DLS City & Town

Better Than Average?

Sean Cronin - Senior Deputy Commissioner of Local Services

I hope you’re all doing well during these immensely challenging times! Every year, we publish an article in City & Town calculating and analyzing the average single-family tax bill. Historically, it’s one of our most popular pieces as it presents data and information from a statewide perspective. Below you’ll find our most recent version for FY2021 and we hope you enjoy it.

As we present this article, we’re aware that our existing approach isn’t perfect. Communities with the residential exemption and/or the new senior residential exemption (done via special acts) aren’t included in our analysis because we don’t possess the data necessary to calculate their average. In fact, we often debate the merits of utilizing an average versus a median on a regular basis and the use of single-family homes as an accurate reflection of residential housing metrics across the Commonwealth.

Therefore, we’d like to request your feedback regarding our average single-family tax bill data and ways we could improve it. One idea we’ve batted around internally is the concept of the median residential tax bill, since (1) the median of actual tax bills is a better indicator and (2) in some communities there are parcel types other than single-family homes (e.g., condos) that make up a large portion of the residential class. In order to use that metric, however, we would need each municipality to provide that information to DLS annually as part of the tax rate setting process using the locally-housed CAMA system and tax bill file. We'd very much like to hear your thoughts about this or any other related approach as part of our effort to improve our annual piece regarding tax bills. Please feel free to email me directly at croninse@dor.state.ma.us. Thank you and enjoy this edition of City & Town!

FY2021 Average Single-Family Residential Property Tax Bills

Andrew Nelson – BOA Worcester Office Supervisor

The state average single-family tax bill for FY2021 as of March 3, 2021 is $6,374, an increase of $197 (3.2%) from FY2020. In addition, the average value of a single-family home is $468,034, an increase of $14,866 (3.3%) from FY2020. These figures are based on data submitted by 322 of the Commonwealth’s 351 cities and towns to the Division of Local Services (DLS).

So far in FY2021 for the 322 communities, single-family residential values statewide represent 75% of all residential assessed values and 64% of state-wide assessed values in all property classes. Analysis of data for this article is limited to single-family properties. It does not include condominiums, multi-family homes or apartment buildings. It also excludes 15 communities for which a residential exemption was adopted, data for seven communities for which no FY2021 tax rate has been set as of the drafting of this article, and seven communities where a special act authorized a means-tested senior citizen property tax exemption.

State Total

Calculation of the state total presumes that Massachusetts is one local governmental entity for which such a bill would be determined, not the median of all single-family tax bills.

Chart 1 presents the calculation of state totals for the 10-year period from FY2012 to FY2021. As you might expect, the state average for the single-family tax bill has annually increased over this time. In addition, the chart shows the average value for all single-family properties. From FY2012 to FY2014 the average value decreased by 1.3%, but from FY2014 to FY2021 it increased 32.2%. Overall, for the time shown, the average value increased by 30.5%.

Chart 1

Median of Community Averages

Graph 1 shows the median or midpoint of the average single-family tax bill for all communities from FY2012 to present. For FY2021 this median tax bill of $5,537 represents an increase over FY2020 by $175 or 3.3%.

Graph 1

For the seven communities without an FY2021 tax rate and not represented in Graph 1, only one in FY2020 averaged above the $5,537 median tax bill calculated thus far for FY2021. If FY2020’s medians prove true once again for these seven communities, the FY2021 median for all 329 communities would drop by $117.

Average by Community

DLS calculates a community’s average single-family residential property tax bill by:

• dividing the single-family (property type class 101) assessed values by the number of single-family parcels to determine an average assessed value for the class;

• multiplying the average assessed value by the community’s residential tax rate as certified by the Bureau of Accounts for that fiscal year.

The following maps provide a visual representation of the FY2021 community averages across Massachusetts as well as their dollar changes from FY2020.

This map shows how most of the communities in the western and central parts of Massachusetts have average tax bills at or less than the state average of $6,374. The map also shows a cluster of communities with average tax bills over $10,000, mostly west of Boston. For a larger version of this map, including community names, click here.

Dollar Changes from FY2020

In FY2021, 290 communities increased their average tax bill from the previous fiscal year in amounts ranging from $1 (Hadley) to $1,175 (Belmont). Several communities maintained or decreased in the average tax bill from FY2020. 31 communities’ bills decreased ranging from $9 in Ashburnham to $311 in Shutesbury. The median for all communities that decreased their average tax bill was $54. For a larger version of this map, including community names, click here.

In Graph 2, 75 communities possess FY2021 average single-family property tax bills in the $4,000 to $4,999 range followed by 58 in the $5,000 to $5,999 range.

Graph 2

Graph 3 displays the number of communities by percentage change in the average tax bills from FY2020 to FY202. Two communities’ average bill decreased 5% to 6% and in 71 communities we see the average bill increase 2% to 3%.

For the 31 communities with decreases in the bill, their median percentage decrease was 0.8%. For the 290 communities with an increase in the average bill, the median percentage increase was 3.3%.

Graph 3

Chart 2 contains the 10 highest and 10 lowest FY2021 average single-family residential property tax bills in descending order.

