Worcester City Council sets tax rates for 2022- Dual Tax Rate

On Tuesday night the Worcester City Council had their annual tax rate hearing.

See Article from the T&G

https://www.telegram.com/story...

You can see my personal thoughts on the topic in my testimony at that City Council Meeting starting at 14:20 - 17:50 of this attached video.  Alex Guardiola, VP of Government Affairs for the Worcester Chamber speaks after me.

https://play.champds.com/worce...

I would like to commend those City Councilors who voted to make the taxes more equitable between businesses and residents.  This will not happen overnight but it the city is beginning to make strides in the right direction.   Those councilors are:

Khrystian King

Sarai Rivera

Sean Rose

Kathleen Toomey

Matthew Wally

Mayor Joseph Petty

They understand that lowering the tax rate for Commercial and Industrial properties is good long term for their constituents.

Rates in a quick table

year.   Residential.   commercial

2021.  16.28             36.20

2022   15.22             33.34

yes both rates went down

but yes, all values of all classes of properties in the city went up so as you can see the average residential taxpayer will pay $105 more a year and the average commercial/industrial taxpayer will pay $143 more a year.

For those who have invested in Residential Income Properties, you are probably disappointed, but you should not be.  If Worcester is able to grow the value of the Commercial/industrial properties through the lowering of the tax rate then taxes will ultimately go down on residential taxpayers.

Currently a residential building that makes $10k a month is worth over $1mm and a Commercial Building that makes the same $10k a month is probably worth only $850k.

Why is this so?  If both buildings have an assessed value of $1m, the residential tax is $16,280 year and the Commercial building is $36,200 that is $20k more in taxes and takes $1660 more a month out of your NOI thus reducing the value.

With the new tax rates it is $15,220 and $33,340 respectively for only a difference of $18,120 or $1510 so it raises the value of that Commercial property by at least $15k.  The reduction in taxes on the commercial property owners allows them to keep the rents stable.

If the tax rates were the same, then the buildings would be worth the same and it would provide an equitable playing field and more choices for investors.

Unfortunately Businesses do not elect the city councilors so they have to rely on people like Alex Guardiola,and the Chamber to explain their case and how this will help the residential taxpayers in the future.

I am glad to see that these councilors were able to see the long game and hopefully this trend will continue until we have one tax rate for all types of properties.