PEABODY — Property taxes will rise in the city next year, but multi-family homeowners will be hit especially hard.
Rising home values in the city have fueled an average tax hike of nearly $200 next year. But owners of two- and three-family homes will see tax increases from $250 to as much as $5,000, according to an analysis by Michael Gingras, the city’s finance director.
Mayor Edward Bettencourt Jr. proposed, and the City Council approved a residential property tax rate of $11.01 per $1,000 of assessed value and a commercial rate of $23.69 per $1,000. The new rates are lower than last year, but the explosive rise in property values means a tax increase for all.
About half of the city’s homeowners will see an increase of $150 or less. The proposal increases the average homeowner tax bill to $4,336 or 4.7 percent. The average commercial property tax bill will increase $858, or 2.5 percent.
The value of single family homes in Peabody rose by nearly 9 percent this year, with an average of $393,000.
But owners of two- and three-family dwellings will see a bigger increase. Of the 1,167 multi-families in Peabody, 337 will see an increase from $250 to $500, another 664 will see hikes from $500 to $1,000, and 80 will see their taxes rise from $1,000 to $5,000.
Ward 1 City Councilor Jon Turco, who owns a two-family home on Lynnfield Street, asked how multi-family property values could rise so dramatically.
“Some multi-family values have gone up exponentially,” he said. “Some anywhere from $80,000 to $120,000 … most are located in South Peabody which directly affects where I live.”
Michelle Doolin, finance director, said the average assessed value for a two-family last year was $356,000, but the average sale price was $466,000, a difference of 27 percent. Among three-family homes, she said the average assessed value was $389,000, while the average sales price was $523,000, a whopping 34 percent.
City Councilor-at-Large Anne Manning-Martin asked Bettencourt why the contributions from nonprofits to the Payment in Lieu of Taxes (PILOT) program have remained stagnant while homeowners are asked to pay more. The program asks nonprofits, which are not required to pay real estate taxes, to make a contribution toward the cost of operating the city.
The mayor said rather than request more PILOT money, he’s asked hospitals to contribute to the high school’s health center. For example, he said, Children’s Hospital has provided $100,000 toward services, supplies, and cash for the student health center.
The tax increase passed by a 8-3 margin. Turco, Manning-Martin, and Ward 5 Councilor Joel Saslaw voted no.
