CITY COUNCIL BUDGET & FINANCE SUB-COMMITTEE TAX CLASSIFICATION PRESENTATION

November 30, 2011

Presented By The Board Of Assessors

BACKGROUND

The Classification Act Requires Municipalities To Classify Real Property Into One Of Four Classes, According To Use: Residential, or Commercial, Industrial, And Personal Property (CIP). Cities That Are Certified as Assessing Property at Full And Fair Cash Value May Elect to Shift Tax Burden Among The Major Property Classes Within Certain Limits Established By Law. The Bureau Of Local Assessment Have Certified Lawrence as Assessing Property at Full And Fair Cash Value.

The Adoption Of Different Rates DOES NOT CHANGE the Total Property Tax Levy. Rather it Determines The Share Of The Total Levy To Be Borne By Each Class.
The Minimum Residential Factor Established By The Commissioner Of

Revenue Ensures That the shift of the tax burden complies with the Classification Act.
November 30, 2011 BOARD OF ASSESSORS CLASSIFICATION HEARING

CLASSIFICATION/ TAX RATE PROCESS

Step 1:
The Bureau of Local Assessment have certified Lawrence as assessing property at full and

fair cash value

Step 2:
The Board of Assessors will provide the councilors with information to select the

residential factor toward the determination of the rate for each class of property. A limited set of possible choices will be provided by the Board of Assessors, but City Councilors may, if desired, explore other tax rate combinations that meet their needs.

Step 3:
City Councilors are required to determine the percentage of the tax levy to be borne by

each class of real property: residential, commercial, industrial and by personal property (CIP). The decision is made after holding a public hearing. The Conclusion of the hearing MUST result in a vote of required choices

Step 4:
The split tax rates for Fiscal Year 2012 are certified by the Department of Revenue

Step 5:
Mail 3rd quarter actual bills January 1, 2012

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

CURRENT STATUS

Lawrence Completed The Triennial Revaluation (Once

every 3 Years) for all Real and Personal Property as Required by DOR For FY 2012. This Revaluation ensures that changes in market conditions are Reflected in the Current Assessment.

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

PREVIOUS YEAR LEVY LIMIT + 2-1/2 % + GROWTH + OVERRIDES

DETERMINE LEVY

DECISIONS BELOW DO NOT CHANGE LEVY

SINGLE RATE

YES

RESIDENTIAL & CIP RATE THE SAME

VERY HIGH
RESIDENTIAL

TAX RATE

NO

HIGHER RESIDENTIAL RATE & LOWER CIP RATE

LOW

FACTOR (1.00- 1.75)

HIGH

LOWER RESIDENTIAL RATE & HIGHER CIP RATE

1.75 MAXIMUM SHIFT OF TAX BURDEN TO CIP & LOWEST RESIDENTIAL TAX RATE
CITY OF LAWRENCE - BOARD OF ASSESSORS

5 CLASSIFICATION HEARING

WHAT IS NEW GROWTH?

New Growth is a calculation of the net increase in municipal property values because of new construction, improvements to properties, subdivisions, condo conversions, the return of exempt property to the tax rolls or new personal property accounts as well as new personal property equipment at existing locations. New Growth is added to the Citys Levy Limit, thereby increasing the Citys taxing capacity. Assessors must submit documentation of New Growth to the Bureau of Local

Assessment annually and receive approval prior to setting the tax rate. The assessed value of real estate and personal property New Growth during the twelve-month period January 1, 2010 to December 31, 2010 is $54,200,000. This Growth translates into $1,388,208 of increased tax levy capacity over the basic limits of Proposition 2 .

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

LEVY, LEVY LIMIT & EXCESS LEVY CAPACITY

Levy is the amount the City raises each year through Property Taxes . The Levy Limit is the Maximum amount the City can levy. FY 2012 Tax

Levy Limit increased by $2,672,250 over FY 2011. Excess Levy capacity is the difference between the Levy Limit and the Actual Levy.
Levy Summary FY 2011 Levy FY11 Amended Growth Prop 2 1/2 Increase New Growth Overrides FY 2012 Maximum Levy FY 2012 Proposed Levy Excess Capacity
November 30, 2011 BOARD OF ASSESSORS

$49,642,351 $41,935 $1,242,107 $1,388,208 $0 $52,314,601 $52,314,601 $0

CLASSIFICATION HEARING

FY 2012 VALUES

Values are based on Sales in Calendar Year 2010 The residential values decreased by 0.70% and

commercial/industrial increased by 0.78%. The City of Lawrence Total FY2012 Property value is $2.843 Billion. This is a 0.39% decrease from FY 2011. The average single family home assessed value in FY 2012 is $176,836. This is a $1,413 decrease from FY 2011 average assessed value of $178,249.