Chart 2

Statewide Trend in Current and Constant Dollars

Chart 3 displays the state total and median of community averages in current dollars as presented earlier in this article in relation to a constant dollar which controls for inflation.

The chart shows that both the state total and the median of community average dollar amounts have outpaced the rate of inflation over the time shown. Note that the state total for current dollars is always more than the median for current dollars. Both dollar amounts may be compared respectively to prior fiscal years but are not comparable to each other.

Chart 3

(Note: Constant Dollar amounts apply the CPI for all Urban Consumers –Boston and includes a 1.1% estimated inflation factor for FY2021.)

The Residential Exemption Communities

Communities that adopted a residential exemption or senior means-tested exemption in any fiscal year are not included in either the state total or median averages as DLS does not receive sufficient information to properly perform the calculation.

For 15 communities that adopted the residential exemption in FY2021, Chart 4 estimates the FY2021 dollar impact of the residential exemption on single family residential properties valued at their break-even point. The break-even point, or point of benefit-neutral assessment, is that point of assessed valuation less the exemption at which the tax burden for residential class properties begins to shift, i.e. when the residential class property taxpayer begins to pay less or more property tax than if the exemption wasn’t voted at all. The impact column shows, all else being equal, how much more this property would pay if it was not eligible for the exemption.

Visit the DLS Municipal Finance Training and Resource Center to view a video explaining why a city or town might consider adopting a residential exemption, and showing how to calculate the exemption and break-even point. Click here to view the video.

Chart 4

For more information on the state total, average bills for communities and statewide rankings, please visit the DLS Databank.

Ask DLS: Community Preservation Act - Part 9

This month's Ask DLS features Part 9 of frequently asked questions concerning the Community Preservation Act (CPA) and CPA funding for eligible recreation projects. Additional questions about the CPA will be featured in future editions of City & Town. For Part 8 of the series, see the February 4, 2021 edition of City & Town. For additional information on the Community Preservation Act, see Informational Guideline Release (IGR) 19-14. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.

In general, what community preservation projects are eligible for funding under the CPA?

There are three community preservation project or asset categories: (1) open space (including land for recreational use); (2) historic resources; and (3) community housing. Under G.L. c. 44B, § 5(b)(2), CPA funds may be appropriated, on the recommendation of the Community Preservation Committee, “for the acquisition, creation, preservation, rehabilitation and restoration of land for recreational use.” These FAQs will discuss eligible “land for recreational use” projects.

What is the definition of “recreational use?”

“Recreational use” is defined in G.L. c. 44B, § 2 as “active or passive recreational use including, but not limited to, the use of land for community gardens, trails, and noncommercial youth and adult sports, and the use of land as a park, playground or athletic field. ‘Recreational use’ shall not include horse or dog racing or the use of land for a stadium, gymnasium or similar structure.” This CPA definition limits “recreational use” to an outdoor recreational pursuit.

For what purposes may CPA funds be spent regarding recreational use?

The CPA clarifies allowable community preservation project expenditures through its definitions which are found in G.L. c. 44B, § 2. As a result, the CPA definitions should always be reviewed when determining if an expenditure is allowable.

Acquisition, creation, and preservation - CPA funds may be spent for the acquisition, creation, preservation, rehabilitation and restoration of land for recreational use.

“Acquisition” is defined in G.L. c. 44B, § 2 as “obtain[ing] by gift, purchase, devise, grant, rental, rental purchase, lease or otherwise.” ''Acquire'' does not include a taking by eminent domain, except as provided under c. 44B.

“Creation” - There is not a specific definition of “creation” under the CPA; however, “creation” was defined by the court for CPA purposes in the case of Seideman v. City of Newton, 452 Mass. 472 (2008) to mean “to bring into being or to cause to exist.”

“Preservation” is defined under G.L. c. 44B, § 2 as “protection of personal or real property from injury, harm or destruction.”

''Rehabilitation'' is defined under G.L. c. 44B, § 2 as “capital improvements, or the making of extraordinary repairs, to historic resources, open spaces, lands for recreational use and community housing for the purpose of making such historic resources, open spaces, lands for recreational use and community housing functional for their intended uses including, but not limited to, improvements to comply with the Americans with Disabilities Act and other federal, state or local building or access codes; provided, that with respect to historic resources, ''rehabilitation'' shall comply with the Standards for Rehabilitation stated in the United States Secretary of the Interior's Standards for the Treatment of Historic Properties codified in 36 C.P.R. Part 68; and provided further, that with respect to land for recreational use, ''rehabilitation'' shall include the replacement of playground equipment and other capital improvements to the land or the facilities thereon which make the land or the related facilities more functional for the intended recreational use.

“Restoration” is not defined under the CPA and we are not aware of any cases defining "restoration" in the CPA context. In the absence of such an interpretation, we look to the usual and generally understood meaning of words from sources known to the legislature, such as use in other legal contexts and dictionary definitions. See Seideman v. Newton, 452 Mass. 472, 477-478 (2008). At webster-dictionary.org, "restoration" is defined as "the act of restoring or bringing back to a former place, station, or condition."

What are some examples of allowable and ineligible “land for recreational use” CPA projects?

