SWAMPSCOTT — Residential real estate taxes will go down next year for the first time since 1994. The average single-family tax bill will decrease by $153.
Businesses will also get a break, as the Board of Selectmen opted to stop taxing commercial property at the highest possible rate allowed under state law, with small businesses getting additional tax relief, according to Selectman Peter Spellios.
The Board of Selectmen set the residential tax rate at $16 per $1,000 home value assessment, which is down from last year’s residential rate of $17.45.
The average single-family tax bill was $9,048 in 2016, $9,225 in 2017 and will be $9,073 next year. In 1994, the last time there was a reduction, residential taxes decreased by an average of about $25.
The 2018 average single-family home estimated assessed value is $567,087, which is $38,417 higher than last year’s average assessed value of $528,670.
Spellios said approximately 74 percent of the town’s 5,288 residential parcels will see a reduction in their real estate tax bill.
“Our taxes are still too high, but this is an important first step,” he said.
Despite the decrease in their tax bills, Swampscott residents typically pay more than their counterparts in other Essex County municipalities. In 2017, the average Swampscott single-family tax bill of $9,225 was about $2,375 higher than the average Essex County single-family tax bill of $6,850.
In an effort to make Swampscott a little more business-friendly, the board chose to adopt a 170 percent Commercial, Industrial and Personal Property (CIP) shift, which town officials said alters the historical policy decision of past boards to opt for the maximum 175 percent shift, which taxes those owners at the maximum share of the tax levy.
Ronald Mendes, town treasurer and assistant town administrator, said this shifts some of the tax burden from the residential taxpayers to the CIP property taxpayers. With the 170 percent shift, residential share of the tax burden decreases from 93.14 percent to 88.34 percent, while commercial, industrial and personal increases 170 percent from 6.86 percent to 11.66 percent share.
The commercial and industrial tax rate for next year is 28.83 per $1,000 assessment and personal property is 28.68, a decrease from last year’s commercial rate of $32.20.
The average commercial tax bill will be $43,088, which is up 6.85 percent, or $2,763 from last year. The average industrial tax bill will be $14,416, which is up 1.85 percent, or $261.
If the board opted to adopt the 175 percent shift, as has been the decision for at least the past 15 years, with the exception of 2014 (174.87 percent), residents would have saved a little bit more on their tax bills. The average single-family tax bill would have been $187 less than last year.
But commercial property owners would have paid on average, $4,034 more on their tax bill next year if the maximum shift would have been adopted.
According to Town Administrator Sean Fitzgerald, the average commercial/industrial tax bill in Swampscott in 2017 was almost twice as high as the rest of Essex County, with figures of $37,915 to $19,670 respectively. There will only be 119 commercial/industrial properties in 2018.
Fitzgerald said it’s important for town officials to realize that businesses understand that and that they need to figure out how that plays in the town’s economic strategies.
Small businesses will get more relief, as the Board of Selectmen voted to adopt a small commercial exemption, opting to adopt the maximum allowable exemption of 10 percent.
To qualify for that exemption, commercial properties must have an annual employment of fewer than 10 employees and an assessed property value of less than $1 million. About 15 properties qualify, according to Mendes.
Mendes said the commercial exemption works by increasing taxes on all of the other commercial properties. So, businesses that qualify for the exemption would only pay 90 percent of their taxes, with other commercial properties picking up the rest of the tab.
Spellios said the tax relief can be attributed to three main factors — new growth, including Hanover Vinnin Square, the use of free cash to offset or buy down the levy and the reduction in debt service that the town has been carrying. But he said officials shouldn’t be overly enthusiastic about this year’s tax situation, as neither of those factors are predictable or sustainable solutions.
“I agree we have to keep a very sober perspective because what’s coming down the pike is going to be costly and it’s going to be costly because Swampscott has a lot of needs,” Fitzgerald said.
Fitzgerald said the town is going to see projects start to populate this year in a much more significant way.
At Wednesday’s Board of Selectmen meeting, where tax rates were set, some residents argued for more tax relief to residents, while some argued for more relief to businesses.
William DiMento, an attorney in town, said he’s been coming to similar tax classification hearings for 15 years “begging (the selectmen) to back off the horrendous position the town took 15 years ago to punish businesses and hurt them so badly with this maximum rate.” He was in favor of the 170 percent shift.
“Businesses pump a lot of money into those schools,” DiMento said. “It’s time for people in the single-family homes to start to pay their fair share for all this money we pump into schools.”
Matthew Strauss, a former selectman, was against the board moving off the maximum 175 percent shift.
“It’s not a slight to businesses,” he said. “How much more can we squeeze our residents and make Swampscott an affordable town (for people) to have children, who want to grow up and stay in town? Many cities across the Commonwealth, people need to move away and go somewhere else because they just can’t afford to be in their hometown anymore. I don’t want to see that happen in Swampscott.”
But Selectman Patrick Jones argued that the split tax rate the board voted for was beneficial for residents and businesses.
“We have an opportunity that everyone can share in the savings at this point this year,” he said. “Personally, I think it’s beneficial for all.”
