Last year, the Giroux building was sold for $10,450,000 but its assessed value has been around $4,300,000 since Fiscal Year 2013: this property is assessed at 41% of its sale price.

In contrast,
single-family houses are assessed at about 90% of their sale price.

Had the Giroux building also been assessed at 90% of its June 2015 sale price, or at $9,405,000 instead of $4,300,000,
the property would have paid in additional taxes to the Town (at the current rate of $28.40 per $1,000 of value):

----($9,405,000 - $4,300,000) x $28.40/$1,000 = $145,000 annually

Given how Prop 2 1/2 works, since the Giroux Building pays $145,000 too little in taxes each year (being under-assessed by 49% [90% - 41%] of its sale price),
all other Lexington taxpayers, mainly homeowners, collectively pay $145,000 too much each year to “fund” the Giroux Building’s unwarranted $145,000 tax break.

The Giroux Building is typical of what is going on in Lexington and across Massachusetts:
large commercial properties are vastly under-assessed, creating unwarranted tax breaks for their owners, which all other taxpayers in Town, mainly homeowners, unknowingly pay for.

Several
other examples of large under-assessments of commercial properties in Lexington were brought to the attention of the Selectmen, of the Lexington Board of Assessors, and of the House Chair of the Legislature’s Joint Committee on Revenue, our own Rep Jay Kaufman, but none of these Lexington officials have so far addressed this serious tax equity issue. Its resolution requires that the Massachusetts Department of Revenue (DOR) update its rules on assessments of commercial properties, so that, like for residential properties, their assessed values be closer to market value.

Eliminating these large under-assessments will:

----(1) reduce taxes for residential taxpayers (by eliminating the unwarranted tax breaks to under-assessed commercial properties that residential taxpayers now unknowingly pay for), and

----(2) in some cases (“new growth” and upzonings) increase total tax revenues to the Town.

This issue should be addressed before residents are asked to increase their taxes.