Chelsea property owners will see a modest increase on their property tax bills for Fiscal Year 2020, with owners of commercial and industrial properties and apartment complexes of nine or more units shouldering a larger burden of the City’s overall tax bill.
Monday night, City Manager Thomas Ambrosino presented an overview of the FY2020 tax rates and the valuation of Chelsea properties.
The City Council’s annual tax rate classification hearing is scheduled for Nov. 25. At that time, the Council is expected to vote on two recommendations from Ambrosino, including a 175 percent tax burden shift onto commercial and industrial properties, and a 31 percent residential property tax exemption for Chelsea homeowners who live in the city.
If those recommendations are approved by the Council, the residential property tax rate would be $13.46 per $1,000 of valuation, while the commercial tax rate would be set at $27.18.
While both those rates are lower than for FY19, there will be an increase in the average tax bills because of the recent revaluation of Chelsea properties that saw assessed property values increase across the board. The average increase in assessed values ranged from 11.5 percent for single family homes to nearly 40 percent for apartment complexes of nine or more units. The averages ranged from 12 to just over 15 percent for 2, 3, and four-family homes and condominiums.
“With adoption of the maximum 175 percent shift and the ability to increase the residential exemption, the City Council will be able to keep tax increases reasonably modest for all owner occupants,” said Ambrosino.
While the Council can increase the residential exemption to as much as 35 percent, Ambrosino is recommending it increase only 1 percent from the current 30 percent rate.
“This remaining 5 percent is the most effective tool for lowering residential property taxes and should be reserved for years with high increases,” he said.
Cutting to the chase, if the Council approves the two recommendations, the FY20 tax bill for a single family home at the median assessed value of $357,500 will be $2,645. That is down 1.6 percent over the average FY19 bill.
For condo owners, the average bill will go up 6.5 percent to $1,937.
Owners of two-family homes will see a 4.3 percent jump to $4,191, and owners of three-family homes will see a slight decrease to $5,553. Four-unit owner occupied properties can expect a .5 percent increase in the tax bill to $6,688 for the median assessed value of $659,241.
Ambrosino said City Hall will be open late for several nights before the City Council votes so that property owners can check the new assessed valuations of their properties.
Ambrosino noted that in addition to the residential exemption rate, Chelsea does offer other assistance on property taxes for residents, especially for those 65 and older.
District 1 Councillor Bob Bishop noted that one of his pet peeves about the assessment process is that owners of large apartment complexes are taxed at residential rates, while owners of smaller commercial properties face the burden of the 175 percent tax shift.
“I’ve advocated that income producing apartments of more than four units should be taxed at the commercial rate,” said Ambrosino. “But that would take a Constitutional amendment.”