Tax Shift: Property Owners Expected To See Modest Increases in FY24 Tax Bills

Homeowners in Chelsea can expect to see a modest increase in their property tax bills next year.

The City Council held a subcommittee on conference meeting on the Fiscal Year 2024 tax rate on Monday night and heard a presentation from City Manager Ned Keefe.

The council is scheduled to hold a public hearing on the tax classification at its Dec. 4 meeting before taking a vote on the commercial/industrial tax rate shift and on a residential exemption.

Keefe is recommending that the council once again approve a 175 percent shift to the commercial/industrial tax rate.

Under that shift, commercial and industrial property owners pay a higher property tax rate, taking the burden off of personal property owners.

Keefe is also recommending that the council once again vote on a 35 percent residential exemption, which is the maximum that is allowed under state law. The city manager said that shift would save the average homeowner about $3,000 in property taxes for FY24.

In addition, Keefe noted that there are exemptions in place for older residents, as well as an income-restricted grant program for people who may need help paying their taxes.

If the council approves the tax shift and the residential exemption, Keefe estimated the residential property tax rate for FY24 would come in at $11.83 per $1,000 of valuation, and the commercial/industrial tax rate would be $24.01 per $1,000 of valuation.

While both those rates are lower than the FY23 rates, the average tax bill will increase for most of the average residential taxpayers because of the increased valuations of property.

The values of single-family homes have gone up by 11.2 percent, condos are up by 6.2 percent, two-family home values are up by 7.4 percent, three-family homes are up by 8.6 percent, and apartments with four or more units are up in value by 8.9 percent. In addition, the value of commercial properties is up by 8.3 percent and industrial properties are up by 17.8 percent.

What that means for the actual tax bills is that the average tax bill for single-family homes will be up by $212, two-family homes will be up by $103, and three-family owner occupied homes will see an average increase of $243 in the property tax bill.

Condominiums are the one classification where the average bill is expected to drop, with a savings of about $44 according to Keefe.

“Values have increased here and tax rates have dropped,” said Keefe. “But with the exemption and the tax shift, the annual change is a modest increase in each of these classes.”

District 1 Councillor Todd Taylor asked how Chelsea stacked up to other communities in the state when it comes to offering exemptions and other tax breaks for residential property owners.

Keefe noted that there are only 13 other communities in Massachusetts that offer the residential exemption, and not all of those are at the maximum rate of 35 percent. “My point is we are doing pretty much all we can do in this respect for helping our residents pay their tax bills and make it easier on them,” said Taylor. “This is unique in municipalities across the Commonwealth.”

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