1. FY2015 CLASSIFICATION HEARING December 3, 2014 Presented by the Board of Assessors 1

2. SINGLE TAX RATE This is the easiest option to explain and to understand. The tax rate setting process is a result of simply dividing the total tax levy by the total valuation of the town and multiplying by 1000. For fiscal 2015 our tax levy, (the amount of the total budget that must be raised by taxation) is $40,577,505.87. Total valuation is $2,093,782,535 40,577,505.87 2,093,782,535=.01938 X 1000 = $19.38 The tax rate of $19.38 is then applied to the full and fair value of all properties in all classes to determine the taxes due. The other options that are available offer the community the opportunity to tax different classes at different tax rates. 2

3. OPEN SPACE DISCOUNT The Open Space Discount is a process which allows cities and towns to grant a tax break to those properties that are classified as “open space”. The Department of Revenue has described open space as “land which is not held for income but is maintained in an open or natural condition and which contributes significantly to the benefit and enjoyment of the public”. Historically the Town of Holliston has not recognized the classification of “open space” as such. The Board of Assessors has consistently encouraged classification under Chapter 61A (Agricultural and Horticultural) or Chapter 61 (Forestry) which enables the property owner greater discount of taxes and gives the Town the benefit of at least a five (Ch 61A) or ten (Ch 61) acre minimum lot size that is actively devoted to the type of classification. In addition to these benefits the Town has the right of first refusal to purchase any lands classified under these acts. The Board of Assessors does not recommend an open space discount. 3

4. SHIFTING THE TAX BURDEN TO THE C.I.P CLASSES The classification amendment allows towns to shift a greater share of the tax burden to the Commercial, Industrial, Personal Property classes (C.I.P.) There are limits as to how great that shift can be and in Holliston we are allowed to shift by no more than 150%. The impact from this shift on the various classes will vary dependent upon their percentage of the total value. The lower the percentage of the C.I.P the greater the increase in the tax burden assuming the maximum shift is applied. The choices available range from a 1% shift to a 50% shift. Included is a spreadsheet that shows the resulting tax rates as well as the tax dollar effects from all of these choices as applied to the average residential value, the average commercial value, and the average industrial value. The Board of Assessors does not recommend a residential/CIP rate shift. 4

5. For each percent change there is a disproportionate tax increase to the average CIP valued property compared to the savings the average residential property would receive. single rate $19.38 split rate 10% $19.10 $21.87 split rate 25% $18.69 $24.85 split rate 50% $18.00 $29.82 ResidentialCIPResidentialCIPResidentialCIP Average industrial value $841,145$17,869.26$19,657.98$22,336.57$26,803.89 Average commercial value $371,357$10,322.93$11,356.26$12,903.66$15,484.39 Average single family value $386,800$7,689.58$7,387.88$7,229.29$6,962.40 Industrial Impact % Change $1,788.72$4,467.31$8,934.63 Commercial Impact % Change $1,033.33$2,580.73$5,161.46 Residential Impact % Change -$301.70$-460.29-$727.18 5

