The Select Board made its annual call this week on whether or not to split the tax rate, that is, to have a single tax rate for residents and businesses, or to have one group pay more than the other. The Board, which often gets asked about splitting the rate by residents feeling property tax pain, stuck with a single rate for the “residential factor” and went out of its way to explain why, with assistance from the town’s director of assessing.
Director of Assessing Eric Henderson kicked off the Fiscal Year 2024 Tax Classification Hearing with a presentation (embedded below) going over the basics of tax rates, sharing the latest on Natick’s property values, and reviewing the town’s options on rates. If you watch the whole presentation via the Pegasus recording, you’ll get your fill of new growth, excess levy capacity, and some fun math equations.
Natick impresses with a total tax value of just under $11.5 billion, with a “b,” for FY23. That’s up 7.41% from the previous year.
About 82% of the value derives from residential properties, and the FY23 average value of single-family homes rose from about $759K to $817K (if you prefer medians, which downplay the outliers, values rose from $686K to $729K). New growth contributed more than $2M in tax dollars to the town.
The usual good news/bad news is that Natick’s property tax rate per $1,000 of property value continues to fall, but tax bills keep rising because property values keep rising despite interest rates tamping things down a bit for certain properties. The projected FY24 tax rate would be $12.26, down 38 cents from the year before. “Obviously a correlation as the [assessed property] values go up,” Henderson said.
Under a single tax rate, the average Natick residential property owner in FY24 would be looking at a property tax bill of around $10,021, up roughly $424 over the previous fiscal year. You might like the projected increase based on median value better: That’s $268.
Also, don’t overlook tax assistance and deferral programs available to eligible residents.
Henderson says the mix of single rate vs. split rate municipalities across the state has stayed pretty steady for years. Currently, 243 communities have a single rate, as does Natick, while 108 use split rates. For Natick, if it were to go with a split rate, residents’ bills would fall by 1%, while commercial property owners would see a 4% spike.
During discussion following Henderson’s presentation, Select Board member Rich Sidney said that he and the board do not take the tax rate decision lightly. In explaining the board’s considerations, he highlighted that the assessed values shown are from January 1, 2023 and that current home values might be different based on factors such as Fed interest rate adjustments. He also pointed out that if the town were to go to a split tax rate and residential bills fell a bit, those bills would probably bounce right back the next year due to commercial property values being lower. He credited the single tax rate in part for supporting Natick’s vibrant downtown and industrial centers.
Another consideration about going the split rate route, Henderson said, is that you might see more commercial property owners appeal their valuations. Residents rarely do. Board Chair Bruce Evans said that if Natick changes to a split rate, appeals by commercial property owners will spike. “I can guarantee that,” he said.
Select Board member Kathryn Coughlin also commented on the split tax rate issue, citing the continued tough retail climate as a reason not to shift more of the tax burden to commercial property owners. She cited millions of square feet of unleased office and retail space in town (not including the mall) as of the end of June. She also noted the impact that spaces vacated by anchor tenants at the mall has on rents that can be charged for other tenants. Raising commercial property taxes would really hurt small businesses like those in downtown Natick, she added. “There’s a lot of very good justification to keep the single tax rate,” she said.
The Board voted 5-0 in favor of the single tax rate.