Mayor Carlo DeMaria Jr. is not dropping his bid to increase Everett’s residential property tax exemption even though the city’s Board of Aldermen recently rejected the plan for the second time this year.
On June 25, the board voted 5-2 against authorizing the city to seek special legislation allowing Everett to increase its existing 20 percent exemption for owner-occupied homes to 30 percent.
The Common Council had voted unanimously to approve the request on the same night.
Were the city to secure passage of the special act, a vote by the City Council — both the Board of Aldermen and the Common Council — would still be needed to increase the exemption.
The council decides whether to offer an exemption and how large it should be when it sets the tax rate each November.
‘This would have helped commercial businesses as well as the person who lives in their property and takes care of their property.’
Melissa Murphy, DeMaria’s chief of staff, said the mayor does not plan to pursue the issue further this year, noting that even if the aldermen reversed course, it is unlikely the city could win passage of the special act before it sets the fiscal 2013 tax rate.
But, she said, “we are definitely going to offer the petition again next year.”
DeMaria and other supporters had argued that the proposal, which was similarly rejected by aldermen in March after earning Common Council approval, would provide needed additional tax relief to those who own and occupy homes.
Commercial property owners would also benefit, they said, because the mayor had proposed that if the city increased the residential exemption, it should also reduce the amount of the tax burden that it shifts onto businesses.
Businesses pay 75 percent more in taxes than they would with a single tax rate; DeMaria’s proposal would have reduced that to 65 percent.
“I am very disappointed that this piece failed to pass the Board of Aldermen,” DeMaria said in a statement following the June 25 meeting.
“I know that this would have been a positive thing for the residents and business owners of Everett and I applaud the Common Council for their vote.”
State law allows municipalities to offer an exemption of up to 20 percent of the average value of all residential properties in the community as a form of tax relief. The exemption can be provided only to owner-occupied dwellings.
Residential exemptions are in place in 13 communities, including Chelsea, Everett, Malden, and Somerville, as well as the West Barnstable Fire District. Three cities, including Somerville, have secured special legislation to increase their exemptions to 30 percent.
Murphy said providing the proposed tax relief for owner-occupied and commercial properties would not result in any loss of revenue for Everett because of the higher taxes it would receive from non-owner occupied homes through an increase in the tax rate.
Of the city’s 8,430 residential properties, 4,392 qualify for an exemption.
Were the city to move to the 30 percent residential exemption and adopt the proposal to ease the commercial tax burden, officials estimate the tax bill of an owner-occupied, average single family home valued at $243,500 would rise by $136 this year, but the increase would be $65 less than what it would be without the changes.
For a single-family home that is not owner-occupied, the tax bill would rise $823 with the changes, $565 more than it would go up without them.
The owner of a downtown store with an assessed value of $420,300 would see a $252 decrease in the property’s tax bill with the combined changes, but a $904 increase without them.
Ward 2 Councilor Mike Mangan voted for the increased exemption and said he is disappointed by the outcome.
“This would have helped commercial businesses as well as the person who lives in their property and takes care of their property. . . . The only people who were going to be hurt were people that don’t live in their property – basically absentee landlords and people who invest in property,” he said.
But Ward 3 Alderman Michael K. Marchese, who had been an original proponent of the residential exemption when the city adopted it about a decade ago, voted against increasing the exemption and said he would even favor eliminating it.
Marchese said the exemption “was never meant to be permanent” but instead was intended to temporarily ease the burden on homeowners who were seeing steep increases in their taxes due to inflationary home values at the time.
With home values now at more stable levels, the exemption only serves to discourage people from investing in multifamily properties and could mean higher rents for tenants, added Marchese, who said that as a commercial and rental property owner, he stood to lose however the board voted.
Ward 6 Alderman Sal Sachetta also voted against increasing the exemption.
Sachetta had supported the proposal in March because it was tied to the mayor’s plan to reduce the tax burden on businesses, something he believes is needed.
But Sachetta changed his stance because he said the Common Council would not go along with cuts the aldermen had sought to make in the fiscal 2013 budget.
Without the budget cuts, Sachetta said. the effect of the proposed changes would be to burden the owners of properties that do not qualify for the exemption.
“They are going to feel the brunt of the whole thing,” he said.