How Is Property In Amherst Assessed? Report On A Special Meeting With Assessor Kim Mew

Report On The Meeting Of The Community Resources Committee, January 12, 2023

Joint Meeting With Town Council And Town Assessor
Amherst Principal Assessor Kim Mew gave a presentation to most town councilors on how her department assesses residential and commercial properties at a joint meeting of the Community Resources Committee and the Town Council on January 12. She explained that apartment buildings are considered to be residential, rather than commercial, and all of their accessories such as playgrounds and swimming pools are included in the valuation. Mew said that the aim is to assess properties at their full and fair cash value, or what a willing buyer would pay. In order to arrive at a property tax amount, the town collects data on many characteristics of a property, such as size, location, style, number of bedrooms, age, etc. The method must be uniform for similar properties within the town, and the assessor may not take into account who owns and occupies the property.

There are three main methods for assessment. The most common method is the market approach, i.e. looking at comparable sales. Another method, used for apartment buildings with four or more units and for mixed-use buildings, is the income/expense approach,  used here because there are not enough sales of these properties of this size to comprise a database. For the income approach, the department tries to determine the net operating cost of the building by calculating income generated, then deducting  the vacancy rate and reasonable maintenance costs, divided by the capitalization rate of around nine percent. The capitalization rate can be considered the return on investment and consists of the tax rate, depreciation amount, and interest rate. Income figures are provided by the property owner and will be investigated by the town or the Department of Revenue if the income and expenses are out of line with similar buildings. The third method, the cost approach, is used only when there is not enough market information to calculate a tax, such as with battery storage sites for solar installations.

Amherst has 6,761 parcels of taxable land. This includes 4,112 single-family homes,  340 two-family properties, 79 three-family buildings, and 100 apartments with four or more units. There are 448 parcels of vacant land. Approximately 700 of the single family homes are registered as rentals. Sixty-seven percent of the residential parcels are owner-occupied. Non-owner-occupied homes of less than four units are currently taxed by the market method. Calculating the property tax by this method (as opposed to the income/expense method) for a sample of several properties in Amherst resulted in a slightly higher tax levy, although the total tax collected by the town would not be increased due to the limitations imposed by Proposition 2½. Only how the total tax is divided up among properties in town would be affected..

District 1 Councilor Cathy Schoen asked how vacant commercial space is handled, whether it is taxed on the value of potential income or deducted from the property value. She also asked how mixed-use buildings are taxed, such as those at North Square, where Beacon owns the apartments and W.D. Cowls owns the commercial space. Mew was unsure how the North Square properties are dealt with, but said the assessor’s office would evaluate long-term vacancies to be sure a property owner isn’t deliberately keeping a property vacant to reduce the value of the property.

Individual condominium units are taxed on their interiors, with the condominium association paying the taxes on the buildings’ exteriors and accessory land. Mew was unsure how taxes on properties owned by cooperatives are determined. She was also unsure about how the department will deal with the public-private residences being constructed at the University of Massachusetts. (See here)

Community Resources Committee Continues Discussion Of Rental Registration Bylaw
Also on January 12, the Community Resources Committee (CRC) of the council continued to develop a rental registration bylaw. Principal Inspector Jon Thompson and Building Commissioner Rob Morra attended the meeting with CRC members Mandi Jo Hanneke (at large), Pat DeAngelis (District 2), Jennifer Taub (District 3), and Pam Rooney (District 4). Shalini Bahl-Milne (District 5) was absent.

The latest draft of the bylaw can be viewed here.

Most of the discussion at this meeting concerned the fee structure for permits and inspections. An increased cost to the town is expected with the new bylaw, because currently most units are only inspected if there are complaints, and the new bylaw stipulates regular inspections for all rental properties every three to five years and when residents change. Thompson estimated that the increased number of inspections would require three full-time inspectors at a cost of $475,000 per year. Each inspector would probably do about 200 inspections a year.

In a written communication, Bahl-Milne asked whether the rental permit fee could be waived for owner-occupied rentals, although the inspection fee would still need to be paid. Taub emphasized the importance of all rental properties, including those that are own-occupied, to have a rental permit, regardless of whether the fee is waived. Morra pointed out that violations are not limited to non-owner-occupied units and  Thompson said he knows of several properties that are supposedly owner-occupied, but probably are not. Both Morra and Thompson seemed to support uniform permitting for all rental properties.

Landlords Object To Projected Increase In Fees
In public comment, Patrick Kamins of Kamins Real Estate said he objects to his industry being taxed “almost an additional half million dollars”. He said that the cost of a  permit/inspection program should be spread among everyone who pays a property tax. He added that the additional costs might decrease the affordability of housing in town. 

Renata Shepard agreed with Kamins, and said she is frustrated at the extra amount that she, a small landlord who charges tenants  below the market rate, would be forced to pay under the rental registration bylaw being discussed.

Final Listening Session For Rental Registration Bylaw Scheduled
The CRC plans to hold a final listening session to obtain public input on the Rental Registration bylaw on Monday, February 13. Information on the virtual session will be forthcoming.