Dual Tax Rate is Killing Worcester
Yesterday's T&G had an open letter from Alex Guardiola to the City Council asking them to abolish the dual tax rate and I can't agree more. In the 30+ years i have spent in the city I see what it is doing to the long term prospects of businesses and their incentives.
Here is the article:
https://worcestertelegram-ma.n...
This provides me an opportunity to re post an email I sent to my buyers on 4.2.2021 just 5 months ago. This is a huge deal and it is important for investors to realize what is going on here. Too Bad that the city council is elected by the people who vote with their wallets in the short time, and not the longer term thinkers who employ them.
4.2.2021 STATE OF THE MARKET
Please see these 3 articles from the paper
As an avid reader of the physical paper, I provide these links to you.
Article 1 summary.
Assessed values of properties in Worcester are going up.
- SF 8.23% (25,428) $6.8 Billion
- Condos 13.15% (4,918) $832.88 Million
- 2 family 12.46% (3,595) $1 Billion
- 3 family 18.94% (4,914) $1.6 Billion
- Apartment buildings 16.52% (1,437) $1.5 Billion
- Commercial Properties – 1.15% (2,157) $2.25 Billion
- industrial -.56% (528) $533.5 Million
Total assessed Value $15.824 BILLION
2020 Tax Rates. Residential $17/1000, Commercial/industrial. $35.16/1000
Article 2 Summary
TAXES ARE GOING UP--- Worcester votes each year to reset the tax rates for both residential and Commercial. This is done by the City Councilors who are elected by the people
Article 3 Summary
Mixed use doesn’t make sense for the old Greendale Mall. They are looking to put in a Warehouse due to the location adjacent to I290 and I190!. Does that mean that AMAZON IS COMING TO WORCESTER? What a perfect location
MY TAKE
As everyone knows the multi market in Worcester is super hot. Taxes are going up.
BUT
Everyone should be voting to get a single tax rate in Worcester. I know that this is contrary to what would be considered your self-interest which would be to have the lowest possible residential tax rate. But over the past couple of decades since the split tax rate was implemented in 1984 businesses have been moving out of Worcester. This has been raising the percentage of taxes that falls on the residents.
Those paying attention to local activities nothing has been built in Worcester recently without a TIF (Tax increment financing) where the City reduces the tax rate for a period of time to incentivize businesses to come to the City. In theory these work, but it would work much better if the market forces of supply and demand were able to create this equilibrium.
Here is a list of notable TIFS:
- Table Talk Pie--- Cleaning up old industrial land
- Homewood Suites (Washington square)—city created a parcel by reducing the size of the rotary
- Polar Park- cleaning up old industrial land
- 2 housing projects with Polar Park—cleaning up old industrial land
- WuXi Biologics- creating something new
- 100 Wall St- change from a long defunct restaurant to residential housing
- 154-156 Main St – switch from office to Residential
- 6 Chatham St- switch from a school to residential
- 205 Summer St- switch from a church to residential
TIFS that sort of Worked
- Unum, Built a building, tried to bring jobs, then announced they are having all of their employees work remotely so they will lease the building
I posit that the split tax rate of $35/1000 is driving companies out of Worcester and many can only stay or create a financially viable project with the help of a TIF.
Some companies that chose to leave Worcester:
- Primetals Technologies (Morgan Construction) to Sutton. $28mm building (275 jobs). Morgan was in Worcester for over 100 years.
- Allegro MicroSystems to Marlboro
- Curtis Industries to West Boylston (200 JOBS)
Worcester is going to have some issues when Restaurants and Bars which have been mostly closed for almost 9 months have to pay their taxes with reduced revenues.
Worcester also has a ton of Non Profit Entities that have huge economic impact on the City but do not pay property taxes.
All of this puts more strain on the homeowner and small landlord. The best way to fix this is to encourage more commercial development by reducing the commercial tax rate.
Let’s take our numbers from above:
Residential Value. $11.73 Billion
Commercial industrial $2.78 Billion
How is this even possible. Worcester has been known as an INDUSTRIAL CITY NOT A RESIDENTIAL CITY
The City is working hard to grow the commercial/industrial tax base, but the tax rate is a killer and needs to be changed.
Please reach out to your city councilors and ask them to vote for a more equitable tax rate on commercial/Industrial properties. It may not look like it is in your financial best interest, but as we know if Worcester becomes a bedroom community to Marlboro and Natick we will be in real trouble.
Here are emails for all of the voters on this issue. Please email all and voice your concerns.
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