Newton Homeowners, Businesses Will See Tax Increase in FY '13

Without much debate, the Newton Board of Aldermen last night voted to keep the current tax rate shift, resulting in a relatively small increase for both residential and commercial tax bills in fiscal 2013.

With numbers based on the city's median single-family property value of $685,900, the shift will increase single-family tax bills by $280.43, or 3.69 percent, according to Director of Assessment Administration Elizabeth Dromey.

Meanwhile, the median commercial tax bills will increase by $324.93, or 2 percent.

The estimated tax bill increases are based on median property values due to the number of high-value residential and commercial properties in the city that skew the average property value. For example, the average fiscal 2013 value of commercial property in Newton is more than $2.1 million, while the median is $754,200.

Dromey presented the property information and tax rates during a tax classification hearing last night at City Hall. 

The shift, which was approved at 174 percent, determines how much of the annual tax levy the commercial, personal, industrial and residential property owners are responsible for.

With the 174 percent shift voted in last night, the fiscal 2013 residential rate will be $11.49 per $1,000 of assessed value and the commercial rate will be $21.93 per $1,000, pending approval from the Department of Revenue.

Last year, residents paid $11.17 per thousand dollars while commercial property owners paid $21.33 per thousand dollars.

According to Chief Financial Officer Maureen Lemieux, the administration considered two tax shifts for fiscal 2013, 174 percent and 172 percent. Those two tax shifts would bring in the most money for the city, Lemieux said.

However, the 172 percent shift would result in a slightly higher increase to residential tax bills while the commercial property taxes would decrease. Therefore, Lemieux said the administration recommended staying with the 174 percent shift. 

"[The 174 percent shift] has less of an impact on homeowners, while [median] commercial properties only see a 2 percent increase," Lemieux said.

From 2005-2011, the city had stuck with a 175 percent shift. However, the board decided last year to adjust the shift from 175 to 174 percent, moving a small amount of the tax burden off local businesses and ultimately bringing in more money for the city. 

In addition to the increased tax rate, residents' tax rate will also increase if voters approve override ballot questions in the spring. 

If all three overrides pass, the average Newton tax bill will increase by approximately 50 cents for every $1,000 valuation of a home, according to Chief Financial Officer Maureen Lemieux. This amounts to an average of $343 per year, based on Newton's median home price of $686,000.

An override calculator is available on the city's website to help residents find out how much their taxes will increase if the proposed override passes.

Some other facts and figures presented at Monday night's tax hearing:

• With the 174 percent shift in fiscal 2013, the median two-family tax bill will increase by 3.24 percent, or $203.72.

• The median industrial tax bill will increase 5.17 percent, or $942.73.

• Newton has had more than $3.1 million in certified new growth over the last year, with some coming from interior renovations at the Newton Marriott, new residential units on Adams Street and Florence Street, renovations at the Riverside office complex, interior renovations at the Mall at Chestnut Hill and some site improvements at Chestnut Hill Square on Route 9.

• The median sale price of Newton homes in 2011 was $760,000 and $800,000 in 2012 (through Aug. 31, 2012). The average sale price in 2011 was $919,210

• By law, the city is limited to tax no more than 2 1/2 percent of the total assessed value of the city. With a 174 percent shift, the city only ends up with around $14,400 more than the limit. By comparison, a 175 percent shift would end up with $141,396 more than the limit. Therefore, city saves roughly $127,000 going with a 174 shift vs. a 175 shift.

• In calendar year 2011, 94 percent of the homes sold in Newton went for $400,000 or more. Around 70 percent sold for $600,000 or more and 32 percent went for $1 million or more.

• Newton's average single family tax bills ($8,900) are lower than Belmont, Lexington, Sudbury, Wayland, Wellesley and Weston but higher than Needham, Bedford, Arlington and Natick.