6. The chart shows an residential average tax vrs increasing commercial industrial personal property tax with shift. 6

7. DETERMINING RESIDENTIAL EXEMPTION USING A 10% DISCOUNT This option allows communities to grant an exemption to qualifying residential properties. There is a statutory limit to the amount of the exemption. This limit is 20% of the average assessed value of all residential parcels. The exemption is computed completely within the residential class and does not impact any other class of property. The major qualification is that the property to benefit from the exemption be occupied by the owner. This poses a logistic problem for the assessor’s office since the only record that we have is of the record owner and not the occupants. In addition, the benefit would vary greatly since the exemption is granted by reducing the value of the property by a set dollar amount, for example a $15,000 exemption on a house valued at $100,000 would have it’s value reduced to $85,000 a 15% reduction, while a house valued at $300,000 would have it’s value reduced to $285,000 a 5% reduction. The following figures were used to determine the effects of a 10% residential exemption as an example only. 1.Compute the average assessed value of all residential property (including vacant land): $1,832,919,425 (total residential value) (5326 total # of residential parcels) $344,100 = (average residential assessed value) (includes all residential properties) 2. This value is then used to determine the dollar value of the exemption. $344,100 X.10 = $34,415 This amount is deducted from those parcels that meet the qualification for the residential exemption. This example is an indication of the inequities that are built in to this process. 3. For the purposes of this example it is estimated that the number of qualifying parcels in Holliston is 4260 approximately 80%, and the exemption is 10%. 4260 X $34,4150 = $1,686,311,525 (total exemption amount). The total exemption amount is then subtracted from the total residential value and a new tax rate is determined. The new rate will always be higher than the original since it reduces the total residential value only and must be accommodated by the residential value only. $1,832,919,425- $164,776,800 = $1,668,142,625 4. This process would result in the following tax rates for fiscal year 2015: Residential Rate C.I.P. With exemption of 10% $21.06$19.38 With exemption of 20% $23.07$19.38 7

8. 10% shift and 20% shift represented by columns. Single tax rate is less than either shift in thin grey line. Unqualified taxpayers are represented by the thin lines which are higher than the shift represented. 8

9. In a community such as Holliston where at least 80% of the properties are Owner occupied, evoking the Residential Exemption into place does not appear to benefit anyone- the qualifying parcels or the non qualifying parcels. Historically the Residential Exemption has benefited communities most where the value and number of owner occupied residences is less than or equal to the number of non-owner occupied residences such as; Boston, Brookline, Waltham, Somerset, and many Cape and Island Communities. Properties under the average value will receive a greater discount at the expense of the majority of higher valued and non-resident properties. The Board of Assessors does not recommend the Residential Exemption. PRE EXEMPTION VALUE VALUE 10% EXEMPT VALUE 20% EXEMPTION 10% RATE20% RATE SINGLE RATE TAX NON QUAL 20% NON QUAL 10% 1,000,000965,585931,171 20,335.2321,482.1118,046.0923,070.0021,060.00 750,000715,585681,171 15,070.2315,714.6113,201.0917,302.5015,795.00 500,000465,585431,171 9,805.239,947.118,356.0911,535.0010,530.00 320,666286,251251,837 6,028.455,809.874,880.607,397.766,753.23 250,000215,585181,171 4,540.234,179.613,511.095,767.505,265.00 200,000165,585131,171 3,487.233,026.112,542.094,614.004,212.00 100,00065,58531,171 1,381.23719.11604.092,307.002,106.00 9

10. SMALL COMMERCIAL EXEMPTION The small business exemption was implemented by the Commonwealth in fiscal year 1995. It is a process which is intended to give a tax benefit to certain commercial properties. The qualifications are as follows: The property must be occupied on January 1 st by a business that has less than 10 employees. The property must be valued less than $1,000,000 The property must be “classified” as commercial with in the 300 class Problems with this exemption: A list of companies that have less than 10 employees is provided to the assessors from the State Department of Employment. Although the list shows that a business is listed in our community, the list may include employees working at other branches in other towns. It is possible that a business could have more than 10 employees and the assessors would not have access to that information. The use classification excludes “mixed use” properties and home businesses (mom and pops) The benefit of the exemption goes to the property owner- not the business owner For a multi-business parcel all businesses must meet the requirements to qualify If a property has businesses that all qualify and they are not on the list- they will not qualify In regards to the list: The list is not public record. Unlike the residential exemption, the exemption is applied to the qualifying parcels as a percentage rather than a dollar amount. There are 101 parcels classified in the 300 commercial class. All but 11 parcels are valued under $1,000,000. The total value of the 11 parcels is: $30,534,000. The total value of all of the commercial properties is $52,445,500. The value of the remaining 90 parcels is $21,911,500. 10

11. In the graph below, the royal blue and white benefit from the exemption as qualifying parcels. All Industrial, mixed use, and non-qualifying parcels pay greater taxes as result of this shift. The lowest range is light blue: the single tax rate. The Holliston Board of Assessors does not recommend the Small Commercial Exemption. 11