Creation of land for recreational use - Funding for the construction of non-commercial athletic fields, outdoor tennis and basketball courts, golf courses and outdoor swimming pools on municipal land is allowable as creation of lands for recreational use.

Creation of land for recreational use - Funding for the installation of soccer fields, including water lines for irrigation, on land owned by a private boosters club is allowable provided the municipality obtains and records a public recreational use restriction and easement commensurate with its expenditure of CPA funding. Here, if the municipality had not required a public recreational use restriction and easement for the public’s use in exchange for the CPA funding, the expenditure would likely violate the Anti-aid Amendment to the Massachusetts Constitution, Mass. Const. Amend. Article 42, § 2, as amended by Article 103. See Commonwealth v. School Comm. of Springfield, 382 Mass. 665, 675 (1981) and Caplan v. Town of Acton, 479 Mass. 69 (2018) for a discussion of the three-factor test that the courts have established to determine allowable expenditures of public funds under the Anti-aid Amendment. A grant agreement with the grant recipient should also be required to ensure grant funds are expended for the approved CP purpose.

Creation of land for recreational use - Funding for construction (creation) of a new indoor community recreational facility or to rehabilitate an existing indoor community recreational facility is not allowable because an indoor community recreational facility is not within the CPA definition of “recreational use” as it houses indoor recreational uses and is similar to a gymnasium. G.L. c. 44B, § 2.

Creation of land for recreational use - Funding for feasibility studies or engineering or other studies for a new indoor community recreational facility or for rehabilitation of an existing indoor community recreational facility is not allowable because the project itself is not eligible for CPA funding. Nor would funding for such studies be allowable under the CPC’s administrative and operating budget to enable the CPC to determine whether to recommend funding for the project because the project itself is not eligible for funding under the CPA. If the project itself is not eligible for CP funding, then funding to study or plan the project is also not allowable.

Rehabilitation of land for recreational use includes “capital improvements” (defined in G.L. c. 44B, § 2 as “reconstruction or alteration of real property that: (1) materially adds to the value of the real property or appreciably prolongs the useful life of the real property; (2) becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and (3) is intended to become a permanent installation or is intended to remain there for an indefinite period of time.”) or extraordinary repairs for the purpose of making the lands for recreational use functional for their intended uses. As a result, allowable CPA rehabilitation includes the following improvements to municipally-owned land - installation of trails for walking, hiking, horseback riding or skiing; installation of water lines and pathways in community gardens; installation of irrigation lines for athletic fields; and installations or replacements of outdoor playground equipment. The purchase of tennis rackets, basketballs, golf carts and other recreational equipment is not allowable because the expenditures are not capital improvements and do not acquire, create, preserve, rehabilitate or restore any land for recreational use.

Rehabilitation - The installation of restrooms for the use of a municipally-owned outdoor recreational facility such as athletic fields or a swimming pool is allowable as rehabilitation of land for recreational use, provided the restrooms make the land or related recreational facilities more functional for the intended outdoor recreational use. However, the use of CPA funding for the installation of restrooms in a building or facility that primarily serves purposes unrelated to outdoor recreational purposes is not allowable.

Acquisition, Creation and Rehabilitation of recreational property - Funding is allowable for the rehabilitation (capital improvements or extraordinary repairs) of an outdoor swimming pool owned by a private nonprofit organization provided the municipality obtains and records a public recreational use restriction and easement for the public’s use of the swimming pool. See above discussion regarding the Anti-aid Amendment to the Massachusetts Constitution. A grant agreement with the grant recipient should also be required to ensure grant funds are expended for the approved CPA purpose.

Stay tuned for next month’s City & Town for Part 10 in our FAQ series on the CPA where we will discuss allowable community housing projects. For more information see Informational Guideline Release (IGR) 19-14.

Public Health Excellence Grant Program for Shared Services

Department of Public Health

The Massachusetts Department of Public Health (DPH) released a Request for Responses (RFR) for the Public Health Excellence Grant Program for Shared Services earlier this week. The program is funded by a line item in the FY2021 state budget (4512-2022; $10M) for grants to local and regional boards of health. The RFR and other materials can be found by clicking here.

The program represents an important step forward in implementing the recommendations of the Special Commission on Local and Regional Public Health. The Commission released its final report in June 2019 – Blueprint for Public Health Excellence: Recommendations for Improved Effectiveness and Efficiency of Local Public Health Protections. As noted in the report, Massachusetts and national evidence supports cross-jurisdictional sharing of public health services as a means to improve effectiveness and efficiency. In working together, municipalities will be better able to meet statutory requirements, respond to public health emergencies, and plan public health improvements. The Public Health Excellence Grant Program is designed to address the Commission’s recommendation to increase the number and scope of public health shared services arrangements in the Commonwealth.

Only municipalities, federally recognized tribes, or regional planning agencies/regional government councils representing local boards of health are eligible to receive these grant funds. DPH anticipates awarding approximately 30 contracts with an annualized amount of up to approximately $300,000 each. Proposals are due on April 1, 2021 at noon. A bidders conference will take place on Thursday, March 11th at 3 p.m. by webinar. Bidders conference registration is available here.