The residential facto, • The open space discount; • The residential exemption; • The commercial exemption. The Committee will be created from the date of this hearing until December 31, 2007, unless such term is modified by the Board of Selectmen. They will deliver final recommendations to the Board by October 31, 2007. In selecting the Committee membership of 5 members, the Board of Selectmen shall appoint all members and shall give consideration to members representing the following interests within the community: • Member or designee of the Reading/North Reading Chamber of Commerce; • Member or designee of the Economic Development Committee; • Member or designee of the Board of Selectmen; • Member or designee of the Finance Committee; • Member or designee of the Community Planning and Development Committee. The Committee shall be advisory in all matters. Decisions as to whether or not to implement measures shall rest as appropriate with the Town Manager, the Board of Selectmen, or other body havingjurisdiction in the matter. This Committee shall administratively fail within the Finance Department. Staff as available will be assigned by the Town Manager to work with the Committee. Adopted 2-6-07 q,v< 3; Exhibit B Reading Tax Classification Advisory Committee Comparison Calculations since 1993 Study Comparison of increase in residential units and commercial units over time - Residential 6,703 7,270 8.46% (SF 8 Condo) Commercial 192 219 14.06% (C &1) �{b 37 1993 2007 Increase Over Time Levy 20,689,604 45,686,874 120.82% Ass. Value 1,375,638,600 3,785,159,436 175.16% Tax Rate 15.04 12.07 Breaking down the increase on assessed value over time - Ass. Value 1,375,638,600 3,785,159,436 175.16% Res. Share 1,240,808,688 3,509,867,100 - 182.91% Com, Share 136,029,934 275,302,336 103.88% Calculating change in residential v. commercial share over time - Res. Share 90.18% 92.73% 2.82% Com. Share 9.82% 7.27% - 25.90% Comparison of increase in residential units and commercial units over time - Residential 6,703 7,270 8.46% (SF 8 Condo) Commercial 192 219 14.06% (C &1) �{b 37 Exhibit C. Community Parcels Com% Snlit - Shift Max Shift Lincoln 2,227 3.4% Y 1.25* 1.5 Melrose 8,822 5.0% Y 015 1.795 Belmont 7,811 5.1% N 1.0 1.5 Winchester 7,568 5.1% Y * ** 1.5 Winthrop 5,275 5.4% Y 1.08* 1.5 Reading 8,213 6.6% N 1.0 1.5 Lynnfield 42214 7.4% Y 1.13* 1.5 Stoneham 7,472 11.2% Y 1.601 1.627 N. Reading 5,521 11.7% N 1.0 1.5 Lexington 11,042 12.2% Y 1.78 1.90 Needham 9,893 12.4% Y 1.75 1.8245 N. Andover 9,337 12.5% Y 1.18 1.50 Wakefield 8,656 14.8% Y 1.90 1.90 Saugus 9,958 18.6% Y 1.90 1.90 Watertown 9,446 18.8% Y 1.75 1.8088 Andover 11,052 20.8% Y 1.42* 1.75 N. Attleboro 9,848 20.9% Y 1.05 1.50 Wilmington 8,108 22.5% Y 1.90 1.90 Woburn 12,119 28.7% Y 1.75 1.7920 Burlington 7,723 32.7% Y 1.893 1.90 qba 30 Exhibit E. COMRESTAXCOM.A@81272007 Comrneraw Prepertlee Residendal Proper8ea Addn m 580 Mein Street (Tambora Buk") Address 120 South Street VALUE TAX 5 YEAR DIFF 5 YEAR PERCENT VALUE VALUE TAX 5 YEAR DI S YEAR PERCENT VALUE FY2007 1,158,200 =13,878.47 8825.79 4.688 0.88314 FY2007 518,200 $8,254.87 57573.84 33.617 1271969 FY2006 1,224,300 $14,788.54 FY2006 608,400 $6,141.47 FY2006 1,202,700 $15,117.94 FY2006 478,200 $6,010.97 FY2004 1,162,200 $14,213.71 FV2004 448,100 $5,480.26 FY2003 1,168.200 $13,353.88 FY2003 407,400 84,681.03 Addreea 107 Mein Street (Wayside Bazaar) Address 62 Grey Comh VALUE TAX 5 YEAR DIFF 5 YEAR PERCENT VALUE VALUE TAX 5 YEAR 015 YEAR PERCENT VALUE FY2007 720,900 88,70126 $766.27 8.657 1.043875 FY2007 871,900 $10,623.83 82,463.69 30.565 1242808 FY2008 716.200 $8,651.70 FY2008 850.400 810,272.83 FY2005 717,200 89.01520 FY2005 768,100 89,529.32 - FY2004 890,600 88,448.04 FY2004 701AN $8,679.35 FY2003 690, 600 87,934.99 FY2003 701,500 $8,06024 Addnm 161 AM Street Molmrt Bukkg) Addreae 717 HeuerhIll Street VALUE TAX S YEAR DIFF 5 YEAR PERCENT VALUE VALUE TAX 5 YEAR DI S YEAR PERCENT VALUE FY2007 731,800 $8,832.83 $980.90 12.638 1.072234 FY2007 388,700 $4,691.61 $1,148.09 32.400 1280378 FY2000 739,800 $8,934.37 FY2006 381,900 $4,613.35 FY2005 728, 700 $9,159.76 FV2006 382,600 $4,556.63 FY2004 SS2, 600 $8.346.98 FY20D4 346,500 $4225.47 FY2003 882,500 $7.841.93 FY2003 308,400 $3,643.52 AVERAGE 1.036416 AVERAGE 1258418 COMRESTAXCOM.A@81272007 OPPOSITION OF AD HOC TAX CLASSIFICATION COMMITTEE MEMBERS KENNETH J. ROSSETTI AND LESLIE MCGONAGLE TO RECOMMENDED TAX CLASSIFICATION We respectfully dissent from the majority recommendation of the Ad Hoc Tax Classification Committee (the "Committee % and urge the Selectmen to avoid forcing the Town's commercial property owners and businesses to incur a significant and disproportionate tax increase that, at best, would create only a negligible benefit for the Town's residents — a benefit that will be overcome, and perhaps be significantly overcome, by the higher costs of goods and services charged by Town businesses compelled to pass on their increased tax burdens to their consumers. Besides significantly burdening the Town's commercial property owners and businesses to produce a minimal residential benefit that will, in our view, be more than dissipated by the higher costs of goods and services, enacting differential property tax rates will harm economic activity in Town, hinder charitable giving, and threaten commercial properly assessments, residential properly assessments, and entry-level job creation Further, other towns with demographics and appearances similar to Reading's have rejected split tax rates, and one town, Concord, reverted to a uniform rate after the enactment of split rates led to diminished commercial property ownership and increasingly severe commercial property tax burdens that only negligibly benefited Concord's residents. As explained in greater detail below, we respectfully recommend that the Board of Selectmen retain the Town's uniform rate of property taxation, in order to avoid the financial hardship and economic strain that would arise from splitting tax rates, to retain the Town's competitive advantage in attracting business to Reading, and to be true to Reading's demographics. Our opposition to split property tart rates is explained in greater detail below:. Split Tax Rates Pose Undue Hardship for the Town's Commercial Property Owners and Businesses, and Do Not Justify the Corresponding Minimal Tax Reduction for Residents — A Savings That Will Be Offset By Higher Costs of Goods and Services. A. BECAUSE ONLY 7% OF READING'S PROPERTY OWNERSHIP CONSISTS OF COMMERCIAL' PROPERTY OWNERSHIP, DIFFERENTIAL TAX RATES WOULD DISPROPORTIONATELY BURDEN COMMERCIAL PROPERTY OWNERS WHILE NEGLIGIBLY BENEFITING RESIDENTS. 'For ease of raferenM the room "commerciar'shallrefar collectively to all property deemed conuneroial, industrial, and personal (°Cln, the three kinds of property that would be subject to a higher one of property taxation should the Board of Selectmen classify the Town's property tax rate. �6zo N� Enacting differential property tax rates in Reading will pose significant hardship to the Tovm's commercial property owners and businesses, and harm the Town's economy. Each such owner/business would incur a major tax increase (relative to what would be required under a uniform rate structure) that would, at best, furaish a negligible savings for residential property owners — a savings that, as explained below, will be dissipated, and perhaps be far dissipated, by the higher prices of goods and services charged by businesses that seek to pass on the higher costs of their vastly greater tax burdens. To illustrate: under the current tax levy, if Reading were to enact the maximum differential permitted by law with property values as presently assessed, an owner of commercial property in Reeding, with a median commercial property assessment of $454,350.00, will pay nearly $2,800.00 more ($2,739.74, to be exact) in annual property taxes than what that same owner pays under the Town's present uniform rate (the tax burden will be higher if the owner's properly is assessed at a higher value, and lower if the properly is assessed at a lower value). That sharp increase in the commercial tax burden dwarfs the marginal tax savings that would be realized by owners of residential property; a Reeding resident, with property at a median residential assessment of $424,300.00, will save just under 2S 00.00 ($199.42, to be exact) in annual property taxes (more if the residence is assessed at a higher value, and less if the residence is assessed at a lower value) if the maximum differential is enacted under the Town's current rate. This stark discrepancy, between the added tax burden on commercial property owners and the slight savings for residential property owners, arises from two factors: (i) Reading's small segment of commercial property relative to residential property (93% residential, 7% commercial); and (ii) the revenue - neutral nature of tax classification, which does not increase the Town's tax revenues. Tax classification in Reading would instead shift a much higher tax burden on commercial property owners, and a slightly lesser burden on residential property owners; commercial property owners would accordingly pay a much higher rate of property tax, and residential property owners would pay a slightly lower rate of property tax, than what these property owners would pay under a uniform property tax rate system. _ The product of the commercial rate and the total valuation of the Town's commercial property, when added to the product of the residential rate and the total valuation of the Town's residential property, yields the Town's tax levy — the same levy that results from multiplying a uniform tax rate by the cumulative assessed value of all properties in Town, residential and commercial. Once again, tax classification is revenue neutral. Information furnished by Reading's Assessor's Office to the Committee verifies the discrepancy between the added tax burden on commercial property owners and the decreased tax burden on residential property owners, and illustrates that even under the maximum shift permitted by law, the residential property tax rate would only drop 47 cents per thousand dollars of valuation based on the current tax levy and current assessed K621 yz values. In contrast, the commercial property tax rate would increase by more than six' dollars per thousand dollars of valuation. The data attached hereto at Exhibit F illustrate this major disparity. The chart on page 1 of Exhibit F shows that for this fiscal year, the current, uniform property tax rate is $12.07 per thousand dollars of valuation. Under the current tax levy and assessed values for all properties in Town, if Reading enacts the maximum differential permitted by law— adding 50 °/u to the commercial tax obligation — then the commercial tax rate would increase from $12.07 per thousand to $18.10 per thousand, and the residential tax rate would drop from $12.07 per thousand to $11.60 per thousand. The Assessor's information also notes that "[f]or every 10% increase in taxes of [commercial property