12. Fiscal Year Historical Changes fiscal year %chg levyVALUElevy average sf home value Single Family Assessed Value chg average taxes av % chgtax rate estimated receipts and other revenue amount to be raised % chg amount to be raised (appropriatio ns?) amount to be raised minus levy % chg other fndg (state/e st rcts) over all town spend- ing incroverlaygrowth 98-947,890,05016,189,962 196,288-3,352.59 17.08 26,169,400-9,979,438--343,872406,687 998%976,993,63017,449,106 200,5002%3,580.937%17.86 27,395,0415%9,945,9350%5%192,925345,341 0012%1,086,985,36319,543,997 222,88311%4,007.4412%17.9813,829,52031,102,02614%11,558,02916%14%172,015497,637 013%1,242,227,74820,099,245 252,96613%4,092.992%16.18 32,808,5095%12,709,26410%5%346,628572,947 0218%1,341,279,17123,660,165 267,4006%4,716.9415%17.64 36,251,25810%12,591,093-1%10%157,821736,665 032%1,484,259,56024,030,162 295,70011%4,787.381%16.191,717,59641,207,75814%17,177,59636%12%139,199498,503 047%1,732,784,44425,697,193 344,70017%5,111.907%14.8318,054,23842,244,8993%16,547,705-4%4%144,316868,923 054%1,832,144,21526,621,055 364,3006%5,293.284%14.5318,152,44444,773,5006%18,152,44410%6%317,982466,115 065%1,971,271,65327,913,207 391,9818%5,550.455%14.1618,218,59346,131,8003%18,218,5930%3%130,289528,170 075%2,199,008,74829,356,767 435,20011%5809.925%13.3522,327,40251,684,16812%22,327,40223%12%157,785498,725 085%2,120,370,59930,787,781 414,223-5%6014.5184%14.5221,866,45852,654,2392%21,866,458-2%2%133,953356,599 094%2,070,821,86332,014,906 398,244-4%6156.85222%15.4619,650,10651,665,013-2%19,650,107-10%-2%374,616564,613 105%2,061,165,46333,617,610 394,400-1%6,432.664%16.3119,381,71152,999,3213%19,381,711-1%3%132,477319,602 116%1,983,870,70035,590,640 376,485-5%6,754.145%17.9418,753,27254,343,9133%18,753,273-3%3%274,999307,098 123%1,998,259,00036,608,105 377,4990%6,915.782%18.325,246,05556,487,3084%19,879,2036%4%294,249475,041 133%2,033,229,01037,858,724 380,7561% 7,089.683%18.625,393,91958,644,8384%20,786,1145%4% 269,083406,573 143%1,970,885,61039,181,206 363,184-5% 7,220.102%19.885,420,99860,251,4023%21,070,1961%3% 296,475464,129 154%2,093,782,53540,577,506 386,8007% 7,689.587%19.382,796,22064,114,9506%23,537,44412%6% 285,467681,087 five year average tax= 7,016.99 12

13. RESIDENTIAL VS C.I.P. VALUATION HISTORY FISCAL YEARRESIDENTIAL %C.I.% RESIDENTIAL VALUATION C.I.P. VALUATION 199587.1912.81 $ 754,038,800 $ 110,820,250 199687.5812.42 $ 770,674,354 $ 109,336,446 199787.6612.34 $ 784,926,579 $ 110,507,481 199887.7312.27 $ 830,370,800 $ 116,159,250 199988.5411.46 $ 865,264,814 $ 112,020,143 200089.4410.56 $ 972,146,643 $ 114,838,720 200189.5810.42 $ 1,112,816,333 $ 129,411,415 200289.2910.71 $ 1,197,656,757 $ 143,622,414 200389.4110.59 $ 1,327,123,176 $ 157,136,383 200489.7910.21 $ 1,555,940,400 $ 176,844,045 200589.9910.01 $ 1,648,852,560 $ 183,291,655 200690.579.42 $ 1,785,545,803 $ 185,725,850 200790.579.45 $ 1,991,067,650 $ 207,941,098 200889.9910.01 $ 1,908,100,520 $ 212,270,079 200988.8811.12 $ 1,840,462,569 $ 230,359,294 201088.1411.86 $ 1,816,610,457 $ 244,555,006 201187.5512.45 $ 1,736,961,400 $ 246,909,300 201287.6312.37 $ 1,751,073,157 $ 247,185,843 201387.1812.82 $ 1,772,694,140 $ 260,534,870 201486.8513.15 $ 1,711,717,476 $ 259,168,134 201587.5412.46 $ 1,832,919,425 $ 260,863,110 13

