This week the, Burlington residential real estate owner received their tax bills in the mail. Two things were immediately apparent. Both the total of the bill as well as the assessed valuations of the average property were up substantially. It has been reported that the average value is up over 14% while the average bill was up 8%. The rise in values is obvious by virtue of the comparable sale prices that we can readily see in the sales recorded in our various neighborhoods. Whether or not these single-family home prices can be sustained remains to be seen. The primary driving force behind these high values has been the low cost of money in the form of mortgage rates. Secondarily has been Burlington’s continued appeal as a result of location and the wide array of services that Burlington offers to its residents.
The second part of the notice was the actual tax amount, which has a couple of components that are responsible for the sizable increase. The town budget has increased in the neighborhood of 4% but the remainder of the increase has come as a result of the decline in values in the commercial industrial sector. Despite the fact that the Selectmen attempted to cushion that shift by increasing the classification values (higher commercial tax rate) the full impact could not be mitigated.
Last month this column examined the FourPoints hotel sale and the local option hotel tax as an indication of how dramatically those values and revenues are going to be impacted in the future. We can examine the most recent past and see how those values and tax bills have impacted the residential taxpayer over the past three years. Keep in mind this is only one industry and a small selection of properties but is never the less indicative of the same type of trend in the office market.
Let’s take a look at all 6 hotel properties over the past the past three fiscal years by total property tax* billed:
Marriott
2003 821,000
2004 794,018
2005 714,035
Candlewood
2003 190,820
2004 183,186
2005 163,136
Homestead
2003 167,461
2004 161,939
2005 145,815
Summerfield
2003 254,559
2004 241,129
2005 220,402
Staybridge
2003 242,661
2004 231,796
2005 213,178
FourPoints
2003 255,113
2004 246,699
2005 214,068
The total tax of $1,671,559 is $260,155 or 13.4% less than the town received in 2003 from the same properties. The Assessor’s office has been aggressively reducing the values of these properties to reflect the market yet even with these markdowns the FourPoints sale is still almost 20% below what the Assessor’s have it on the books for 2005. This reduced property tax amount coupled with the over $300,000 reduction from the room tax vividly demonstrates the shift to the residential property owner. The town is already faced with some very difficult budgeting decisions this fiscal year. If this trend is not reversed soon Burlington may be faced with either a Proposition 2/1/2 over ride or some very serious budget cuts.
Again the wild card in this is the retail properties, which have held their value during this difficult period. If the construction of Wayside Commons as well as the huge new 1 million square foot mall in Tewksbury provides aggressive competition to our existing retail base then we can expect to see similar drops in retail values as we have in office and hotel values.
*Source Tax Collector’s office
