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With Tax Spike, is Lowell Still Good Deal?

December 3, 2018

In 2009, the average single-family tax bill in Lowell was less than $3,000. In the next fiscal year, that figure is going to surpass $4,000. Sun Graphic Sun staff photos can be ordered by visiting our SmugMug site.

LOWELL -- No city councilor enjoys raising taxes.

But year after year, with the recent exception of 2013-2014, the City Council has been doing just that -- to continue providing services to residents, whether it’s hiring additional police officers or filling potholes, officials say.

Since 2009, the average single-family tax bill has gone from under $3,000 to a proposal this year of more than $4,000. The additional $1,116 in taxes for the average household is a 38 percent spike over the last decade.

And let’s not forget an expensive high school project is on the way.

“No one wants to do this,” City Councilor Vesna Nuon said about approving a tax hike, ahead of Tuesday’s tax classification public hearing.

Is Lowell still a good deal for residents? An affordable place to live?

Officials tout that the average tax bill remains $1,642 below the state average.

“That’s indicative of the council’s and city manager’s tax policy, to keep taxes in check,” said Chief Financial Officer Conor Baldwin.

Lowell has done well compared to other municipalities that have had to borrow money just to cover their budgets, City Manager Eileen Donoghue pointed out.

Certain communities have racked up incredible debt for mismanagement, she added.

“So I look at Lowell, and we’ve managed well in good times and in bad,” Donoghue said. “We compare ourselves to other suburban communities and other cities, and Lowell is a tremendous value, considering the investment that’s happening here.”

Some residents move out to more affluent suburban areas, but they don’t always have the services that Lowell offers, Mayor Bill Samaras said.

He said he’s met empty-nesters who moved into downtown condos from Concord and Westford, and they’re enjoying the services.

“They’re getting a good value for their dollar,” the mayor said.

City officials in memos and presentations like to emphasize that residents pay significantly less in taxes compared to the state average, but fail to mention that the median household income in Lowell is way below the state median figure.

According to data from the U.S. Census in 2016, Lowell’s median household income was $46,972, compared to the state’s median household income of $70,954.

The average person in Lowell falls well short of what an average person in the state makes, City Councilor Rodney Elliott stressed.

“Yes, taxes here are less than the average, but that’s not an apples-to-apples comparison,” he said. “With that significant income disparity, we have to be much more cognizant of what people can afford.”

Elliott, who did not back a downtown high school project, said he continues to worry about the tax implications from the $350-million project. In addition to these annual tax hikes, the project’s cost will place a “great financial strain” on taxpayers, he said.

“We have to do a better job, and adopt something that is much more affordable,” Elliott said. “We have to live within our means.”

The estimated high school project tax increase for an average single family home ($274,542 at the fiscal 2018 tax rate) would be $272. The debt service payment would last for three decades.

Donoghue said final numbers are still not locked in for the project. The city should know what its share will be, and what the state’s share will be, in April.

They also don’t know what the interest rate will be when they go out for bonds.

“Will there be an increase? Of course, no matter what,” she said. “It will start getting phased in over several years.”

As for Tuesday’s hearing, Donoghue will recommend the city set the residential tax rate at the lowest percentage of the total levy allowed under state law. Establishing the minimum residential factor for Fiscal 2019 would result in the maximum tax relief to residential homeowners, shifting the burden to the commercial and industrial classes.

The average tax increase for a single-family home is expected to be $106, or 2.7 percent.

The average single-family home’s value increased by about $15,000 this year, rising up to $289,566.

“The actual tax rate is going to go down, but the tax bill is more because home values have increased,” Baldwin said. “It can be a confusing statistic for some people.”

If a home value fell, they could see a tax decrease.

Lowell has about $19 million in excess levy capacity, which is significant, Baldwin said. That’s money essentially left on the table, he said.

“Because the council and the manager are not trying to overburden residents,” Baldwin said. “They understand the socioeconomic makeup of the city.”

Follow Rick Sobey on Twitter @rsobeyLSun.

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