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

PROPERTY VALUE CHANGE 2011 VS. 2012

Total Real Property Value FY2011 Total Real Property Value FY2012 Real Property Value Change Residential Property Value FY2011 Residential Property Value FY2012 Residential Value Change Commercial Property Value FY2011 Commercial Property Value FY2012 Commercial Value Change Industrial Property Value FY2011 Industrial Property Value FY2012 Industrial Value Change Personal Property Value FY2011 Personal Property Value FY2012 Personal Property Value Change Total Value FY 2011 Total Value FY 2012
November 30, 2011

$2,705,022,200.00 $2,693,646,700.00 ($11,375,500.00) $2,193,228,846.00 $2,177,867,654.00 ($15,361,192.00) $308,416,654.00 $313,314,846.00 $4,898,192.00 $203,376,700.00 $202,464,200.00 ($912,500.00) $149,199,370.00 $149,378,760.00 $179,390.00 $2,854,221,570.00 $2,843,025,460.00 ($11,196,110.00)

-0.42%

-0.70%

1.59%

-0.45%

0.12%

-0.39%
CLASSIFICATION HEARING

BOARD OF ASSESSORS

LARGEST TAXPAYERS

Total Assessed Valued

$37,161,700

$34,267,130 Verizon New England Inc $27,707,960

Mass Electric
Bay State Gas Bouwfonds Jefferson LP Lincoln Andover LLC

$205,884,560

$25,460,810

New Balance Athletic Shoe Hampton on Beacon Chi Energy Inc Lawrence/Methuen Props

$17,716,600

Princeton Andover Total

$14,682,500 $13,770,630

$13,240,430
$10,098,600 November 30, 2011 $11,778,200 BOARD OF ASSESSORS CLASSIFICATION HEARING

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TAX LEVY- SINGLE TAX RATE

Tax Levy
FY 2012 Maximum Allowable Levy = $52,314,601 FY 2012 Estimated Levy = $ 52,314,601

FY 2012 Estimated Excess Capacity= $0

Total Value
FY 2012 Total Value = $2,843,025,460

FY 2012 Residential Value = $2,177,867,654 or 76.6039% of Total

Assessed Value. FY 2012 C.I.P. Value = $665,157,806 or 23.3961% of Total Assessed Value. Single Tax Rate $18.40 / $1,000

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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THE FACTOR - SHIFTING DEFINITION

Shifting allows the City to reduce the Residential Classes

(R.O.) tax burden while increasing the C.I.P. tax share. The combination of the two tax classification amounts must equal the total property tax. The chosen Factor for FY2011 was 1.75,which provided for maximum Tax Shifting, as allowed by law, from Residential to C.I.P. Continuing with a Factor of 1.75, the residential tax rate for FY 2012 would be $14.19, a $0.74 increase over FY 2011. The correspondent C.I.P. tax rate for FY 2012 would be $32.20, a $1.79 increase over FY 2011.
November 30, 2011 BOARD OF ASSESSORS CLASSIFICATION HEARING

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THE FACTOR- SUMMARY

Total Levy FY 2012

$52,314,601

Shift Determined Based on (1.75)

C.I.P. Tax Share =40.9432% New C.I.P. Levy amount $21,414,740 Residential Tax Share = 59.0568%