owners], the residential property owners save0 approximately .75 % + / -. The maximum increase of 150% [adding a 50% burden onto commercial properly tax payers] would save the residential tax payer 3.890/o." 50 Exhibit F, page 2. Even under the Committee majority's recommended shift —100K in the first year, and 25% in the third year — the commercial property tax rate would rise significantly, and the residential property rate would drop by mere cents. See Exhibit F, page 1. Under the current tax levy and assessed values for all properties in Town, if Reading enacts a 10% differential, the commercial rate would jump $1.21 per thousand, to $13.28 per thousand, and the residential rate would drop a mere nine cents per thousand, to $11.98 per thousand. See Exhibit F, page 1. Further, under the 10% differential, an owner of commercial property in Reading, with a median commercial assessment of $454,350.00, will pay nearly $550.00 more ($549.77, to be exact) in annual property taxes than what that same owner pays under the Town's present uniform rate and under current assessed values (the tax burden will be higher if the owner's property is assessed at a higher value, and lower if the property is assessed at a lower value). In contrast, an owner of residential property in Reeding, with a median residential assessment of $424,300.00, will save just over $38.00 ($38.19, to be exact), or a little more than a dime a day. Under a 25% differential, and under the current tax levy and assessed values in Town, the comparative figures are as follows: the commercial rate would jump more than three dollars per thousand, from $12.07 to $15.09, and the residential rate would drop by 24 cents, from $12.07 to $11.83. See Exhibit F, page 1. Further, the median commercial property owner would pay an additional $1,372.14 in property taxes annually, and the median residential property owner would save $101.83, or a little more than a quarter per day. The above figures illustrate that tax classification in Reading would significantly and disproportionately burden commercial property owners, in order to furnish negligible savings, at best, for residential property tax payers. As explained below, the enactment of split tax rotes in Reading will harm economic activity, hinder charitable giving, and threaten commercial and residential property assessments — and the residents' negligible �bz �3 tax savings will be dissipated by the higher costs of goods and services charged by businesses compelled to pass on the costs of their significant tax increases. B. THIS NEGLIGIBLE RESIDENTIAL TAX SAVINGS WILL BE OFFSET BY THE HIGHER COSTS OF GOODS AND SERVICES CHARGED BY BUSINESSES FORCED TO PASS ON THEIR INCREASED TAX BURDEN TO THEIR CONSUMERS — THE RESIDENTS OF READING. Enacting differential property tax rates on commercial property owners will significantly and automatically increase the cost of doing business in Reading, as higher rates will adversely impact property owners, and the businesses that rent space from them.2 Businesses will then seek to pass the costs of their increased tax burdens, most likely on their customers/clients — many of whom are Reading residents. In order to pass on such costs, businesses will increase the prices of their goods and services to their consumers, from Reading and elsewhere. Reading residents who patronize the Town's businesses will accordingly pay higher prices for their groceries, coffee, dry cleaning, pizza, accounting services, restaurant meals, legal fees, wine, home fiunishings, and ice cream, among other things. There is a reasonable likelihood that these higher prices will exceed, and perhaps far exceed, the negligible savings to residents posed by splitting the property tax rates. To avoid causing residents to pay higher prices that would exceed, and perhaps far exceed, the minimal tax savings afforded by tax classification, the Board of Selectmen should reject differential property tax rates, and vote to retain a residential factor of `1" in setting the Town's property tax rate. C. THE DISPARITY BETWEEN RESIDENTIAL ASSESSMENT GROWTH AND COMMERCIAL ASSESSMENT GROWTH REFLECTS THE SHARP DIFFERENCES BETWEEN THE RESPECTIVE MARKETS FOR COMMERCIAL PROPERTY AND RESIDENTIAL PROPERTY. NOT A NEED TO SPLIT TAX RATES. Despite the stark discrepancy between the significant tax burden to be imposed upon commercial property owners and businesses upon enactment of split property tax rates, and the small gain, at best, to be realized by residential property owners, the Committee's majority urges the adoption of differential property tax rates to alleviate what the majority contends to be an unacceptable disparity between the rise in the Town's residential property assessments in relation to the comparatively more stagnant growth in commercial property assessments. The majority reasons that since residential assessments have risen steadily over the past few years, and commercial assessments have lagged in comparison, residential property owners have bome a disproportionate 'As explained below, tax classification would sigad' cantly harm commercial property owners and the businesses that rent from them because commercial lasses typically requite became to pay all, or a prorated portion, of the owner's property taxes. ci6 z3 kti share of property taxes, and commercial property owners have not paid their fair share of property taxes, since one's property tax bill is the product of the Town's property tax rate and one's property assessment The majority accordingly endorses differential property rates to compensate residential property owners for their overpayment of property taxes, and to cause commercial property owners to pay additional taxes, since those owners have historically paid too little. As explained below, we find the majority's contention misplaced. Suggesting that residents have overpaid property taxes because their assessments have risen more substantially than commercial assessments implies that the markets for each kind of property are the same. Such a suggestion is akin to comparing apples and oranges, and ignores the numerous and obvious differences between the characteristics of each kind of property. These differences help to explain the disparity between the rise in residential assessments and commercial assessments, and, accordingly, that disparity does not justify enactment of differential property tax rates. D. RESIDENTIAL PROPERTY DIFFERS SUBSTANTIALLY FROM COMMERCIAL PROPERTY BECAUSE THE RESPECTIVE MARKETS FOR THESE PROPERTIES DIVERGE SIGNIFICANTLY DUE TO (1) THE GREATER FINANCIAL RISK INCURRED BY COMMERCIAL PROPERTY OWNERS; (II) THE GREATER LIABILITY RISK INCURRED BY COMMERCIAL PROPERTY OWNERS; (III) THE COSTS IMPOSED ON COMMERCIAL PROPERTY OWNERS TO COMPLY WITH ZONING BY -LAWS; AND (TV) THE GREATER BENEFIT RESIDENTIAL PROPERTY OWNERS DERIVE FROM MUNICIPAL SERVICES. Residential property and commercial property are inherently different because the respective markets for each kind of property are markedly dissimilar. Anyone who doubts this proposition should review a property appraisal report; a. report on a residential property will not fist commercial properties in the comparative sales section, and a report on a commercial property will not list residential properties in the comparative sales section. The reason for this is clear — the respective markets for these different properties differ so much that residential property and commercial property cannot be meaningfully compared, as commercial property is typically not as freely transferable as residential property. Indeed, the following reasons illustrate the sharp differences between residential properly and commercial property. Commercial Property Owners Incur Greeter Financial Risk Than Residential Property Owners. Residential property and commercial property differ because commercial property ownership tends to incur far greater financial risk in comparison to residential property ownership. A purchaser of commercial property usually purchases more than just land; yd�s such a purchaser also often purchases the enterprise conducted on that land, which normally consists of inventory, assets, receivables, goodwill, intellectual property, and other components of the enterprise — a purchase that incurs a risk compounded by the many costs attendant to complying with the myriad laws and regulations governing businesses, such as workplace safety regulations, insurance regulations, wage laws, environmental laws, and anti- discrimination laws — not to mention regulations and laws specific to the particular enterprise being purchased (e.g., food handling regulations for a restaurant). These factors limit the free transferability of commercial property. Even if a purchaser of commercial property merely seeks to rent space to commercial tenants, that purchaser incurs a risk that the mounting tenants will not pay their rent — a risk compounded by the costs of build-outs typically necessitated to ready the property for rental, and to ensure that the property complies with relevant laws pertaining to the structure, access, and egress. In contrast, a comparatively smaller financial risk surrounds residential property ownership, particularly in asought -after " bedroom" community like Reading, with a reputation for educational excellence, many scenic points, and a close proximity to Boston, major access roads, and areas north, south, east, and west.' Given these critical, well- regarded attributes, Reading is presumably positioned to continue to be a desired community for individuals and families alike, particularly in comparison to the many towns and cities whose attributes do not measure up to Readfng's. Put another way, there will always be a strong desire among prospective home purchasers to reside in Reading. Further, in purchasing a home in Town, the purchaser usually is not seeking to acquire or establish a business, or to rent the home to another person or entity. Instead, the residential purchaser almost always simply seeks an agreeable primary residence, and does not need to rely upon an acquired business, or one or mom: tenants, to make the residential purchase work. In contrast, a purchaser of commercial property typify seeks to simultaneously acquire the business conducted on the premises, or to rent space to one or more commercial tenants. The purchaser of commercial property, therefore, risks; among other things, the downturn of the acquired business, and the inability of the renting business to pay rent — risks that do not attend residential property purchases. These risks decrease the free transferability of commercial property in relation to residential property. In sum, residential property and commercial property are different because commercial property ownership incurs greater financial risks, which risks hinder the free transferability of commercial property and dampens the growth of commercial property assessments. Commercial Property Owners hicur Greater Liability Risk Than Residential Property Owners. ' We do Ma contend that there is