Council Asking Legislature to Allow Residential Property Tax Relief

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Wikimedia Commons / Chensiyuan Massachusetts State House.

City officials requested that the State Legislature give Watertown an exception to a state law that would give residential property owners a break on their taxes.

For years Watertown has shifted the burden of property taxes from residents to commercial, industrial and personal property taxpayers. The City Council has voted for the maximum shift of 175 percent.

State law, however says that the total portion of the residential tax cannot be below the higher of 50 percent of the tax levy or the lowest percentage of the tax levy made up by residential property tax since the the City created tax classifications for different types of properties. The lowest portion was 57.39 percent.

With most of the new projects in Watertown being used for commercial or industrial uses, the proportion of property taxes from those properties has increased sharply. Due to that and the restriction of the state law, the City could not shift the full 175 percent, said Council President Mark Sideris.

In an effort to change that, Sideris added, councilors John Airasian and Emily Izzo requested that the City seek relief from the State Legislature.

“That was a significant burden on the residents, so we are looking for the General Court [State Legislature] to allow us to go back and do that for the next three fiscal years,” Sideris said.

City Assessor Earl Smith said the tax rates adopted in November residential property taxes account for about $85 million, but being able to reduce it to 50 percent would cut the amount to $70 million. In a quick calculation, that would be an average reduction of $1,500 per property. The actual amount would depend on the size of the tax bill.

While the Legislative session ended on July 31, Smith said the proposal could still be passed in informal session before the new session begins in January. One caveat is that if any legislator votes against the proposal it would fail.

Councilor John Gannon asked if many communities have asked for such assistance. City Attorney Mark Reich said he has worked with only one other community that has explored getting similar special legislation. Gannon noted that only 20 communities in Massachusetts do a shift from residential to commercial, industrial and personal (CIP) properties.

While she supported seeking the relief, Councilor Caroline Bays said that she believes Watertown can take other actions to avoid the situation in the future.

“I was reading this and what I was thinking is we need to build new housing. We are asking for three years (relief). At end of three years if don’t have more housing, relative to business, we are going to have the same problem,” Bays said. “I am going to vote for it — obviously I don’t want our residences to suffer — but to me what this is saying is we need to start investing and build more units, again.”

See the proposed legislation by clicking here.

8 thoughts on “Council Asking Legislature to Allow Residential Property Tax Relief

  1. We don’t need more housing..they are already slapping up apartment complexes all over Watertown…STOP THE OVER CROWDING!!!!

    • Data from Boston doesn’t necessarily carry across to Watertown, but it’s plain to see that housing supply is a huge limiting factor in the market right now. There are certainly issues you can take with the YIMBY premise that increasing housing supply will reduce rents or homelessness rates, but sitting on our hands and allowing housing supply to remain stagnant certainly doesn’t do anything to help the problem.

      However, I do agree with you that thoughtlessly approving apartment complexes without regard to affordability is also poor solution to the issue. To take the example of the three buildings that constitute “BLVD & Bond”, the new luxury apartment development in Arsenal Yards, their least expensive listing is a $2,893 1-bedroom apartment; to make an apples-to-apples comparison with the article above, their 2-bedroom apartments start at $4,681. When the AVERAGE 2-bedroom rent in *Boston* as of this June was $2,694, luxury apartments with rents $2,000 above that average rate are a counteractive approach to the issue; if a household making Watertown’s median household income of $59,764 wanted to live there, more than half of their income at minimum would have to go to housing, and if they chose the 2-bedroom they’d only have $3,600 to spend over the entire rest of the year.

      Housing supply is plainly a major factor driving up rents and home costs, and developments that purport to solve the problem but don’t factor in cost will at best keep things as they are and at worst drive up home prices and property taxes, thereby exacerbating the issue.

  2. Quick question, If you had a magic wand and you could create all the housing needed for the elderly and homeless, how much housing would we need?
    Does anybody even know?

  3. Can somebody explain what this gibberish means
    “State law, however says that the total portion of the residential tax cannot be below the higher of 50 percent of the tax levy or the lowest percentage of the tax levy made up by residential property tax”
    “below the higher of 50% .. Wah?
    “or the lowest % of the tax level… Huh?

    • Yes, it is confusing. Basically, if a city chooses to do a shift from residential properties to commercial, industrial and personal properties (CIP) there is a limit to the total amount of the tax levy (total property taxes) that CIP can account for. It CIP cannot be more than 50 percent, so residential can’t be less than 50 percent. However, if the residential was more than 50 percent when the city created the different rates for different types of properties (residential vs CIP) the portion cannot be under that amount. When Watertown did so it was 57.63 percent.

      Basically, the limit is whichever is higher, 50 percent or the percentage when tax classification started. Then you have to figure out how much potion CIP would be if the tax rate was shifted so it is 175 percent the amount of the residential.

      Not sure if that clears it up but hope that helps.

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