WORCESTER TELEGRAPH – The total value of taxable property in the city jumped 8.26% this year, rising to a new high-water mark of $14.646 billion.
Last fiscal year, the city’s total valuation was $13.5 billion.
The classes of properties that experienced the biggest average increases in assessed values were single-family homes (10.22%), three-family homes (11.82%) and apartment buildings (14.91%), according to the city assessor.
Those increases dwarfed the increases for commercial (3.69%) and industrial (2.63%) properties.
City Assessor William J. Ford said the total valuation figure for fiscal 2020 reflects the value of all individual taxable properties as of Jan. 1, 2019. It does not reflect what has happened in the local real estate market since then.
It is the seventh consecutive year that Worcester’s total valuation has increased.
Since fiscal 2014, when the city’s total valuation was $11 billion, it has grown by more than $3.6 billion, with the biggest increases coming the past two years.
Ford said the fiscal 2020 valuation figure translates into a combined single tax rate of $21.58 per $1,000 valuation. Because of the higher assessments, the single tax rate is 83 cents less than last year’s single tax rate of $22.41.
But Worcester does not have a single tax rate. Since 1984, the city council has set separate tax rates for residential and commercial/industrial/personal properties through tax classification, with the residential rate being significantly lower than the tax rate for businesses.
For the previous fiscal year, the residential tax rate was $18, while the tax rate for commercial/industrial/personal properties was $34.90.
City Manager Edward M. Augustus Jr. said the new valuation figures have been certified by the state Department of Revenue. That allows the City Council to hold its annual tax classification hearing.
Augustus has recommended the council hold that hearing, at which time it will also set the tax rates for this fiscal year, on Dec. 10.
The manager said the new total valuation figure included $6.49 million in taxes generated by new growth. That is nearly $1.5 million more than the $5 million new growth estimate that was included in formulating this year’s municipal budget.
The additional new growth primarily came in the category of personal property and was driven in large part by new investments by utility companies that changed from tax-exempt to taxable, Augustus said.
Consistent with the city’s revised financial plan and the recommendation of the Mayor’s Tax Policy Committee, the manager said, the additional new growth of nearly $1.5 million will be applied to reduce property taxes.
Since the policy was adopted in 2017, it has provided overall tax relief of $4.9 million, he said.
The total allowable tax levy if the City Council taxed to the maximum is $335.56 million. But the budget adopted by the council for this year calls for raising $316 million in taxes. That means the city has an excess tax-levy capacity of $19.5 million, which is the highest in the city’s history, Augustus said.
“This untapped tax capacity will allow for financial flexibility in the future,” he said.
According to the city assessor, residential property now accounts for 74.8% of Worcester’s overall tax base, with a valuation of $10.9 billion. Meanwhile, commercial, industrial and personal property make up the remaining 25.2%, with a combined total valuation of $3.69 billion.
The average assessed value for single-family homes has risen by 10.22%, from $226,325 last fiscal year to $248,697 this year.
Meanwhile, the average assessed value for condominiums has risen by 3.88%, from $144,796 to $151,122; for two-family homes it has risen by 5.36%, from $236,766 to $248,762; and for three-family homes it has risen by 11.82%, from $246,378 to $275,056.
Apartment buildings, which are classified as residential for taxation purposes even though they are a business, had a 14.91% increase in their average assessed valuations, from $885,501 to $1.29 million, according to the city assessor.
On the business side, the average assessed value for commercial properties rose 3.69%, from $1.015 million to $1.057 million, and for industrial properties it increased by 2.63%, from $943,802 to $999,274.