Fiscal Resources Task Group - Oct 15th, 2020

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Meeting conducted via video-conference. The Fiscal Resources Task Group (FRTG) is a working group within Envision Arlington. The focus of tonight's meeting was property assessments, new growth, and how new growth is captured. Meeting materials were posted here:

Guests are Paul Tierney and Dana Mann, from the Assessor's office.

Gordon Jamieson introduces the meeting. Arlington's voters passed a budget override in 2019. Since then, we've been thinking about ways to extend it. Having overrides less often than anticipated is far preferable to having them more often. The main ideas were state aid, limiting insurance expenditures, and new growth. The group was interested in learning more about the role that new growth plays, and have invited our assessors to talk about it and answer questions.

A few members examined properties on several streets, looking for building permits that would indicate significant work (e.g., a new addition). They were interested in seeing if these improvements were recorded on the property card, and if they'd led to a change in assessed value.

Michael DeLisa notes that the agenda lists several properties that were examined. They represent a sample of significant additions or other improvements. He believes these should be captured as new growth, and would like to understand the process by which that occurs.

Mr. Jamieson wants to make sure that the town is able to capture the full and fair value of new growth.

Mr. DeLisa thinks we're close to being able to avoid future budget overrides, and capturing all of the new residential growth could help with that.

Paul Tierney starts by saying that $100k from a building permit is not automatically $100k in new growth. Furthermore, the change to the tax levy would be much smaller: new growth, multiplied by whatever the tax rate is.

Dana Mann says that MassDOR defines new growth as anything not taxed during the previous year, which is taxed this year, and leads to an increase in value. New growth is coded on the back side of property cards, in a field called "Jurisdiction". Someone's displayed a property card for illustration. This card has "G18" in the Jurisdiction field; that coding indicates new growth that was captured in 2018.

Property assessments are reported on January 1st, and DOR allows that to be extended to June 30th for new construction that's still in progress. Some projects may span years, and growth may have to be captured over several years.

There's a discussion as to whether property values in one community can affect those in another community. While that may be the case for property values, it's not the case for assessments. Arlington's mass assessments are based on sale data from Arlington, without consideration to sales in neighboring communities. Mass assessments are driven by the housing market in each community.

Someone asks how to tell how much new growth is captured in a given year. Mr. Tierney says this information is reported to MassDOR on form LA-13. It's a lump figure that covers the whole town. Mr. Tierney also notes that new growth doesn't make a distinction between changes in land value or changes in building value, it's only concerned with the total assessed value.

Looking at an individual property card, it's hard to tell how much new growth was captured, and when.

Dana Mann describes the process by which property improvements are considered for new growth. When a property owner builds an addition or a dormer (for example), they'll start by going to the building department and applying for a building permit. During that process, the permit is scanned and entered into the building department's permit management system. Each month, the assessors office gets a report that contains all of these scans. The permit data is entered into Patriot Properties' assessment system. The system performs some calculations, and determines if the property should be considered for re-inspection. When the work is complete, the assessors office will perform a new inspection and update the property card.

The assessors office typically leaves a card at the property, asking the owner to call the assessors office to schedule a visit/inspection. However, the property owner is not required to do this. If the property owner never schedules, the assessors make a visual inspection of the building exterior, and make their best guess as to what the improvement is worth.

Sandy Pooler notes that the town's expenses have been increasing at $3M/year. That's faster than the 2.5% increase that proposition 2-1/2 allows us to make in the tax levy.

There's a question about replacement homes (e.g., when a home is torn down and replaced with a new one). Mr. Mann says that new growth from the replacement home would be calculated as the assessed value of the new home, minus the assessed value of the home that was replaced.