an absence of financial risk attendant to the purchase or ownership of residential property. Rather, we contend dw there is a greater financial risk to purchasing or owning commercial property in comparison to residential property. yb Residential property and commercial property also differ sharply because a far greater liability risk attends commercial property ownership.' Anyone who doubts this proposition should compare the differences in how each kind of property is typically titled. Most residences — though admittedly not all residences — are owned in the name(s) of the individual owner(s), which subjects the owner(s) to individual liability in the event of an accident or injury on the premises. In contrast, most commercial properties — though admittedly not all commercial proper ties — are titled in the name of an entity that shields the principal(s), to some extent or another, from personal liability. Such titling options for commercial property typically include the name of the corporate entity doing business on the premises, or the name of the corporate entity that purchased the property and is renting/managing the premises for one or more businesses on site. The reason for this difference in titling is clear: commercial property owners face far greater liability risk tbm residential property owners, which limits the free transferability of commercial property. Commercial properties and businesses typically receive many more visitors than residential proper ties — employees, customers, delivery people, and sales people, among others — and this reality increases the likelihood of an accident or injury occurring on commercial property. Further, businesses typically conduct activity that is many times more risky than activity on residential property — dispensing gasoline, fixing cars, dry cleaning clothes, teaching children gymnastics, taking x -rays, receiving streams of deliveries — which, by consequence, makes the liability risk faced by commercial property owners that much greater than what residential property owners face. In sum, residential properly and commercial property are different because commercial property ownership incurs greater liability risk, which hinders the free transferebility of commercial property and dampens the growth of commercial property assessments. 3. Zoning By -Laws Differentiate Between Residential and Commercial Property. Residential property and commercial property are also sharply different because of zoning by -laws. Indeed, the very existence of zoning by -laws underscores that residential property and commercial property fundamentally differ because such laws expressly stipulate different permitted uses and locations of commercial properties and residences. Further, such by -laws typically impose comparatively greater costs on commercial property owners than residential property owners, on matters including signage, parking, hours of operation, locations, access, egress, conduct and density, and these factors tend to limit the free transferability, of commercial property. We do NOT contend that there is an absence of liability risk attendant to the purchase or ownership of residential property. Rather, we contend that there is a greater liability risk to purchasing or owning commercial property in comparison to residential property. q62- 4. Commercial Property Owners Derive Less Benefit From Municipal Services Than Residential Property Owners. Residential property and commercial property are also very different because residential.property owners typically derive greater value from the Town's tax expenditures — and the municipal services funded by those expenditures. — than commercial property owners, which tends to counter the growth of commercial property assessments in comparison to residential assessments. Unlike residential property owners, commercial property owners are responsible for coordinating and paying for their own trash removal. Further, unlike residential property owners, commercial property owners cannot send children to Reading's public schools unless such owners are also residents in Town. Put another way, commercial property owners must pay commercial property taxes to fund, in part, a trash removal service they are barred from using, and a public school system their children cannot attend (unless these owners also reside in Town and can partake of Reading's residential trash removal and public school system). These are only two of the disparities between the respective benefits derived from commercial property owners and residential property owners; these disparities illustrate that residential and commercial property fundamental differ because residential property tax payers typically receive more for their tax dollars than commercial property tax payers. In sum, the respective markets for residential property and commercial property markedly differ because of the many and obvious differences in the characteristics of these properties, as set forth above — the greater financial risk to commercial property owners, the greater liability risk to commercial property owners, the existence of zoning by -laws and the costs of zoning compliance on commercial property owners, and the lesser municipal benefit to commercial property owners — and these differences, individually and collectively, limit the free transferability of commercial property as compared to residential property. This limitation on transferability explains the disparity between the growth in residential property assessments and commercial property assessments, and, accordingly, that disparity does not justify enacting differential property tax rates. We therefore urge the Board of Selectmen to retain a residential factor of "I" in setting the Town's property tax rate. II.. The Hardship Posed By Differential Tax Rates Will Harm Economic Activity, Hinder Charitable Giving, and Threaten Commercial and Residential Property Values in Reeding A. DIFFERENTIAL TAX RATES ADVERSELY IMPACT COMMERCIAL PROPERTY OWNERS AND RENTERS ALICE BECAUSE COMMERCIAL LEASES TYPICALLY REQUIRE TENANTS TO PAY THEIR LANDLORD'S PROPERTY TAXES. According to information furnished to the Committee by the Assessor's Office, there are 252 commercial properties in town. One might accordingly conclude that q6 2,3 01 enacting differential property tax rates will only directly hurt those property owners. That conclusion is else and belied by the custom and practice of commercial leasing. Enacting higher property tax rates for commercial property owners will hurt Reading's commercial property owners and the many businesses that lease space from these owners, since commercial leases typically contain triple -net provisions that require tenants to pay all, or a prorated portion, of the landlord's property taxes. Accordingly, should Reading split its property tax rate, many individuals and businesses will be adversely affected, particularly when one considers that a number of individual commercial properties contain multiple tenants. Put another way, the enactment of differential property tax rates will adversely affect many more persons and entities than the 252 commercial parcel owners in Town, and as explained below, differential property tax rates will harm economic activity in Town. B. DIFFERENTIAL PROPERTY TAX RATES WILL LOWER THE VALUE OF COMMERCIAL PROPERTY AND HARM READING'S ECONOMY BY FORCING COMMERCIAL PROPERTY OWNERS AND BUSINESSES TO IMPLEMENT ECONOMICALLY - DETRIMENTAL MEASURES TO PAY THE ADDED PROPERTY TAX BURDEN. Enacting differential properly tax rates will have immediate and negative effects on Reading's economy, by causing a small proportion of commercial property owners — and the businesses that rent from them and that pay their taxes — to incur a significantly higher property tax burden in comparison to what these owners would pay under a uniform tax rate structure. This higher tax burden, outlined in detail above, will immediately increase the cost of doing business in Town, decrease the cash flow of these owners and businesses, lower the value of commercial property, and thereby make commercial property less attractive to lenders as collateral. All of these factors will adversely impact the Town and its economy. The higher commercial property tax burden posed by a split rate will force commercial property owners and businesses to implement economically-detrimental measures to compensate for their higher burden and decreased cash flow. As noted above, one result will be an increase in the prices and fees for the goods and services charged by the Town's businesses; this will harm the Town's residents, including those who rent their homes — who will not have any offsetting savings in property taxes because those renters do not pay property taxes — and those who own their homes. Indeed, the minimal tax savings realized by residential property owners will be offset, and perhaps be far offset, by the inevitable increases in prices and fees for goods and services. Splitting the property tax rate is akin to setting an added tax on the goods and services famished by Reading's businesses because the higher prices, resulting from the Town's businesses passing on the increased tax burden, would not arise but for the split rate, all other factors being equal. In other words, in the absence of the split rate, yb29 U9 businesses would agree to sell, and buyers would agree to purchase, goods and services at lower prices. The higher prices of goods and services will force residents to pay more for what they purchase in Town. Again, this will harm residents who rent because they will not have any offsetting savings in the residential property tax rate. This will also harm residents who own homes because their minimal savings from a split tax rate will be dissipated by these higher prices. Additionally, the higher prices of goods and services will prompt some residents to patronize out-of-town businesses. This will decrease demand for goods and services in Reading, which will diminish local business activity at a time when there are already significant, visible commercial vacancies. This will also force residents to incur increased travel costs and expend more time for their shopping and errands. Commercial property owners and businesses will also be compelled, regrettably, to consider other economically - harmful measures to address their simultaneously increasing tax burden and decreasing cash flow. These measures include reducing or eliminating any planned expansion; relocating their businesses out of Reading; reducing anticipated hiring, or terminating staff, reducing compensation for employees; and/or reducing or eliminating employee benefits. Some businesses may even close, and, as we argue in greater detail below, charitable giving will be hindered. These measures, collectively and in isolation, will harm economic activity in Town. Business activity in Town will also be slowed because the diminished value of commercial property will decrease the incentive for lenders to finance business expansion through secured real estate