Split Tax Policy for Residential and Commercial Properties

As the Select Board undertakes a thorough review of all potential revenue sources and its tax rate classification, it should keep in mind that the single largest taxpayer in Natick--the Mall--is in receivership, re-negotiating the terms of a half-billion dollar note. The top two tax payers--Natick Mall and Mathworks--pay almost 5% of the entire tax levy and the top ten taxpayers pay over 10% of the tax levy. These are some of many factors that complicate the discussions on whether to move to a split tax rate and if so, how much of the residential levy to shift to the commercial and industrial asset classes.

In November of every year, the tax assessor appears before the Select Board and provides it with information and data relevant to setting the residential factor: the levy limit, the maximum allowable levy, and the excess levy; the town's tax base, property values, and new growth; and the impact of taxes--split rate or not--on the the next fiscal year.

I have spent a number of years looking at this issue and have always come to the conclusion that the Select Boards have: a single tax rate best serves both the residents and commercial/industrial property owners. The composition of our tax base is approximately 83%, a 6% decrease in residential taxes requires a 30% increase in commercial real estate taxes. The top two taxpayers, Natick Mall and MathWorks, pay almost 5% of the tax levy. And the top ten taxpayers in Natick pay 10.15% of the entire tax levy (FY25).

For example, the median real estate tax bill for a Natick homeowner is $9,334 (for a home assessed at $780,400) for fiscal year 2025. To reduce this bill by $560 or about $47 a month, Natick Mall's annual tax bill would rise by 30%, from $4.3 million to $5.59 million, which would exacerbate vacancies in this very challenging business environment. And these changes do not *increase* the tax levy for supporting schools, the town's climate initiatives, or affordable housing. They merely redistribute the tax burden to businesses.

I have spoken to literally dozens of small business owners in Natick since first running for office in October, 2021. Almost all of them have "triple net" leases, whereby the tenant pays all the expenses of the property, including real estate taxes, building insurance, and maintenance. These expenses are in addition to the cost of rent and utilities. Raising their taxes by 30% would drive many of them out of business.

As the composition of the tax base continues to change, I will keep an open mind about whether to split the tax rate but the economics of shifting the tax burden onto businesses doesn't make sense to me right now.