Council Sets This Year’s Property Tax Rates With Concerns on Values

The City Council passed two orders Monday night that essentially set the property tax rates for Fiscal Year 2020, but one Councillor did attempt to hold the line on tax increases, raising questions about how the Assessing Department values larger properties in the city.

The Council unanimously approved two recommendations from City Manager Thomas 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.

With those votes, the residential property tax rate will 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.

But before the orders were ultimately passed, Councillor-At-Large Roy Avellaneda introduced an amendment calling for a zero percent increase in property tax rates alongside the 31 percent residential exemption, essentially cutting $3.7 million that would have been raised by the proposed 2 1/2-percent increase in property taxes.

Avellaneda noted that there was nothing in either order introduced by Ambrosino that called for the 21/2-percent increase, the maximum allowed by law. With the increase, property taxes would raise just over $61 million toward the city budget.

“Now, I have raised this point in subcommittee, that while the city does a very good job of valuing the smaller properties, the condos, the single family, the two family, the three family, most likely because so much data is out there,” he said. “Unfortunately, there is not as much good data out there for larger properties and it is up to the assessor’s office to try to evaluate them.”

The Councillor said if he sees unfairness in the way taxes are distributed in the city, he is going to advocate for those homeowners who are impacted.

“Now, that’s what the whole system should be about, the fairness of how we distribute the tax burden to the whole community,” said Avellaneda. “And I’ve seen just a list of 100 properties that don’t make sense. The way that it doesn’t make sense to me, is that it is not capturing, in my humble opinion, close to $37 million worth of value.”

Among other items, he said he has seen properties that are remarkably similar yet with wildly varying assessed valuations.

“All I can say is that they are just not capturing the value,” Avellaneda said.

Without the proper assessment of larger properties, the Councillor said the tax burden unfairly shifts to the owners of smaller properties.

Earlier in the evening, both Ambrosino and Mary Lou Ireland, the Director of Assessing, defended the Assessing Department’s work, both noting that the assessed values were certified by the state’s Department of Revenue (DOR) as part of a five-year revaluation of city property.

Ireland said the assessor’s office has undertaken a major overhaul over the past four years to get the valuations of every city property properly squared away.

“We have already made changes to several thousand properties, and we are not done,” said Ireland. “We are constantly working on things, but there has to be realistic expectations as we make the changes.”

Ambrosino stated that while the mass appraisal process the assessor’s office is undertaking can occasionally result in some abnormalities in some individual assessments, the process is subject to exacting scrutiny from the DOR. 

“The DOR looked at that work with a fine-tooth comb for a full month,” he said. “They looked at all the values, and they were fully certified last month.”

Cutting money out of the budget after it has already been approved, or having property tax money replaced by free cash would have an adverse impact on the city’s finances, the City Manager said.

Several Councillors said they understood Avellaneda’s concerns, but that this late in the game, it is an issue that can be given fuller consideration during next year’s budget process.

“I applaud my colleague for bringing this to everyone’s attention, but I think it should be addressed in next year’s budget,” said Councillor-At-Large Leo Robinson. “We might not like all the values, but they were certified by the DOR. Even if we don’t like them, these values are legitimate.”

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