This Tide Is Going WAYYYYY Out!

Home values down, but tax bills rise


Struggling homeowners feel the pinch as Mass. communities try to make ends meet

By Matt Carroll and Stephanie S. Daly
Globe Staff
Globe Correspondent / August 22, 2010


 Despite dropping home values, Massachusetts property tax bills continued to rise last year.


Revenue-hungry cities and towns, looking for money to pay for new buildings and to maintain services, have continued to push up local taxes, often asking voters to approve property tax overrides even as real estate values drop further.


The double whammy of lower home values and higher taxes — a phenomenon that has hit Massachusetts homeowners for several years — frustrates taxpayers as they endure the rocky economy.

“There’s absolutely no way you can sell a house in Dedham for what it’s assessed at,’’ said Janet Gorman, who has lived in the town with her husband for about 30 years.


The couple, who own two single-family homes and rental property in town, sought a tax abatement on one of the rentals and got about $900 knocked off their tax bill.


“And is Dedham any different than any other town? Probably not,’’ Gorman said.


The average tax bill on a single-family home in fiscal 2010 increased about $140, a 3.3 percent increase, according to figures released this month by the state Department of Revenue. The average tax bill for a single-family home was $4,390.


The statewide home values, which have more than doubled since 2000, peaked in 2007 but dropped about 4.6 percent last year to an average of $373,702.

Taking a longer view, both taxes and home values have risen over the last decade. Since 2000, average property taxes on single-family homes in Massachusetts have increased about 64 percent.

State and local officials defend the tax increases, and lower values.


“Not only is the 3.3 increase the lowest in 20 years, but it also marks the first time in at least 20 years that the annual percentage increase has gone down for four consecutive years,’’ said Bob Bliss, spokesman for the Department of Revenue.

Local officials also point out that property assessments are a snapshot of values from a year or two ago.

Rick Henderson, the assistant director of assessing in Dedham, pointed out that assessed values for fiscal 2010 are based on a home’s worth on Jan. 1, 2009, which was determined by home sales in 2008 in that community. A home’s actual value — different from its assessed value — might have changed significantly over the last two years, he said.


“The taxes are high and I think everybody’s taxes are high,’’ said Jeanette Geller of Needham, who has filed for abatements at least three times in the 50 years she has lived in her split-level home. She recently won an abatement of nearly $400. Overall, property values dropped in 281 communities for the fiscal year that ended June 30. Hardest hit were Brockton, Revere,, Lynn, and Rockland, where values were clipped at least 14 percent.

“We still have a large number of foreclosures in the city, which impacts the values of homes,’’ when they sell at lower prices by lenders eager to get out of the real estate business, said Mayor Linda M. Balzotti of Brockton. This is the second cycle of foreclosures the city has endured, she said. The first was caused by sub-prime mortgages. This cycle largely stems from homeowners who have lost their jobs or are underemployed.

“We still haven’t quite leveled out yet, but I’m hopeful we will shortly,’’ she said.


“In Revere, things have really slowed down over the last three years,’’ said John Verrengia, an assessor. “Generally speaking the overall market has been tough.’’


Home values in 56 communities — mostly small towns in Central and Western Massachusetts — increased. Topping the list were the towns of Washington, New Ashford, and Granville, where values climbed at least 6 percent.

Values climbed more sharply in Eastern Massachusetts during the boom years of the last decade, but have tended to fall more sharply as well.

Arlington was of the few towns in Greater Boston where values increased, by 2.4 percent.


“Arlington has something for everyone, from cradle to grave,’’ said Robert Greeley, director of assessing, who pointing to the town’s location and its access to Boston, as well as a strong school system, recreational facilities, and senior center.

Greeley estimated seven out of 10 people buying are from outside of town — when homes come up for sale, which isn’t often. Individual homes go on the market every 28 years on average, he said.

The downturn has hit the rich as well. The number of towns where the average home value topped $1 million stood at 10, the same as a year ago. . But values dropped in seven of those towns. Chilmark, a small summer community on Martha’s Vineyard, had the state’s highest average value, at more than $1.8 million, down 1 percent from a year earlier.

In Weston, values slipped a fraction, but the community still had the second-highest average assessments, at $1.4 million. One home is assessed at $23.7 million, according to town records. Weston did top the list in one notable category — highest average taxes on a single-family home, at more than $15,000.

“The values here have been very stable,’’ said principal assessor Eric Josephson. Still, more than 40 people filed for property tax abatements, he said. “With the state of the economy, everyone is concerned where their money is going.’’

The town of Hancock had the state’s lowest average tax bill, at $824.

In Boston, the average assessment was $372,138, down 4.3 percent, according to the city. The average tax bill was $2,935, up 6.2 percent. However, Boston’s numbers were not included in the state data because it, along with 13 other communities, calculates data differently.

Nine towns, all west of Boston, had average taxes of more than $10,000. Not surprisingly, these towns, such as Dover and Lincoln, are among those with the highest values as well.

And nine communities had taxes jump at least 10 percent, with tax overrides or debt exclusions a major factor in most, noted the state.

Rockland was in the unenviable position of ending up among those communities with the greatest drop in valuations (14.3 percent) and highest percent increases in taxes (15.2 percent).

The tax hike was largely due to a $2.8 million override, said town administrator Allan R. Chiocca, who noted the town had the sixth-lowest average tax bills in Plymouth County, even after the override.