loans, and, accordingly, decrease the loan amounts for which prospective business borrowers will qualify. This will binder business expansion in Reading, at a time when commercial vacancies are so noticeable at present. Higher prices for goods and services, reduced economic activity, and increased commercial vacancies are just some of repercussions posed by splitting the property tax rate. The Board of Selectman can avoid these harms, and others set forth below, by setting a uniform property tax rate. C. THE COMMERCIAL EXEMPTION IS AVAILABLE TO ONLY A SMALL PROPORTION OF PROPERTY OWNERS, AND WILL HARDLY NEGATE THE EFFECT OF THE SIGNIFICANT TAX INCREASE POSED BY SPLITTING THE TOWN'S PROPERTY TAX RATE. Proponents of differential property tax rates suggest that the commercial exemption blunts the negative impact of the increased tax burden on commercial property owners and businesses. While we agree with the majority that the Board of Selectmen should enact the maximum commercial exemption permitted by law — a 10% tax 'exemption on qualifying commercial assessments — if the Board of Selectmen votes to 10 IL 2, split the property tax rate, we believe the commercial exemption will do little to counter the negative effects of the increased tax burden on commercial property owners and businesses in Reading. The many conditions on the application of the commercial exemption support our view. First, the commercial exemption does not apply to any properties assessed at or above $1,000,000.00. Second, the commercial exemption does not apply to any commercial property owner that employs ten or more persons. Third, this exemption does not apply to property classified as "industrial." Fourth, and perhaps most significantly, if a multi-unit property has one owner who does, not qualify for the exemption, than nobody on the property qualifies for the exemption. According to information furnished by the Reading Assessor's Office, only 33 of 252 commercial properties presently qualify for the commercial exemption — roughly 13 %— which means that 87% of commercial properties do not presently qualify for the exemption. we believe, therefore, that the commercial exemption will do little to blunt the negative effect of the increased commercial property tax burden resulting from a split property tax rate. For example, under the Town's current tax levy and property assessments, if the Board of Selectmen enacts the maximum differential and the maximum commercial exemption permitted by law, a qualifying commercial property owner, with a median, commercial assessment of $454,350.00, will get taxed on 900/. of that assessment — $408,915.00 — and save $827.37. while this figure may have some superficial appeal, that same property owner will pay $1,942.00 more in property taxes under the maximum differential, even if the Town adopts the highest permitted commercial exemption, over what that owner would otherwise pay under a uniform tax rate at the current tax levy and property assessments. Thus, the commercial exemption will do little to counter the negative effects of tax classification. indeed, the ranges of commercial assessments in Reading, attached hereto at Exhibit F, page 3,s underscore that the commercial exemption will do little to blunt the effect of a split property tax rate (although we view a little help as preferable to no help). These ranges illustrate that most commercial parcels in Reading are relatively modest in assessed value. Roughly 50% of these parcels -124 —are assessed at $499,900.00 or below, and nearly 80% of these parcels —197 —are assessed at $899,900.00 or below. See Exhibit F, page 3. Only about 4% of these parcels —10 — are assessed at or above $3,000,000.00. �M Exhibit F, page 3. These figures underscore that most commercial properties in Reading are relatively modest, which suggests that most owners of these properties are also relatively modest A split tax rate will therefore primarily hurt small business, not large businesses this point is made in greater detail below. ' This information mss furnished to the Committee by the Reading Assessor's OtHce. 11 gb3D 0 Further, these figures underscore that the unavailability of the commercial exemption to 87% of commercial property owners in Town is not principally due to the assessed value of commercial parcels. Indeed, there are relatively few parcels that automatically disqualify for the commercial exemption based on assessed value. See Exhibit F, page 3. Instead, most commercial property owners disqualify for the commercial exemption because of the other conditions on the exemption's application, such as the "all or nothing" condition noted above. In light of the foregoing, while we agree with the Committee's majority that the commercial exemption should be enacted to the maximum extent if the Board of Selectmen splits the property tax rate, we caution that the exemption will do little to blunt the negative effect of the increased tax burden on commercial property owners and businesses. In any event, we urge the Board of Selectmen to make this issue academic by adopting a uniform property tax rate. D. DIFFERENTIAL TAX RATES ARE A DISINCENTIVE TO COMMERCIAL PROPERTY DEVELOPMENT AND INVESTMENT, AND UNFAIRLY BENEFIT HOME-BASED BUSINESSES. Splitting the rate, by whatever differential, will create a disincentive to developing and investing in commercial property by causing commercial property owners and businesses to incur a substantial tax increase — relative to what would be paid under a uniform tax rate structure — that will significantly and automatically drive up the cost of developing, owning, and managing commercial property. Developers will be less inclined to develop commercial property, and lenders will be less inclined to finance commercial property development. Further, prospective purchasers and renters of commercial property will be less inclined to buy or rent such property in Reading because of the added burden posed by a split rate; this will create a lower demand for commercial property in Town, which will contribute to diminished commercial property values, and lead businesses to leave Reading. Additionally, splitting the property tax rate will unfairly benefit home-based businesses at the expense of businesses presently located in commercial property. By driving up the cost of commercial property ownership and leasing, the enactment of a split tax rate will automatically favor home -based businesses. The accountants, attomeys, medical providers, construction contractors, sales people, and consultants who presently work in commercial space will automatically pay much more for.their work space than the accountants, attorneys, medical providers, construction contractors, sales people, and consultants who presently work out of their homes. Home -based businesses will have a greater incentive to remain at home, and be in a position to leverage the benefit of a lower property tax rate under a split-mte system, and businesses that are in commercial space and that can move home will have an incentive to do so (and, we 12 1 /b .� believe, will do so, to one extent or another), and lower the demand for commercial property — and thereby adversely affect commercial property values. To avoid creating a disincentive to the development, ownership and rental of commercial property, and to avoid providing an unfair advantage to home -based businesses, the Board of Selectman should retain a uniform property tax rate. E. ADVOCATING DIFFERENTIAL PROPERTY TAX RATES, BECAUSE SOME TOWN BUSINESSES ARE LARGE, REFLECTS A FUNDAMENTAL MISUNDERSTANDING OF READING'S BUSINESS COMMUNITY AS A WHOLE, AND THREATENS ENTRY -LEVEL JOB CREATION. Some advocates of differential property tax rates state in substance that the increased tax burden posed by a split rate will be a "drop in the bucket" for large companies like Starbucks, so, accordingly, tax rates should be split because large companies can afford the attendant increased tax burden. This contention mischamcterizes Reading's business community, and threatens entry-level job creation in Reeding. There is perhaps no clearer way to explain this point than by simply saying this: we are not all "Starbucks.se Take a stroll through Reading Square; walk up and down Haven Sheet; or drive down Main Street to Route 128, and what will one notice? Most businesses in Reading are small enterprises, usually staffed by one person or a handful of people. In nearly each instance, these are not remote, well - heeled, Fortune 500 companies; these are your neighbors, striving to serve their community and to make decent livings for their families. indeed, when advocates of split tax rates propose increasing the tax burden of these small businesses because large companies can easily shoulder the burden, such advocates mischaracterize the small -town mature of most of the businesses in Reading, and, worse, they propose that these small businesses bear an added tax obligation fm more onerous, in comparative terms, thm what these large companies would bear; indeed, a small business owner required to pay extra hundreds or thousands in taxes (under a split -rate structure, as compared to a uniform rate structure) will feel a pinch many times sharper — based on that owner's yearly revenues — than Starbucks, or other such large companies in Town, even though Starbucks' increased tax burden might be higher, or perhaps much higher, since Starbucks' gross annual revenues surpass those of most companies - again, because most Reading businesses are not Starbucks, and certainly not earning anything close to Starbucks' normal revenues a in this part of the report, the name Starbucks is intended to be synonymous with the names of the relatively few Inge companies that have locations in heading, in comparison to the larger number of small businesses in Town. 71n an online article available at ht •t/ ^— m/ mae. zims/fortune/a,.mne5002o07 /smwwA lamt Starbucks' annul revenues are reported adjust over $7.7 billion. 