With the rest of us paying 40% more, why are Dunkins (and 72 other business properties) paying less this year than they did in 2019?

 

With a 2-1 vote on December 8th, Allison and Carr voted to tax the average homeowner an extra $300 this year to lower business taxes: at least 73 will pay less this year than they did in 2019.    With residential values skyrocketing, why have we been so reluctant to split the tax rates?

 

Once each year -- usually in December -- Lancaster's Select Board gathers for their most immediately consequential vote of the year:  they hold a "Tax Classification Hearing" and vote how the year's tax levy will be assessed on Residential, Commercial, Industrial and Personal Property.   The decision can change the tax bill you get a few weeks later by hundreds or thousands of dollars.  Almost no one attends.

 
From FY2019 to FY2026, the value of residential property has skyrocketed in Lancaster.   The total value of all residential property in town has increased by 68%.   87% of that increase was from the sharp appreciation in value we've all experienced.  

Over the same period the total value of business property has increased by 48%, but only 2% of that was from appreciation in value.  (The rest is attributable to improvements and new construction, reported every year as "new growth.")

 

 

During the run-up in residential property values, we've stubbornly kept the tax rate the same for all classes of property.    This year, we'll gather $26.6 million in tax revenue by collecting $16.90 for every $1000 of value.

 

 

 

 If we wanted to make sure that every one paid the same proportion of the tax levy each year -- which I think is what we generally expect -- we'd have adjusted the residential rate down a bit each year.  We have not been doing that, and it has moved the tax burden onto residents each year as a result.

 

 Residents have seen dramatic tax increases as a result.

 

Taking the first ten houses on Nicholas Drive as a sample -- their taxes have increased 38% to 43% since FY2019.   Nicholas Drive is a residential street in the Eagle Ridge 55+ development.

 

 

Businesses on the other hand, have escaped the tax increases of recent years.  This year 73 of the 138 business class properties valued at more than $100K will pay less than they did in FY2019.  Last year, 64% paid less. 

 

 

 

This doesn't have to be the case.   At the Tax Classification hearing the Select Board can elect a "CIP Shift" that adjusts for disproportionate change in value.  Adopting a shift around 1.23 in December would have adjusted the tax apportionment roughly back to where it was in FY2019.     A number of residents (myself included) pitched for that, and the hearing took more than an hour.

Hudson has routinely adopted the strongest CIP shift allowed to them (1.75).    This year, that shift will save the average single-family home owner in Hudson $1,460 in real estate tax.

 

 

Hudson and Lancaster have a similar makeup of residential an business property: Lancaster is 87.7% residential property, Hudson is 86.6% residential.

 

Why is Lancaster so stuck on keeping the tax rates identical?  If the aesthetics of the symmetry are our goal, it costs us all hundreds of dollars.

Why did the Select Board vote to shift the tax burden further onto residential taxpayers this year?  Because that's the effect of picking "no shift."

Maybe this December you'd like to join us at the Tax Classification Hearing: we'll save you a chair.