Tax rate up 4.1%

December 16, 2010
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Chelsea’s tax rate for commercial and residential properties has been set. The new tax rate is $12.92 per thousand of assessed value for residential property and $30.60 for commercial/industrial properties.

Overall, this represents an $0.83 cent raise which translates into a 4.1% increase in the average single family tax bill.

The average single family home assessment increased by $600 for the Fiscal Year 2011, which measures values as they stood in 2009.

The slightly less than one percent increase represents the first time in four years that taxes have risen. The decreases had averaged 7.4%, according to official city records.

In addition to setting the annual tax rate, the Chelsea City Council enacted two motions that will result in a $1,629 savings in the average single family tax bill.

“I’m thrilled that we have once again taken action to keep residential taxes as low as we possibly can,” said City Council President Leo Robinson.  “Our efforts are consistent with our approach to restrict the cost of government here, while continuing to offer great services for the tax dollars we do collect.”

The Council took the initiative in adopting the maximum shift of residential taxes onto commercial/industrial taxpayers and an additional savings for owner-occupied households, called a residential exemption.

“We value homeowners here and want to encourage them to continue to make an investment in their properties and neighborhoods,” said Councillor Mike MeKonnen.  “They are the backbone of our community.”

The process of setting the tax rate is complicated and was made even more so by the council’s actions to adopt the commercial shift and the residential exemption.

“I am in total agreement with the Council. I support wholeheartedly what they did,” said Ash.

According to Ash,  Chelsea raises 2.5% more every year in property taxes.  Because valuation changes fluctuate among the various residential and commercial/industrial properties, the increase in a tax bill is also a function of which class of property retained or saw increases in value.

Over the last several years, residential values have plummeted much more substantially than commercial values.     The result was a shift in tax burden from residential properties to commercial.  This last year measured, though, commercial properties are seeing lower values, while the residential slide has seemingly ended.  With that plugged into the formula, residential taxes are up the 4.1%, while commercial and industrial taxes are up 1.4% and 1.9%, respectively.

Real estate statisticsFrom 2006-08, single family properties lost 36% of their assessed value.   Condos and two-family homes still showed a 2% decrease in 2009, adding to their slides since 2006 of 31% and 47% respectively.  Three-family home value stayed the same in 2009, after being hit the hardest since 2006, with a whopping 52% decline.  Since 2006, commercial properties have decline 9% in value, while industrial properties are down 8%.  It is important to note that assessing values are estimates over an entire range of properties and may not accurately depict the market value of an individual property.

“Your head can really spin after studying the figures we need to review when setting rates,” suggested Councillor Robinson.  “What’s the most important one for me is where do our residential tax rates stand versus others in the region.  Once again, after looking at all the available data, Chelsea has the lowest burden on single-family owner-occupants.  We’re all very proud of that.”

Third quarter tax bills will be in the mail around January 1.  Because the first and second tax bills already mailed contain no changes in taxes, the upcoming bill will contain the new assessment and 50% of the total dollar increase or decrease in the individual property tax.  The fourth and final tax bill of the year, arriving around March 1st will make up the final 50% of the tax bill difference.  Abatement applications will be available in the Assessors Office the first week in January and generally need to be filed by February 1.


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