PITTSFIELD, Mass. — The City Council on Tuesday set a rate that will see residential tax bills rise by about 2.5 percent, or about $100 for the average homeowner.
The vote was 8-2 to adopt a tax shift of 1.6738 on the commercial side. Councilors Christopher Connell and Kevin Morandi voted against because they had also voted down the budget.
This makes the residential tax rate $19.25 per $1,000 valuation and the commercial, industrial, and personal property tax rate, $39.99. This is down from $19.71 and $40.36 last year.
However, the value of the average home has risen by about $10,000, from $194,288 to $203,901. This will result in an increase of $95.67 on the average bill, or about 2.5 percent.
The commercial median value has not significantly changed at $189,200. The tax bill at that value will see a slight decrease of about $82.
A single tax rate would have been $23.89.
Board of Assessors Chairwoman Paula King gave the presentation on the tax classification options for fiscal 2021. Mayor Linda Tyer recommended a residential factor of .8057 and a commercial, industrial and personal property, or CIP, shift of 1.6738.
The average single-family home is assessed at $203,901. The tax bill will be $3,925.09, an increase of $95.63 for the entire year, or 2.5 percent.
King said this is not a very big difference from last year.
Municipalities are required to determine the fair cash valuation of property. This includes review and analysis of existing property and property sales. This is confirmed with the state Department of Revenue verify the fair cash value.
All of the information gathered is from calender year 2019.
"With that said, we know that this has been a very difficult year with the COVID-19 and with regards to the impact on assessments, there won't be this year," King said.
She acknowleged that the novel coronavirus has severely impacted unemployment and businesses, but is unsure how it will impact the real estate market. Despite this, the analysis must be based on 2019.
King said they will closely monitor what the current real estate market is and if there is any impact that COVID-19 has had on real estate and investment properties in preparation for fiscal 2022 assessments.
"But I will say, looking at the sales that have been coming in this year," she said. "it appears that fiscal year 2022 will also be seeing an increase in property values due to the sales that are taking place in this calendar year."
King provided comparisons of last fiscal year's overall values to this year's.
Single-family homes are seeing a total increase in assessed values by $107.5 million, or 4.9 percent, because of the very strong housing market.
Overall condominium values are up $2,000,000 or a 1.4 percent increase. Two-family homes increased by $8.2 million, or 3.5 percent, and three-family buildings by $1.4 million, or 3.9 percent; buildings with four or more units by $5.1 million, or 3.7 percent.
Raw land value is up $1.2 million.
Industrial properties decreased by $937,979, and power plants by $2.6 million, or 6.4 percent.
And person property has experienced a total increase of 11.8 percent from last year.
Ward 5 Councilor Patrick Kavey and Councilor at Large Earl Persip brought up the issue of second-home owners overbidding. Those moving in from larger cities are able to spend more money than the average Pittsfield homebuyer, they said, which is making it harder for local residents to buy houses.
Kavey said it might not be the worst idea to put in specific taxes or fees for second-home owners, adding his neighborhood has seen houses go for will over asking price to buyers from out of town.
"It doesn't seem to bother them to pay an extra 20 or 30 thousand dollars to get the house," Persip said.
He thinks that if this pattern continues, Pittsfielders will priced out of the market.
"My taxes are based of my home value," Persip said. "So if my home is overvalued or if I am looking at a home that's getting overvalued, my tax bill is still going to be based on that inflated value."
King said assessments are done on 100 percent fair-market value, what a willing buyer and willing seller are able to do. She said the tax burden will be shifted on all of the parcels in the city, but admitted that increasing values might make it more difficult for someone who wants to buy a home.
She also informed the council that second-home owners do pay a personal property tax that is decided from a formula that is agreed on by DOR. This is 6 percent of the building value and is taxed at the commercial tax rate.
Persip said the inflation price of homes is discouraging local homebuyers. Houses going for $300,000 to $500,000 is extreme for people with low-paying jobs, he said, but a "drop in the bucket" for some out-of-towners.
"I think we need to address second-home owners and what they are doing to our market because I think they are inflating it very quickly since COVID-19 has started," he said. "I don't think it's going to stop, I think we need to start about how we protect people who are currently living here who were born here and really address the out of towners."
Ward 1 Councilor Helen Moon echoed Persip's sentiments and said it should be part of the larger conversation of housing insecurity.
"I feel like it really ties into this broader conversation that we are having about housing insecurity and allowing opportunity for lower income households to maintain and stay in their homes," she said. "As well as creating a safety net so that people more housing insecure can benefit from programs that help them stay in their homes."