13 �j 3 Z a While the added tax burden on Starbacks may be insignificant when compared to the corporation's total international revenue, the increased tax burden will affect the company's two Reeding locations by making each location more expensive to operate (and thus less profitable if the added tax burden is not met by a corresponding increase in revenue for the location and/or a decrease in the location's costs). When the cash flow to these locations decreases upon enactment of differential property tax rates, then entry-level job creation suffers, particularly for teenagers just entering, or barely into, the job market. Routine arithmetic bears this point out. Company "X" prepares to hire a part-time stock clerk, at the beginning of the - school year, for $8 per hour, and that clerk is expected to average 10 hours of work per week over the course of a 50 -week year. This clerk will cost Company X $4,000 ($8/hr. x 10 hrsJwk. x 50 wks.) in wages alone. If Company X's tax payment then increases by several thousand dollars upon the enactment of differential property tax rates — in comparison to what Company X would pay under a uniform rate structure — then Company X may very well decline to hire that part -time clerk to compensate for the added tax burden posed by differential rates. This elementary principle applies with equal force to the large companies with Reading locations, and underscores that entry-level job creation would suffer upon the enactment of differential property tax rates in Reading. Perhaps each Starbucks location hires one less barista, or lets one go. And Staples hire one less stock clerk, or lets one go. And Home Depot hires one less cashier, or lets one go. And Bank of America hires one less teller, or lets one go. And so on. This prospect is especially troubling since large, national companies are often in the best position (and in the greatest need) to hire entry -level employees — particularly teenagers just beginning to learn about the work ethic outside of thew homes. If large national companies with Reading locations cot back on entry-level hiring, then an increasing number of Reading's employable youth may either go without work — which would strain, however significantly or minimally, their parents' budgets, and cause such youth to miss out on the money and character- building qualities of one's fast job — or be forced to work out of town. Working out of town incurs the added costs and risks of longer - distance travel, and Reading's businesses would lose out on transactions that might otherwise occur in Town if the kids forced to work outside Reading worked in Town instead. These kids will take their lunch breaks out of town; meet co- workers for dinner after work at restaurants out of town; buy their gas at out -of -town stations; and purchase snacks at out - of- town convenience stores. These are lunch breaks, dinners, gas purchases, and convenience store sales that might otherwise transpire in Reading if large national companies in Reading were not forced to forego some hiring because of the added burden of differential property tax rates. 14 g633 0 In sum, proponents of split property tax rates ask Reading's many small businesses to shoulder a far more onerous financial burden then what Starbucks, Staples, and other large companies in Town would shoulder when one considers the vastly lower revenues earned by the Town's many small business owners in comparison to the revenues earned by these larger funs. Equally disturbing is the very real prospect of impaired entry-level job creation if Reading adopts a split property tax rate. in order to avoid burdening Reading's many small businesses and hindering entry-level job growth in Town, the Board of Selectmen should retain a uniform property tax rate in Reading. F. MANY MEDICAL SERVICE PROVIDERS CANNOT PASS ON THEIR INCREASED TAX BURDEN ONTO THEIR PATIENTS BECAUSE THEIR CONTRACTS WTM HEALTH INSURANCE COMPANIES CAP THEIR CHARGES TO PATIENTS. Enacting higher commercial property tax rates will pose a particular hardship for medical providers in Reading, who typically cannot pass their increased taxes onto their patients because contracts between medical providers and health insurance carriers limit the fees that can be charged to the providers' patients. The caps on charges prevent medical providers, who are at their caps, from doing what other businesses, confronted with higher tax rates, . will inevitably do if differential rates are enacted — namely, charge higher prices to the consumers who partake of their goods or services. Consequently, such medical practices that are at their caps literally get stuck with the higher tax bill, and must consider blunting that cost through cutting back on hiring; reducing or eliminating charitable giving; reducing or eliminating employee bonuses or other benefits; and/or other means that hinder economic activity in Reading. Why should this matter to Reading? Because Reading is attracting a growing number of medical providers, and established practices are expanding in Town. Hallmark Health, based in Melrose, recently invested considerably in a [lace -story, renovation at 30 New Crossing Road, to create the Hallmark Health Medical Center, a new outpatient medical facility. Additionally, other medical providers have recently moved to, or are in the process of moving to, various suites in 2 Haven Street. Reading residents — those who work for the Town's many medical practices, those who are treated by these practices, and those who serve the patients and employees of these practices — benefit from this growth in the Town's medical practices. Indeed, this growth should be encouraged. Regrettably, tax classification will hinder such growth by forcing the Town's many medical practices to incur a tax burden that cannot usually be passed on to the practices' patients; as a result, such practices will be forced to cut costs through means that hinder economic activity. 15 I S The Board of Selectmen can avoid this detriment to the Town's medical providers by rejecting split tax rates, and we accordingly urge the Selectmen to retain the Town's uniform tax rate system. G. DIFFERENTIAL TAX RATES WILL HINDER CHARITABLE GIVING BY INCREASING THE COSTS OF SOLICITING DONATIONS. Differential property tax rates will hinder charitable giving by significantly increasing the costs of soliciting donations. Indeed, we have received specific feedback to this effect from the local business community. As a threshold matter, splitting tax rates will shift a significant sum of money away from the Town's comparatively small proportion of commercial property owners and businesses — money, in whole or in part, that might otherwise go toward charitable giving. This shift will significantly decrease the ability of charities and other organizations to mavimize their dollars -to -donor ratios, a critical element to successful fandraising. Basic arithmetic underscores this point. As noted above, order the current tax levy and property assessments, if the Selectmen enact the differential shift recommended by the majority of this Committee — 10° /a in the first year, 25% in the third year — then, in that fast year, a commercial property owner with commercial property at the median commercial assessment of $454,350.00 will suffer a tax increase of almost $550.00 dollars, while a residential property owner, with a residential property assessed at the residential median assessment of $424,300:00, will save approximately $38.00. Put another way, the recommended differential, if enacted, leaves $550.00 less for the median commercial property owner to donate to charity, and up to an additional $38.00 more for the median residential property owner to donate. To make up for the loss of one median commercial property owner inclined to donate $550.00 to charity, a charity must target 15 median residential property owners ($550.00338.00) — and hope that each median residential owner donates the maximum tax savings (all $38.00) resulting from enacting a 10% differential shift. Keep in mind that those same median residential property owners will likely face higher charges for the goods and services in Town due to the significant increase in the commercial property tax burden imposed by differential property tax rotes. Differential property tax rates, therefore, will significantly counter mavimi i ^g the dollars-to-donor ratios of fandmising organizations, particularly where Reading has such a small proportion of commercial property ownership. Put another way, charities and other fundraisers will suffer increased costs of soliciting donations because, as illustrated above, they must now target many more individual donors to compensate for the lost sums that commercial property owners must pay toward increased property taxes. This will entail, among other things, more direct mail campaigns, more telephone calls, and more flyers — and, by consequence, more costs. 16 11b 3 S Significantly hindering charitable giving has major negative implications for charitable activity in Town as a whole, and for Reading in particular. As noted in the minutes of the March 13, 2007 Board of Selectmen's meeting, a copy of which is attached hereto at Exhibit G, there are multiple concurrent fimdmiting efforts directed toward capital improvements in Town — improvements that the Town alone at this time cannot exclusively fund. These fundraising efforts include the Friends of Reading Tennis' initiative to raise $150,000.00 to improve tennis courts, and various athletic organizations' efforts to raise $60,000.00 for an artificial turf field. See Exhibit G, pages 3-4. Hindering charitable giving through the enactment of differential property tax rates would therefore make these fundraising efforts, and others (such as the prospective private funding of parking consultancy work, as the Board of Selectman discussed during their August 21, 2007 meeting), more difficult than they otherwise would be were the Town to retain a uniform property tax rate. Let us be clear on this point. We are NOT advocating that commercial property owners or businesses decrease or stop their charitable giving. Instead, we merely express the concern that splitting the property tax rate will make it harder, and thus more costly, for charities and fundraisers to solicit donations, and, consistent with feedback that we have received from the local business community, commercial property owners and businesses will be forced to consider cutting back on charitable giving. in order to avoid hindering charitable giving, the Board of Selectmen should reject differential tax rates and vote instead to retain a uniform rate. H. SPLIT TAX RATES THREATEN BOTH COMMERCIAL AND RESIDENTIAL PROPERTY VALUES IN READING. As explained above, splitting the property tax rate will harm economic activity and decrease the demand for the development, ownership, and rental of commercial property by significantly increasing the tax burden attendant to owning commercial property. The lowered demand for commercial property will decrease commercial property values. The negative impact on commercial property values will also harm residential property values. If businesses shut down or leave Reading, the Town's commercial/business vacancy rate will increase. There are already a number of commercial properties in Town that are damaged or vacant; increasing business vacancies will detract from the Town's economy and looks and consequently, we believe, decrease the demand, however slightly, for home purchases in Reading (particularly since business people who might locate their businesses and homes here will consider other towns if Reading splits the property tax rate), which will adversely impact residential property values. We do not believe that such a drop in residential values would necessarily be significant because, m we point out above, Reading is such a sought -after residential location for a number of important reasons. However, a decrease in residential values 17 Nb31 s, would not need to be significant in order to demonstrate that splitting the tax rate would be harmful. For example, the