When Brenda Kelley Kim opened the mail this month, her jaw dropped in disbelief. The town had increased her home’s assessed value by 29% from $649,500 to $836,800 – adding nearly $200,000 overnight. Even with accounting the tax rate decreasing from $10 in Fiscal Year 2023 to $8.96 in Fiscal Year 2024, her taxes shot up about 15 percent, the type of spike that Proposition 2 1/2 was designed to eliminate.
“I looked around my house going, ‘Hey, where’s the addition to justify this?'” said Kim. “Because this is crazy.”
Kim soon learned she was far from alone. As tax bills landed in mailboxes across town, a swarm of baffled homeowners demanded answers. Many took to social media.
Harbor Avenue resident David Moran couldn’t fathom how his assessment leapt 32% in one year, tacking about 18% onto his annual property tax bill.
“You can’t spring this on people out of nowhere,” said Moran, a resident for over three decades. “I don’t care what the numbers say — something is fundamentally wrong here.”
Compounding the shock that Kim, Moran and others are experiencing is that January tax bills for the third quarter of FY 24 also incorporate the town “catching up” with shortfalls in taxes paid by homeowners in Q1 and Q2, those bills having been estimated based on the prior year’s assessment.
One of Moran’s neighbors on the Neck shared with him an analysis she had performed, seemingly unraveling part of the puzzle. The neighbor found that properties listed with a particular neighborhood code, “3N,” indicating the Neck, had been whacked with a particularly large increase in the land value of their parcels — more than 40%.
Meanwhile, adjacent properties with different codes saw vastly smaller increases, Moran’s neighbor found. For example, properties categorized as “3W” and “4W,” the “Neck Waterfront” neighborhood,” saw their land value increase by less than 5%.
But as Kim’s experience shows, the issue is not limited to the Neck.
What’s going on?
Local residents are outraged after receiving exorbitant property tax hikes they say vastly exceed home values and set dangerous precedents. They also argue assessments are inconsistent, with comparable neighborhood homes receiving substantially lower increases around 20-40%.
“With the housing shortage, real estate is in high demand, and values are increasing,” Town Administrator Thatcher Kezer explained. “This year, we’ve seen an average increase of 16%, but some properties, due to their type or location, have seen higher hikes.”
Kezer explained that the first week of January marks the distribution of actual tax bills for fiscal year 2024, as opposed to the estimated placeholders sent out over the summer and fall. This first bill reflects any changes in property valuations applied to the new fiscal year.
“Folks are just receiving their new tax bills,” said Kezer. “So this is the first adjustment for the new year.”
Kezer said the town’s total tax levy is only rising 2.5 percent this year, as restricted under Proposition 2 1/2. But assessments updating the values of each individual property can fluctuate more wildly – especially amid housing shortages with demand surging more for certain home types.
“But the fact is that the increase or decrease in property values does nothing to raise any new dollars for municipalities; it’s all based on how much taxes in dollars we collected the year prior plus 2 1/2% to account for any increases in property values,” Kezer explained. “All that does is change the share of who’s paying more and who’s paying less to hit those dollars.”
Marblehead assessor Karen D. Bertolino said her office bases valuations on arm’s length real estate transactions in the prior calendar year. For the fiscal 2024 tax bills, her department reviewed 2022 sales and applied Massachusetts Department of Revenue criteria.
“The department tries to come as close to fair market value as possible,” said Bertolino. “So we have a range which we need to follow. And that’s between 90 and 110% of market value.”
Bertolino said Marblehead has been in an appreciating real estate market in recent years, further impacted by the COVID pandemic. When homeowners call with questions about increased assessments, Bertolino recommends they compare total tax bills year over year rather than focusing solely on the assessed value.
This year’s tax rate is $1.04 less than the $10 rate in fiscal 2023.
‘Prove I’m not being gouged’
However, residents like Moran and Kim are not convinced.
“There must be a more transparent and equitable way to assess these taxes,” Moran stated. Further complicating the situation is the disparity in increases across different neighborhoods.
The residents charge the town has failed to provide transparency or clearly explain the staggering hikes.
Moran, a tax attorney, is threatening legal action unless the town substantiates its valuations with hard evidence. He considers the lack of communication and due process regarding his spike unacceptable and potential grounds for a lawsuit.
“Who are you to charge me thousands more without proving it or notifying me in advance?” demands Moran.
Kim is similarly upset.
“Don’t tell me you now value my little house at over $800,000 and expect me to shrug and pay up,” said Kim. “Bring me the facts to prove I’m not being gouged.”
