Larger Apartment Buildings Will Bear Brunt of Fy22 Property Tax Increases

Owners of four-plus unit apartment buildings look like they will take the brunt of property tax increases for the coming year.

For owners of condominiums, one-, two-, and three-family homes, however, the news is better, and they can expect to see mostly modest increases if they see any increase in their tax bills at all, according to City Manager Thomas Ambrosino.

The increase in the larger apartment buildings, of which there are about 340 in the city, is due to a revaluation of the four-unit plus buildings requested by the City Council last year, according to Ambrosino. Of those buildings, Ambrosino said less than 30 are owner-occupied, and most are owned by property owners who live outside of Chelsea.

At a presentation before a City Council subcommittee last week, Ambrosino made his initial tax classification presentation. A public hearing is scheduled for Nov. 22, after which Ambrosino is recommending the council take votes on a residential exemption and the minimum residential tax factor which shifts a greater tax burden onto commercial and industrial properties.

“In both cases, the choice is entirely yours,” Ambrosino told the council. “But this city has adopted the 175 percent shift for most of the last generation, and if you did something different than that, you would really increase the residential property tax because all of the previous years have been based on this 175 percent shift, and that’s what I am recommending again.”

In addition, Ambrosino said he is recommending the 35 percent residential exemption again this year. The residential exemption reduces the tax bill by excluding a portion of the residential property value from taxation.

“I would again argue that you should continue the 35 percent residential exemption, which is the maximum amount allowed by law,” said Ambrosino. “You slowly worked your way up, but during the last year during Covid, you gave the best break you can and now we should stick to that.”

Ambrosino noted that the city made a commitment to take a closer look at the valuations of four-plus unit apartment buildings, and brought in JF Ryan Associates as a consultant to take a closer look at those valuations.

“We felt that might be a place where our assessments might not be as accurate as they are for condos, ones, twos, and threes,” said Ambrosino. “We have a high level of confidence in our values there, not so much on the four-plus.”

The valuations of all properties, outside the four-plus apartment buildings, are roughly equal this year, Ambrosino. However, the valuations of the four-plus buildings jumped by an average of about 30 percent, compared to the single-digit increases across all other categories.

That revaluation means that over $284 million in value was added with those properties, the city manager said.

“I do expect that we will get appeals and requests for abatements from a lot of these owners, the majority of which are non-owner occupied,” Ambrosino said.

With the recommended shift in the tax rate where commercial and industrial properties would pay 1.75 times what they would pay if there was a single tax rate, Ambrosino estimated the residential tax rate for Fiscal Year 2022 would be $13.23 per $1,000 of valuation for residential taxpayers, and $25.68 for commercial taxpayers.

“Both of these rates are down from last year,” Ambrosino said. “Condos, one-, two-, and three-families taxes are staying the same on average, or even going down a little bit. The brunt of the increase in the tax levy is going to be picked up by owners of four-plus unit apartments.”

John Ryan of JF Ryan Associates said there are currently 248 properties in the city with four to eight units with a median assessment of $1 million, and 88 properties with more than eight units with a median assessment of $3.47 million. “I will say that the overwhelming majority of these 340-odd parcels that we looked at are not owner occupied,” said Ambrosino. “I think we have determined that there are about 28 that are owner occupied, and to the extent that they are, I would suggest that probably the majority of them are four units, and these people are eligible for our homeowner’s assistance program

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