Overall, the town is doing well, he said. “Rockland offers a bargain to taxpayers with our low tax rate,’’ he said, pointing to major improvements in renovations and building on the high school and middle school.


Joseph Modugno, a 52-year-old English professor at North Shore Community College, fought for an abatement on his Milton two-family. He likes that the community does not have many businesses, which means more “open space and unclogged streets.’’ But he understands that a small commercial base means the tax burden falls more heavily on homeowners.


“What can I say? Who wants to pay taxes?’’ he said about filing for the abatement.
Matt Carroll can be reached at mcarroll@globe.com and followed on Twitter @GlobeMattC.

Above is an extremely interesting article in today's Boston Sunday Globe that brings up a critical issues which have been impacting Fall River's financial picture over the last few years and will likely spell dire trouble in the very near future without a vast increase in tax base and employment to the City and the region, neither of which seems likely at all. Those issues are the  lowering of property values and the resulting increase in property taxes to keep vital municipal services operating.

The full article and related excellent graphics showing the changes over ten years time in property values and tax rates for every City and Town in MA can be found here:

http://www.boston.com/news/local/massachusetts/articles/2010/08/22/mass_home_values_down_but_tax_bills_rise/?p1=Local_Links

The data boils down to what we can see happening in Fall River, especially after people's outrage over the FY2010 valuations placed by City Assessors of their residential properties. Assessed valuations lag behind actual current  market valuation by almost 2 complete years (as the law dictates) and bear little resemblance to current market values of the properties within the overwhelming majority of cities and towns in Massachusetts. That means as property value increases have been weak over the last decade, or actual decreases over the last year or so, tax rates have had to be kept at Property 2 1/2 maximums, or more , with overrides and debt exclusions, to maintain the same or lesser level of public services.

What does that mean in Fall River? Property values have actually been impacted negatively here more than most municipalities in Massachusetts because of a number of critical reasons, the main one's being high unemployment, lack of growth of Commercial/Industrial tax base for tax shifting from residential to commercial/industrial properties, and a very week regional economy while the state's economy grows at twice the national average. The state's economy is recovering but Fall River's and it's surrounding region is not!

This will make the growing disparity between property values and the tax revenues raised from those properties even worse as time goes on, as long as the Fall River/regional economy stays moribund. By "economy", I mean those industries that are net exporters of goods and services out of the City /region. These type of industries produce employment and wages which in turn most often reliably creates sustainable new households and carries with them the consumption of locally and regionally produced goods and services typically required by those new households. What has to be excluded from this picture are wholly low paying, low skilled service sector jobs, those that do not typically create new households nor, in this case in particular, pay property taxes.

Fall River is already in extreme fiscal distress. This is primarily a function of the existence of  a structural gap between current property tax revenues (not including other fees, such as Water and Sewer Enterprise Funds, or other Enterprise Funds) and the basic, contractual and legally obligated costs of providing needed municipal services to residents of Fall River. As long as the City's tax base witnesses very little major new growth, especially in Commercial/Industrial property, this problem will grow almost exponentially. Without such extreme levels of property tax valuation increases, which are clearly NOT about to occur due to a poor Fall River /regional economic outlook, and because municipal labor contracts have promised millions in salary increases to most Fall River municipal employees in future years as a bargaining tool to offset current salary rollbacks, the full extent of the crisis is not yet visible, as dire as things seem to be year after year!

The economy of the region is stagnant at best, regardless of official statements otherwise. All you need to see this is true is to talk to your neighbors who have been out of work for long periods of time, or whose buying power has been butchered by increasing prices and static salaries. The family wallet and pocket book do not lie. As families/homeowners witness flat incomes and lessening purchasing power, in Fall River they are seeing the value of their largest single possessions, their homes, fade faster over time than elsewhere. Their net worth is eroding in Fall River faster than almost any other City and Town in Massachusetts. Hence, Fall River's ability to raise new tax revenues to meet expenses for the same level of services is virtually nill! This will place further pressure to increase fees and charges related to Water, Sewer and Ambulance Enterprise Funds to insulate fully the General Fund operating budgets from deficts in those enterprise funds! This at a time when cost increases to taxpayers is most painful due to stagnant income growth.

The kicker to this entire situation is that valuations STILL lag behind the actual current market by almost two full years. So, even if things were to turn around tomorrow, the tax base will reflect low or no growth while municpal expenses will continue to rise, especially those expenses related to negotiated union contracts with large built in cost increases and associated health and retirement benefits.

While federal grant funds have been available at the last minute for the last two fiscal years, and will provide a level of "tide you over" funds for FY 2011 and some into FY 2012 for fire and police salaries, the expenses related to those grants will not dry up as the grants do. Therefor, at some point, Fall River will have to find a way to cover those grant fund increased base expenditures, or there will be a drastic reduction in basic safety and other municipal services in the very near future. This is not good news as Republicans look as if they might take over either the US House of Representatives or Senate in the upcoming Fall elections. If that happens, the grant spiggot will immediately be turned off.

Clearly, without any other issues impacting Fall River's municipal finances, things look very bleak, like the tide is going out, not in. When you add into this equation a hyper political atmosphere which cripples the City's ability to move nimbly, and with emergent purpose, to solve these potentially terminal problems, and the incompetent and muddled day to day management ability of current finance managers for Fall River, you can quickly see that the tide is going way out...wayyyy out....for Fall River.

Hope everyone can doggy paddle!