present median residential property value in Reading is $424,300.00, and if the Board of Selectmen enacts the largest differential permitted by law, an owner of such property would save just under $200.00 in properly taxes relative to what that owner would pay under a uniform rate under the Town's current tax levy and assessed values. That $200.00 savings represents just under 0.05% — five one- hundredth's percent, or I120a of one percent— of the property's assessed value. If that same property loses just one percent of its assessed value, that value would drop by more than $4,000 — more than 20 times the minimal tax savings to be realized under a split rate. Put another way, that property owner would need to save $200.00 per year for more than twenty veers to make up for the loss of 1% of the assessed value of that property at the Town's current median residential assessment. In light of the foregoing, a very slight decline in the value of residential property will significantly offset the marginal savings to residents under a split tax rate. To avoid this detriment, the Board of Selectmen should maintain a uniform property tax rate. III. Towns with Appearances and Ownership Demographics Similar to Reading's Have Rejected Split Tax Rates, and Maintaining a Uniform Rate Offers Reeding a .Competitive Advantage in Retaining and Attracting Businesses A. THE TOWN OF CONCORD SCRAPPED DIFFERENTIAL TAX RATES BECAUSE COMMERCIAL PROPERTY OWNERS SHOULDERED SIGNIFICANT TAX BURDENS THAT NEGLIGIBLY BENEFICED RESIDENTS. The Town of Concord - with a New England- village look and demographics remarkably simile r to Reading's —rejected differential property tax rates after their enactment led to a decreased commercial tax base, which caused Concord's businesses to shoulder onerous tax burdens that only negligibly benefited Concord's residents. According to the Concord Board of Assessors' report, "Tax Rate Analysis Fiscal Year 2007," a copy of which is linked on Concord's web site at 072 ( "Concord Report', Concord adopted differential property tax rates in the mid - 1980s, when the ratio of residential property ownership to commercial Property ownership was 82 % -18 %- a split with a significantly higher proportion of commercial property ownership than in Reading presently. After Concord increased the commercial property tax rate, commercial property ownership decreased, and the town recognized that the small population of commercial 'A herd copy of the Concord Report will be distn'boted m the Board of Selectmen when the Board receives the Committee's report. 18 Kb3 g property owners in that town shouldered a significant tax burden that only negligibly benefited Concord's residents. See Concord Report, pages 9 -10. Concord consequently rejected differential property tax rates in the mid- 1990s, and the town has adopted a uniform rate in each year since then, and at present, Concord's proportion of residential property ownership to commercial property ownership is 91 % -90/o - nearly identical to Reading's 93%-70/o ratio. See Concord Report, pages 9 -10, 19. The following excerpt from the Concord Report, at pages 9 -10, underscores the above point: '... through the mid- 1990's, the total value of the town [Concord] became increasingly residential. Wtth this residential growth, it was perceived that an increasingly severe shill' of th e tax levy share to CLP /commercial) would be required in order to produce only a relaMWy small benefa to the residential class. Therefore, the Board of Selectmen decided to gradually reduce the tat shift, and in FY1996 eliminated this tax shy entirely. In each of the ensuing years, the Board of Assessors has recommended and the Selectmen have voted to adopt a uniform rate for all classes. (emphasis supplied). The Town of Reading does act need to endure the detriment that Concord experienced following Concord's enactment of split property tax rates, and to save experiencing such a loss, we urge the Board of Selectmen to retain the Town's uniform rate of property taxation. B. THE TOWN OF DUXBURY REJECTED SPLIT TAX RATES BECAUSE OF DUXBURY'S 97a/o-3% RATIO OF RESIDENTIAL. PROPERTY OWNERSHIP TO COhOAERCIAL PROPERTY OWNERSHIP. The Town of Duxbury, with a 970/o-3% split of residential property ownership to commercial property ownership — a split remarkably similar to Reading's 93 %-7% ratio — rejected differential tax rates because a small proportion of commercial property owners would incur a significant property tax burden that would only minimally benefit Duxbury's residential property In a report available on the Town of Duxbury's web site, a copy of which is linked at ht • / /www town iuxbury us/Public Documents /DmcburvMA Assessll'ex %20Facts ("Danbury Report'), Duxbmy disclosed thatjust three percent of property ownership in ' A herd copy of the Duxhury Report will be distributed to the Board of Selectmen when the Board receives the Committee's report. 19 n,b 3e� 59 that Town consists of commercial property ownership, and illustrated the considerable attendant tax burden such owners would suffer if split rates were enacted: if the maximum allowable tax burden shift were made from the residential property class to the commercial property class, its effect on the average residential assessed value of $649,100 would reduce the tax bill by $103.86. However, the tax bill for a similarly valued commercial property would be increased by $3.290.94. (emphasis in original). See Duxbury Report, 110. The above illustration minors in large part the significant tax burden to be incurred by Reading's commercial property owners in relation to the minimal benefit for residential property owners if the Town splits the property tax tare, and favors maintaining Reading's method of uniform property taxation. To avoid the disproportionate burden posed to Reading's commercial property owners and businesses, the Town's Selectmen, like their colleagues in Concord, Duxbury, and more than two out of every three communities in Massachusetts," should reject split tax rates and keep the present system of uniform property taxation. C. THE TOWN OFWELLESLEY— LIKE OTHER ROUTE 128 COMMUNITIES SIMILAR TO READING — MAINTAINS UNIFORM PROPERTY TAX RATES. Like Concord and Duxbury, Wellesley has a ratio of residential- to-commercial property ownership very simile r to Reading's — Wellesley's ratio is 90% residential, 100/0 commercial, nearly identical to Reading's 93%-7% proportion. Further, like Concord and Duxbury, Wellesley has rejected split property tax rates, opting instead to apply a uniform rate. Indeed, Wellesley expressly recognizes what Concord and Duxbury expressly recognize — the adoption of split tax rates in a town with a small percentage of commercial property ownership causes commercial property owners to incur a substantial tax burden that, at best, offers a very small benefit to residential property owners. In a report available on the Town of Wellesley's web site, a copy of which is linked at Classificatiomiuif ( "Wellesley Repore)," the Town of Wellesley notes the 90 % -10% ratio of residential -to- commercial property ownership - see Wellesley Report, page 15 — and illustrates the significant burden posed to commercial property owners if Wellesley were to adopt differential property tax rates. As noted on page 6 of the Wellesley Report, if Wellesley's Board of Selectmen were to adopt the maximum differential permitted by 'o Amordmg m mformution tisnished to the Committee, approximately 110 communities in Massachusem . have adopted differential property tax rates. Since them are 351 oommwities in the Commamvealth, 241 communities— slightly mote than two out of every Once — maintain uniform property tax rates. "A had copy of the Wellesley Report will be distributed to the Board ofSelechnen when the Board receives the Committee's report. 20 �b 3 law — 50° /s — then an owner of commercial property in Wellesley, with a median commercial assessment of $1,806,000, would incur a tax increase of $8.019: in contrast an owner of residential property, with a median residential assessment of $824,000, would save just $461. Put another way, the added tax burden on a commercial property owner in Wellesley, with properly at the median commercial assessment, would be more than 17 times greater than the savings to be realized by a residential property owner, with property at the median residential assessment in Wellesley. Wellesley's assessment report also illustrates that other Route 128 -area towns, with small proportions of commercial property ownership, similarly apply uniform rates of property taxes. The Town of Belmont — a picturesque New England village like Wellesley, Concord, and Reading — has a residential -to- commercial property ownership ratio of 95%5 %, nearly the same.as Reading's 93 % -7% ratio. Like Wellesley and Concord, Belmont applies a uniform property tax rate. 5ee Wellesley Report, page 15. Similarly, Wayland and Weston — two other picturesque New England villages in the Route 128 region, akin to Belmont, Wellesley, Concord and Reading— each have small proportions of commercial property ownership (Wayland, 4 0/9; Weston, 3 %), and each applies a uniform properly tax rate. See Wellesley Report, page 15. Another picturesque, Route 128 town with a small proportion of commercial property ownership — Arlington — employs a uniform property tax rate. According to the "Report of the Arlington Board of Assessors and the Results of the FY 2007 Revaluation," a copy of which is linked on Arlington's Web site at `Arlington Report")," Arlington's proportion of commercial property is 4 %, very similar to Reading's 7% proportion. See Arlington Report, p. 9. Arlington, BehnoM, Concord, Wellesley, Weston, and Wayland — like North Reading13 — all share an important characteristic with Reading that favors retaining a uniform property tax rate; besides being picttmesque and in the Route 128 area, each Town has a very small proportion of commercial property ownership. These Towns recognize — and in the case of Concord and Wellesley, expressly recognize — that splitting the property tax rate will cause a small number of commercial property owners to shoulder a severe tax burden that would at best marginally benefit residential property owners. These Towns have accordingly rejected splitting thew property tax rates, and Reeding should as well. Nonetheless, certain proponents of splitting Reading's property tax rate have pointed to other area municipalities with split rates, such as Woburn and Burlington, and suggested that since these municipalities adopted split rates and appear to be doing fine — 13 A hard copy of the Arlington Report will be distributed to the Board of Selectmen when the Board receives the Committee's repo[. rs North Reading has a uniform property tax rate. 21 L46 YO lol i.e., they have well- recognized business activity — Reading should not be deterred from splitting its tax rate, particularly since two other towns with small proportions of commercial property ownership (Lexington and Lynnfield, each with 7% proportions