Residential Levy Amount = $30,895,318

Residential Tax Rate

$14.19 / $1,000

C.I.P Tax Rate

$32.20 / $1,000
November 30, 2011 BOARD OF ASSESSORS CLASSIFICATION HEARING

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FY 2012 TAX LEVY BREAKDOWN

Valuation Factor= 1.75 Valuation % Factor= 1.75 Valuation %

Tax Share TaxTax Share Share % %

FY 2012
Residential Residential Commercial Commercial Industrial Industrial $2,193,227,846 76.6039% 76.7590% $2,177,867,654 $311,487,554 $313,314,86 $203,376,700 $202,464,200 10.9015% 11.0205% 7.1178% 7.1214% $29,451,930 $30,895,318 $9,470,575 $10,089,304 $6,183,536 $6,519,713 59.3282% 59.0568% 19.0776% 19.2858% 12.4562% 12.4625%

Personal Personal
Total Total

$149,199,370 $149,378,760

5.2217% 5.2542%

$4,536,310 $4,810,266

9.1380% 9.1949%

$2,857,292,470 100.00% $2,843,025,460 100.0000%

$49,642,351 $52,314,601 100.0000% 100.00%

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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CHOICE OF TAX RATES

Various Tax Rate Factors are shown below Other choices are possible and can be shown if desired. As

a reminder, a factor below 1.75 will increase the residential tax bill.
Residential Factor 1.75 1.74 1.73 1.72
November 30, 2011

RO Rate $14.19 $14.24 $14.30 $14.35

RO Change $ From 2011 $0.74 $0.79 $0.85 $0.90

BOARD OF ASSESSORS

C.I.P Rate $32.20 $32.02 $31.83 $31.65

C.I.P. Change $ From 2011 $1.79 $1.61 $1.42 $1.24

CLASSIFICATION HEARING

* All $ are per $1,000 of Assessed Value

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FACTOR COMPARISON

Below is a comparison of a factor of 1.75 and 1.72

Factor of 1.75 FY 2011 Avg Value Tax Avg Tax Rate $186,769 $13.45 $2,512 $316,416 $30.41 $9,622 $1,001,856 $30.41 $30,466 FY 2011 Factor of 1.75 $186,769 $13.45 $316,416 $30.41 $1,001,856 $30.41 Factor of 1.75 FY 2012 Avg Value Tax Avg Tax Delta $ Delta % Rate $185,138 $14.19 $2,627 $115 4.58% $321,371 $32.20 $10,348 $726 7.54% $965,790 $32.20 $31,098 $632 2.07% FY 2012 Factor of 1.72 $185,138 $14.35 $321,371 $31.65 $965,790 $31.65

Class Res Com Ind

Res Com Ind

$2,512 $9,622 $30,466

$2,657 $10,171 $30,567

$145 $549 $101

5.76% 5.71% 0.33%

November 30, 2011

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CLASSIFICATION HEARING

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OTHER FACTORS IMPACT

November 30, 2011

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CLASSIFICATION HEARING

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OTHER FACTORS IMPACT (CONT.)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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AVERAGE TAX BILL IMPACT ANALYSIS FISCAL YEAR 2012 VS. 2011 (1.75 Factor)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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AVERAGE TAX BILL IMPACT ANALYSIS FISCAL YEAR 2012 VS. 2011 (1.73 Factor)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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AVERAGE TAX BILL IMPACT ANALYSIS FISCAL YEAR 2012 VS. 2011 (1.71 Factor)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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AVERAGE TAX BILL IMPACT ANALYSIS FISCAL YEAR 2012 VS. 2011 (1.70 Factor)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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AVERAGE TAX BILL IMPACT ANALYSIS FISCAL YEAR 2012 VS. 2011 (CONT.)

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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PROPERTY TAX ANALYSIS CLASSIFICATION AVERAGE VALUE FISCAL YEAR 2012 VS. 2011

* 1.75 Factor

November 30, 2011

BOARD OF ASSESSORS

CLASSIFICATION HEARING

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WHATS NEXT?

Full Council Vote on the Classification Factor Upon the Commissioners determination that the percentages meet statutory requirements and the public hearing has been held, the assessors will submit to the Bureau of Accounts the local tax rates for final approval. Councilors certify the excess levy capacity on recap. (Form LA5). This will happen after full Council Meeting.

November 30, 2011

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CLASSIFICATION HEARING

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DISCUSSION

November 30, 2011

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CONCLUSION OF CLASSIFICATION PRESENTATION

November 30, 2011

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CLASSIFICATION HEARING

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