Framingham's long road to a single tax rate
Courtesy photo
Framingham Town Manager Robert Halpin hopes to reduce the tax burden on businesses, but says a single tax rate is probably a long way off.
A number of Massachusetts cities and towns with separate property tax rates for homes and businesses are pursuing or recently adopted rates that close the gap between the two groups, if not one rate for everyone.
Framingham is among them, but MetroWest’s largest town faces a long haul. Robert Halpin, the town manager hired in 2012, has recognized the town’s large tax disparity between businesses as a major hindrance to economic development. He and the town finance department have pushed a three-year plan to cap the tax burden on businesses at 40 percent of the total tax base.
As the commercial tax base grows, that will lower the factor, the amount of the burden shifted to commercial property owners. After a tax classification hearing last week, the factor is 1.71, down from 1.74 last year.
Shouldering the shift
That means owners of business property are shouldering 71 percent more of the tax burden than they would if Framingham employed a single tax rate. Compared with other dual tax rate communities, that’s a large shift. Marlborough, for example, has a factor of 1.4, while Worcester this week enacted two rates that yielded a factor of 1.35.
Halpin declined to speculate about how Framingham got to the point where, until last year, it was shifting the maximum amount of the tax burden allowed by state law (a factor of 1.75) onto businesses. But historically, reducing the factor for businesses meant significant increases in residential tax bills, something selectmen were loath to embrace.
Halpin hopes to attract smaller companies through changes
Halpin said narrowing the shift makes sense because commercial property values are rebounding, and that’s generating more revenue from the commercial tax base, so more modest annual increases will be sufficient to support the town budget. Framingham also recently redesigned its insurance plan for public employees, which Halpin said allowed the town to use the money saved to provide tax relief.
While large corporations looking for space along Route 9 and near the Mass Pike might not be swayed by a change in Framingham’s tax policy, Halpin said he’s hoping the strategy will draw more small-business owners that are looking to buy space in areas away from Route 9. Those companies, Halpin said, have more flexibility on location and may just as easily set up shop in neighboring Southborough or Ashland.
A generation-long effort?
Halpin recognized that Framingham is taking a measured approach to narrowing the tax gap between businesses and residents, and he was realistic about the idea of pursuing a single tax rate.
“That would be a generation-long effort,” he said.
Whether or not a single tax rate is feasible, Craig Johnston, senior vice president with commercial brokerage R.W. Holmes Realty Co. of Wayland, said he hopes the town will take a long view in setting commercial tax rates.
Johnston said tenants look to Framingham when inventory in neighboring towns is low, but the relatively high tax rate of $39 per $1,000 of assessed property valuation can be a difficult sell. In Natick, which has a single tax rate, businesses are charged $13.82 per $1,000.
“I applaud (Framingham) for moving in the right direction; I think they’re doing the right thing. But hopefully, they have a longer plan than three years and they can do more,” Johnston said.
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