nearly identical to Reading's proportion) currently split their respective property tax rates. We respectfully differ on this point Towns like Woburn and Burlington — unlike Reading — have a substantial number of large commercial and industrial entities, not to mention many "box" stores whose development in Reading is typically not as favored as it is in a number of surrounding communities. Further, these municipalities have much larger proportions of commercial property ownership; indeed, Woburn and Burlington's proportions of commercial property ownership are each roughly 30%, more than four (4) times Reading's corresponding proportion of 7 %. Accordingly, comparing Reading to Woburn and Burlington is not meaningful. Additionally, even if we agree for argument's sake that these municipalities are doing fine, we submit that, in light of what Concord experienced as set forth above, there may have been a drop, however small, in commercial property ownership following adoption of split rates, with a negative effect, however small, on those municipalities' economies. We do not want Reading to experience what Concord experienced — which caused Concord to revert to a uniform rate. Further, Lexington and Lynnfield are each unlike Reading, and comparisons to those towns are not helpful. Lynnfield— like Saugus, mother split -rate municipality — contains a portion of Route 1, a well- known, well - developed commercial roadway with a number of significant businesses in each direction perhaps willing to trade higher property taxes for the visibility afforded by that highway; Reading does not have comparable development. Further, Lexington has major office park development — e.g., Ledgemont Center — with many national and international companies; Reading does not have comparable office park development In sum, we believe that Reading's looks and demographics follow those of Concord, Belmont, Arlington, Wellesley, Weston, and Wayland mach more than they follow those of Woburn, Saugus, and Burlington. We accordingly urge the Selectmen to stay true to those looks and demographics, and avoid the hard lesson learned by Concord, by retaining a uniform property tax in Reading. D. MAINTAINING A UNIFORM PROPERTY TAX RATE OFFERS A COMPETITIVE ADVANTAGE TO RETAINING AND ATTRACTING BUSINESSES IN READING. Proponents of differential property tax rates point to surrounding communities that have enacted differential rates, such as Woburn, Saugus, and Burlington, and suggest that since these towiWeities have adopted split rates and appear to be doing okay, Reading should adopt differential tax rates as well. We respectfully differ, as the surrounding communities' split tax rates favor keeping the Town's uniform tax rate. 22 u b ql 6z By maintaining a uniform property tax rate in a region with many split -tax communities, Reading offers a competitive and nearly - unique advantage to attracting businesses to the town. A business that is contemplating a start or relocation in the Route 128 region will be mom likely to choose Reading if the town maintains a uniform tax rate instead of a split rate. Furthermore, such business that is choosing between a Reading location and a location in a split -rate community will be more likely to choose Reading if other factors are otherwise equal. Keeping this competitive advantage is particularly crucial since some neighboring communities, such as North Reading, maintain a uniform tax rate, and are therefore positioned to leverage tbis advantage — and thereby attract businesses away from Reading — if the Town splits the property tax rate. The Board of Selectmen can maintain Reading's competitive advantage by voting to retain the Town's system of uniform property taxation, and we respectfully urge the Board of Selectmen to reject split property tax rates in Town. IV. Conclusion: Since Split Tax Rates Would Significantly and Disproportionately Burden Reading's Small Proportion of Commercial Property Owners and Businesses to Create Negligible Residential Tax Savings That Would Be Offset By the Higher Costs of Goods and Services Resulting from the I-ligher Tax Burdens on Businesses, Which Would Harm Economic Activity, Charitable Giving, and Job Creation in Reading, We Urge the Selectmen to Retain a Uniform Property Tax Rate. The debate over whether to enact split property tax rates is much more than a difference over the significance of particular statistics. Indeed, the debate strikes at the heart of how the citizens view their Town and its business community, and the result of the debate has significant implications for Reading, its citizens, and its economy — not to mention its looks and demographics. While we differ strongly with the majority of the Committee over whether Reading should split its property tax rate, we do so respectfiilly, and we, and our respective constituencies, look forward to a vibrant, civil discourse over the next few months, as the Board of Selectmen, the business community, and the citizens of Reading assess whether the Town should split its property tax rate. We thank the Board of Selectmen for the opportunity to serve on the Committee, and for the Board's consideration of our many points in opposition to a split tax rate. We also appreciate the invaluable assistance of Assistant Town Manager Bob LeLacheur and Town Appraiser Dave Dillard in fumishing time and information to the Committee in the course of the Committee's analysis and deliberations. In closing, we respectfully urge the Board of Selectmen to maintain a uniform property tax rate in Reading — for the good of all the citizens in Town. 23 L4 b N'1i 63 FORMULA FOR THE TAX RATES: _ Exhibit F. SUMMARY OF INFORMATION CONTAINED ON PAGE 6. (1) Coumn i shows lMlaarate and amouds atfmcas is MrBtatl HresiaantlalaM CIP W rate% an Usa same (1a. 100%). The Department of Ravanso ream to Mb as msltlentlal fades d'1'. (2) Column 2 shows a f0 %shiRirom msi6entlal to CIP w 110%. (3)Ldumm3sha1s a25X sh{R ham nsltlantlalbClP w125X. ' '(4) Coumn 4showsq 6% Wil lrom mslaantlal to CIPw 15M (5)TharesManWl lax rob Mrzaases ala rood( slawar rote than Ore GlP mkincresses (6) Page eshows 8ia abll dtlm clasaMptlon ssMS and the impact on tl,a resitlantlal aM soinmertlaVlntivstrla1 ana pammal property lbs. FY2007 FORMULA FOR TAX RATE COLUMN 1 . COLUMN 2 COLUMN 3 t6% 110% 125% R+0 TAXES $42,363,976.64 542,363,07 6.e4 642,363,978.66 X RES FACTOR 100.0000% 901152% 98.0391% �ROTAXES $42,363,910.64 $4L031,711.75 64t,533,261A2 ON BY R+O VAL $3,609,852;100 f3909A37,16 63,509,852,100 .TAX RATE RESIDENTIAL $1207 $1198 611,33 TOTALTAXES $451686,81439 645,66,32499 _$5,686,81439 LEW NO TAXES $42,303,92 &64 $2,0:$,71113 $41.53&rMA2 =CIP TAXES . .$3,322,807.75 $3,655,16288 $,153,612%2 DIV BYCIP VAL 695,302,330. #75,302,336 $225,302,336 sgAX RATE CU, $1207 $13.28 $law TAXES: R +0 $2,36,97 &fib $2,031,711.73 $1,533,261,32 C +I+P $3 ,322,89115' $3,055,1826 $.153,fi129] TOTAL TAXES $5,66,874.59 $5,68&81430 $5,686,874.39 5 COLUMN 4 IFy� 642,363,976.64 9&0782% $0,762,54610 63,509,852,100 611.6`` 445,66,874A 640,60 2.54&20 64,986 ,32 0.19 695,302936 618.10 960,70294010 $994,928.19 910,6&92429 Iqb'� �y 'CIABB61Ga71petiHFB Moo 14.00 mac t4.0O 1 1ZOO IO.W ■FIESIDf?ffiaL sm &W B�MMEHCW. 4Ap LAO om i. ta0 110 120 tib 140 ,t6p RESIDEMIAL absa01ra Bh11 FYZ007 100 110 120 130 140 150 ® RP9RAIZ '12d17 1198 11.88 '11.79 11,69 11.60 CIPRAIY 1 3A7 13.28 14.48 15.69 1690 18.10 _ For every 10% increase In Wes of the iommcrdaNndostrMl and personal property duses, the residential property owa— eavn appreatmately.75 % + / -. The roulmnm increase of 150% would we the residential taapaycr 3.89X. 6 Nb�,Y CJ CONDAERCIAVINDUSTRIAI, FY2007 DISTRIBUTION OF VALUES: VALUERANGE QUANrIY PCP CUMPCT. LESS THAN 99,900 14 5.556 5556 100,000 TO 149,900 16 6.349 11.905 150,000 TO 199 00 3.571 15.476 200,000 TO 249 14, 5.556 21.032 250,000 TO.299 19' 7:540 - 28.571 300 000 TO 349,900 .19 7.540 36.111 350,000 TO 399,900. 19 7.540 43.651 400000 TO.449 900 14: 5.556 49.206 450 000 TO 499,900 14 5.556 ' 54.762 500 000 TO 599 900 22 8.730 63.492 600 000 TO 699,900 . 16 6.349 69.841 700 000 T0.799 15 5:952 75.794 800 000 TO 899,200. 6 2.381 78.175 . 900 b00 TO 1 499 24 9.524 " 87.698 1,500,000 TO 21' 8.333 96.032 .3 000 000 TO 4 99 900 2 0.794. 96.825 ' OVHR 5000000 8 3.175 100.00 TOTAL - 252 TOTAL CA VALUATION. . . AVERAGE C/I VALUATION MEDIAN VALUE RANGE $1,000 TO $23,745,700 CA MEDIAN VALUE $454,350 @ 12.07 $ 5,484.00 . (W-XMUM INCREASE $2,739.74 $ 257,590,116 $ 1,050,077 $ 454,350 SINGLE FAMILY MEDIAN $424,300 Q 12.07 $5,121.39 - MAXIMUM SAVINGS i.$Il .42 ' TO SAVE THE MEDIAN VALUED RESIDENTIAL PROPERTY OWNER A MAXIMUM OF $199.42 THE MEDIAN VALUED COM 4ERCIALINDUSTRIAL OWNER WOULD HAVE TO PAY $2,739.74 MORE THAN WOULD. OTHERWISE BE PAID UNDER ONE TAX RATE. 7. qb`S C4�) Exhibit G. Board of Selectmen Meeting March 13, 2007 For ease of archtving, the order that items appear in these Wmaes reflects the order in which the items appeared on the agenda for that meeting, and are not necessity the order in which any item was taken rap by the Board The meeting convened at 7:02 psi. in the Selectmen's Meeting Room, 16 Lowell Street, Reeding, Massachusetts. Present were Chairman Bea Tafoya, Vice Chairman James Bonazo% Secretary Stephen Goldy, Selectmen Camille Anthony and Richard Schubert, Recreation Administrator John Feudo, Town Manager Peter Hechenblelmer, Assistant Town Manager/Finance Director Bob LeLachem, Paula Schena and the following list of interested parties: Jennifer MikseA David Tuttle, Michelle Hopkinson, Tony D'Arezezo, Patricia Lloyd, John McCracken, Lorraine Salter, Kate Kammer, David Lautman, Adam Pollock, Mike Sheedy, Peter Coumondums. Reports and Comments Selechnen's Liaison Reports and Comments — Selectmen Richard Schubert noted that the I93/195 Interchange Meeting is March 21st at the Woburn High School. He also invited the Selectmen to participate in the upcoming Coolidge Spelling Bee. Selectman Stephen Goldy noted that the Addison-Wesley design charette is Thursday, March 22nd at the Senior Center. He has received inquiries from residents wanting to know when the stop sign at Walnut Street and Old Farm Road is going up. He asked where the seasonal Crossing Guard will be located Vice Chairman James Borimoli indicated that he was not happy that the Finance Committee removed the Nurse Advocate from the Warrant, and he feels that it was not then place to do that. The Town Manage noted that the Finance Committee took it off because they hadn't seer the FY 2009 Budget yet, not because they don't agree. Vice Chairmen Bonazoli noted then he is also disappointed with Town Meeting's vote on Johnson Woods. Chairman Ben Tafoya noted that the screening committee met tonight to review the Town Planner resumes. Personnel and Appointments Community Planning and Development Commission — Chairman Ben Tafoya noted that all of the CPDC Associates were notified, and David Tuttle indicated then he was interested in becoming a full member. yb�f� Board of Selectmen Meeting —March 13 2007 —Paget Ad Hoc Community