14. PROFILE OF SINGLE FAMILY RESIDENCES FY2015FY2014FY2013FY2012FY2011FY2010 Assessed Value ($1000)# parcelsMedian Value# parcelsMedian Value# parcelsMedian Value# parcels Median Value# parcels Median Value# parcelsMedian Value 00 - 1250 00 000 0 142,700 144,600 137,7000 0 125-1500 21 1 00 000000 150 - 1753 6 3 5 2 1 188,000 193,200 183,750 186,968 188,700 188,300 175- 20022 38 18 17 13 200 - 22579 144 83 57 60 46 235,200 234,300 236,100 233,764 236,000 234,650 225 - 250223 339 241 190 186 128 250 - 275365 570 462 414 418 322 280,600 276,900 278,000 277,906 278,900 280,550 275 - 300556 670 587 599 607 502 300 - 325596 509 575 657 663 640 323,050 293,300 321,456 322,526 321,400 323,100 326 - 350514 386 443 517 513 555 350 - 400566 443 546 536 535 652 400,700 403,700 400,000 409,457 403,200 397,200 400 - 500575 502 546 568 567 599 500+839599,900693587,000763609,400706618,398692594,000793619,500 TOTALS4,339 4,301 4,268 4,267 4,2584,250 AVERAGE7,496.18386,800$7,220.10363,184$7,089.68380,756$6,915.76377,498 $6,754.14 376,485 $6,433.69$394,463 MEDIAN6,598.89340,500$6,323.83318,100$6,211.63333,600$6,089.57332,400 $5,950.70 331,700 $5,640.81$345,850 TAXESVALUETAXES VALUETAXESVALUETAXES VALUETAXES VALUETAXES VALUE 14

15. The Market in Holliston For Fiscal Year 2014 the sales reviewed were based on 2012 sales. Trying to determine what the market is telling us in a stabilizing market can be frustrating. The Board carefully took into consideration all factors impacting the economy and market data that was available. In addition, they reviewed physical details of sales and collection data. They analyzed 128 valid arms-length sales and decided a conservative approach would be prudent while the market stabilizes. A market ratio of.94 was derived and applied across the Town to single family residences. Although the 2012 volume of sales increased over the prior year, sales prices were not as robust or definitive consistently throughout Town as we would have expected. There was much diversity in the sale prices, within neighborhoods and throughout Town. For Fiscal Year 2015 the sales reviewed were based on 2013 sales. The market of this year saw recovery for many of our neighborhoods and a restoration of values. 136 sales arms length Sales were analyzed, a conservative market ratio of.93 was derived and applied across town to single family residences. As result of a more consistent valuation theme throughout town assessments to residential properties increased on average of 7% from last year’s values. 15

16. Town of Holliston Calendar YearTown: SFR Sales Analyzed MLS The Warren Group 2011 106 124 134 2012 128 155 162 2013 136 170 148 2014* 150 129 *year to date Calendar Year median sales MLS The Warren Group price 2011 $438,000$390,000 $372,500 2012 $377,500 $372,000 $353,350 2013 $421,000$401,000 $386,500 2014 $449,950 $425,000 *year to date Foreclosure Data no. of foreclosures/calendar year: 2011- 92012- 82013-52014-1 Data from MLS and The Warren Group from respective websites. Differences in count is attributed to arms-length sales. 16