Preservation Act Study Committee —The Board interviewed Patricia Lloyd for one position on the Community Preservation Act Study Committee. Discussion/Action Items Hearing— Waiver of Drivewav /Curb Regulations — 37 Pinevale Avenue - The Secretary read the hearing notice. The Town Manager noted that the owner paved the anm in front of the wall making it a larger area than allowed. John McCracken is the owner and is requesting a waiver fmm the Town's regulations. The Town Engineer stated that the area is being used for parking but is supposed to be a sidewalk. The Town Manager also noted that Pinevale Avenue is in bad shape. Mr. McCracken noted that he did not pave the area for perking - he did it for safety and aesthetics. It was not his attention to go against the Town regulations. He also noted that its a 5 foot by 30 foot pavement and if it is taken out, it will be a mess. Selectman Richard Schubert asked if there are any sidewalks on Pinevale Avenue, and if curbing Will be put in. It was noted that there are no sidewalks or curbing. Selectmen Stephen Goldy asked Mr. McCracken if he consulted with the Conservation Commission regarding putting this in. Mr. McCracken noted that he did speak with Fran Fink and made changes that she recommended regarding drainage. Vice Chairman James Bomazoli noted that the Conservation Commission only rules on garages and driveways. The Town Manager noted that if the intent is a safe haven fm pedestrians, then there should be curbing. He also noted that curbing will also prevent the snow plow from digging up the edge. He noted that the Town does allow residents to install sidewalks at their own expense according to Town specifications. Selectman Richard Schubert noted that curbing would add to safety but there is none on the rest of the sheet Mr. McCracken noted that In cannot afford cubing so he will haw to tear up the pavement Jennifer Miksen of 41 Pinevale Avenue noted that the run off from his property has increased, and it should be removed and made pervious. She also noted tat when she purchased her house, it was required to keep the land pervious for drainage. Mr. McCracken noted that Ms. Miksen had mentioned that she always had water so he moved his downspouts. Chairman Ban Tafoya asked if the driveway project was done according to Town standards, and the Town Manager indicated that it was. U6 Board of Selectmen Meeting — March 13 2007 — Page 3 Review Capital Program and Financing— Selectman Camille Anthony asked the Assistant Town Manager Bob LdA&ery to review Page 7 of his Capital information. The Assistant Town Manager noted that on Page 1, there is a net amount of $2 ,325,571 committed. On the lest page, everything above the boiler is committed, everything below is new/naeded. Chairman Ben Tafoya asked what number we are trying to stay below, and the Town Manager noted that in FY 2009, we can afford $1,024,000 in capital. Selectman Camille Anthony asked if there is a policy on issuing debt The Assistant Town Manager noted that it is the Town's objective b not do debt but to do capital. Selectman Anthony also asked if we add $77,000 in BAN's to this year's budget what would be the impact. The Assistant Town Manager noted that there would be none because it is already in the budget that has been submitted. Chairman Ben Tafoya noted that the Finance Committee has set a policy for 5% for debt and capital. The Assistant Town Manager noted that the Finance Committee policy also states that if any new project is more than .25% of 5 %, than the Town should go for an override. Selectman Camille Anthony noted that the Library needs more capital. The Assistant Town Manager noted that the Library maintenance is in the Town line. The amount she is looking at is for technology, etc. SelechnanAnthony also noted that she would like to see the School capital broken down by building. Park Plannin¢ — Tends Courts — Recreation Administrator John Feudo and Friends of Reading Tennis representatives Lorraine Salter and Kate Kaminer were present Ms. Salter handed out brochures and noted that 250 people attended the Reading Tennis Open. There are cracks in the courts that are in disrepair. Friends of Reading Tennis are researching special needs grants. Ms. Kaminer noted that they had private companies come and look at the courts. It will cost $350,000 to rebuild six courts with lights. The lights alone are $90,000. Engineering also recommends raising the pads approximately three feet to align with the field, and that will alleviate drainage issues and handicap access. There is $200,000 earmarked from the Town and that leaves $150,000 for Ste Friends of Reading Tennis to raise. They are applying fur grants and do house presentations. They have raised $30,000 since January. Ms. Salter noted that two courts will meet ADA specifications. She reviewed the list of programs that they plan on hosting. U (9 Board OfSelec[men Meeting —March 13,2007 — Page 4 The Town Manager noted that the new lighting is definitely needed. The Superintendent of Schools wants to put ht for SBA funding. Selectman Richard Schubert asked if there is an opportunity to repair the courts for use this Summer. The Town Manager noted that there was not and if there are any issues with the wnditioq they will take the courts out of use. John Feudo noted that it costs approximately $12,000 to crack seal one court. Park Planning — Artificial Turf Field — David Lautman, Adam Pollock and Mike Sheedy representing United Soccer, Lacrowe and Pop Warner Football were present. Mr. Lautman noted that the lacrosse field at Coolidge doesn't hold grass. They have been filling in the holes for years and it is a liability U the Town. He also noted that the Collins Field at Parker is deteriorating and they have lost the tennis court field. The usage is increasing — enrollment is up to over 500 children playing lacrosse. He noted that the Town has a $200,000 grant from the State that Representative Brad Jones got for them. John Feudo reviewed the benefit of playing on artificial turf. He noted that Parker is the best site for synthetic turf. He also noted that there are over 1000 players of soccer, over 700 in Pop Warner and over 300 in lacrosse. Mr. Pollock noted that they had to make fields in hazardous areas; i.e., parking lots last year when the fields were wet. The number of children playing is growing but the Town is not adding more fields. Mr. Sheedy noted that there are over 1000 kids playing soccer and if the first game of the day is cancelled, then the whole day is cancelled. John Feudo noted that the lifespan of artificial turf is 10-15 years. Maintenance is $5,000- $10,000 versus $23,000 for grass. The total cost is $614,811 and the Town has received a grant for $200,000. The athletic organizations will do fundraising. Mr. Lautman noted that the three organizations have joined together and are donating $15,000. The goal is to raise $75,000. Selectman Camille Anthony asked about the lifespaq and the Town Manager noted that when the field is replaced, it is not the full cost just replacing the top portion because the drainage, etc. is already done. Park Planning — Memorial Park — John Feudo noted that Peter Coumondums and Michelle Hopkinson were present. The Town Manager noted that Mr. Coumondmos came forward with ideas/phm for Memorial Park. He also noted that none of the plans are inconsistent with the current restrictions on the park u� CJ Board of Selectman Meeting — March 13 2007 —P •e 5 Mr. Coumonduros noted that this perking has huge potential and is underutilized. The skating acre will be resiwd to look like a pond. They will add Lees and parking. There will be a walking path around the facility, and the pathway from Salem Street will be redesigned. Friends of Reading Recreation will raise funds and do the work in phases. He also noted that the parking will also help the neighborhood. The Town Manager noted that the meadow in the center will allow ball playing without bothering the neighbors. DPW will do the skate rink and pathway. The bandstand will be modified. Vice Chairman James Bonazoli noted that they have created a vision that the Town has needed. He also noted that he does not want an asphalt walkway— he would prefer some other material. The Town Manage noted that we will be doing neighborhood outreach. Pink Planning — Birch Meadow —The Town Manage noted that thae bas beau some confusion regarding the roles and responsibilities related to park improvements. He also noted that the Selectman do not need to get involved with the day to day issues when there is a Master Plan. The problem is we don't have one for the Birch Meadow area. He suggests a Selectmen liaison, the Chairman of the Recreation Committee and staff to work out a policy for who does what Selectmen Camille Anthony noted that she would like to sea a Master Plan for Bich Meadow that does not include fences at Birch Meadow. She also noted that there is the problem of people who do fundraising and the Town cannot fulfill them end. Chairman Ben Tafoya noted that the Board has seen substantial charges to the Capital Plan tonight from the presentations, and these did not include Imagination Station or the Northern Area Greenway. The question is how to evaluate and how to set priorities. He also noted that the Board could consider going to the community for a debt exclusion just for recreation projects. Selectman Richard Schubert suggests creating a Master Plan Group immediately for the Birch Meadow and Parker areas. Vice Chairman Jarman Bonaacli agreed with Selecuman Schubert but noted that the committee needs to know the Selectmen's desires. The Town Manager indicated that he will put together a policy for an Ad Hoc Bimh Meadow Planning Committee. Selectman Camille Anthony indicated that we will need someone with passive recreation experience. Discussion of Possible Regulations — Retail Hours of Operation Ire, Bylaw Change) — The Town Manager noted that Town Meeting approved the changes in the Hours of Operation bylaw. The Selectmen need to think about broad concepts. Some issues would be: • Earliest time to open • Allowing law than midnight kbs© 9 Board of Selectmen Meeting — March 13 2GO7 — Page 6 • Partially opened or entirely open • Hours of delivery restrictions • Outside speakers • Address proximity of abutters Selectmen Richard Schubert noted that there needs to be a process for the permit that clarifies when they will be required to come in before the Selectmen. Tony D'Are= of 130 John Street noted that he abuts the Industrial District. He recommends that the Board be more on the strictrr side in the beginning because it is harder to take away something once it has been granted. Vice Chairman James Bonazoli indicated that he would like a list of the places that were opening before 6:00 a.m. Selectmen Camille Anthony and Stephan Goldy indicated that they will meet with the Police Chief for his recommendations. A motion by Bouazoli seconded by Anthony to adioum the meeting of March 13 2007 at 11:00 p.m. was approved by a vote of 54-0 Respectfully submitted, Secretary z