Search

Special Board of Aldermen 11-15-2021 Page 2

Richard Vincent, Chief Assessor

Thank you. Good evening. The next slide in the presentation is a screen caption. Actually the next two slides are
screen captures from the Assessing Department’s page on the city website. The quarterly reports that Ms. Kleiner
mentioned are provided on this webpage. We have quarterly reports that go out to the BTLA — the Board of Tax and
Land Appeals. They also have quarterly reports to the Board of Assessors. Those aren’t on this page but we do have
bi-weekly status reports that we received from Vision Technologies. Those are also shown here on the screen capture.
Those are on the Assessing webpage as well.

Mike Tarello, June Perry, and Steve Whalen from Vision Government Solutions are here. They will speak to the next
several slides regarding the revaluation process. When they're done, | will speak to a report that | did back in September
that was a study of 2021 market trends. When Mike Tarello is done with the revaluation process, he will also present two
reports from recent revaluations they did in Manchester and Salem. So with that, I'll turn it over to Mike Tarello.

Mike Tarello, Vice President

Thank you, Richard. I'm Mike Tarello, Vice President of Appraisal Operations for Visual Government Solution. | also
have with me June Perry and Steve Whalen. They're also District Managers who concentrates on the commercials.
June is running the project and works directly with the residentials.

So it just want to give you a few minutes of a little breakdown of the process that we're doing for the revaluation. So it is
broken up into five sections that you see on the screen. The data collection portion -physical data of inspections that
we've been doing for the last two years, the gathering of market information that we'll talk about in a moment, sales,
processed information, land sales, income expense information. Then we gather all that information and we do the
evaluation process to (inaudible) in that order. We determine the market value and the progress (inaudible). Then we'll
complete a peer review which is a quality control check for equitable and fair values and checking the physical data one
more time. Then finally, we'll do an informal pairing process where we meet with the taxpayers who explain the process
and (inaudible).

So the data collection was we did start in the winter of 2020. This portion is now starting to come to completion with the
physical inspection part that we've done - measuring, looking at story heights, styles, walking the site, taking photos,
gathering all the pertinent information that we use for valuation. We have done approximately 98% of the inspections.
Just wrapping them up now for the residential and we've done 97% with commercials. We are now in the phase of doing
interior inspections which we were (inaudible) earlier. Now we are sending letters out to each Ward and wrapping up
Ward 2 and starting Ward 3 to send out letters or setting up appointments so we can do the interior inspections. So this
will be wrapping up in the next few months with the final interior inspection.

So once this is complete, we start to gather information and actually we've already started doing some of this market
analysis in this process of inspecting the sales. So we do this review of the sales, we'll be sending out income and
expense information to the commercials in the January period, gather more information. We'll be collecting market
information, construction costs, and other pertinent information that we use surveys and so forth in the market
capitalization rates. We gather all this information so that we can then begin to set the land values, and neighborhood
adjustments, and to prepare all the data so that we can do (inaudible).

So these three approaches which are recognized by the IAAO Standards that we use the cost approach, which is looking
at land values and construction costs less appreciation is a method of value. The income approach which pertains more
to apartments, mixed use, commercial, and industrial properties is looking at the income stream and then capitalize on
that value to that stream into a value. Then the sales comparison approach and looking at common sales that occur with
similar comparison to non-sales in determining a value (inaudible) usually mostly for residential and we also look at the
sales or the other classes. During this phase, we will analyze everything that we've done in the earlier phases and put all
this data together and come up with market values for the land and buildings and total value for all properties.

So once we've set these values and rates and through the analysis of all the market data, we’ve been working closely
with the Assessor's office on this information and make sure that they approve every step and phase that we do just like
we've done with the data collection phase. Once this is completed, we'll start to do a field review, which is a drive by
check and review of all the neighborhoods and properties also commercial properties and looking at the data that was
collected, determining the accuracy of it, and then making sure that the values that have been preliminary set are
reviewed for accuracy, uniformity, and to be equitable for all different groups of properties. We'll be looking at style of
properties, neighborhood delineations. We'll be looking at other variables as we do the review from the valuation. The
valuation looks at properties based on their age, based on all the variables to make sure of the lot size, and so forth, and
value of the land to make sure that everything is done.

Special Board of Aldermen 11-15-2021 Page 3

So once this is completed and the property's been valued, reviewed, and approved by the assessors for the preliminary
values, we'll be sending out valuation notices to all the people in the community so they'll have an opportunity to do an
informal hearing with our staff to go over the value, to go over the data, to answer any of their questions. We encourage
them to bring information that can help support any claims they have or just to enforce that we did a good job and to
check. So during this whole process it’s informal to work with the taxpayers to explain the information and make sure
that we get the information and values added. Again, we feel that the taxpayers are part of the evaluation process and
we can bring a lot of added information (inaudible). So once this is finalized, we'll send a notice out if there was a
change in their property or there wasn't a change if they went to a hearing and sometimes when we make changes, it
might be people that met before a hearing that might have an adjustment. Also if we're looking at, say, a condo complex
or a neighborhood and we find that adjustment needs to be done (inaudible). And then once this is complete, the
taxpayer has the ability for further appeals, if necessary, with the assessor (inaudible).

Alderwoman Lu
Excuse me. Could we ask him to speak louder?

President Wilshire

Sure. Mr. Tarello could you speak a little louder?

Mike Tarello, Vice President

Sure.

President Wilshire

Thank you so much, appreciate it.

Mike Tarello, Vice President

Okay. So that's basically the process that we do for the revaluation.

Richard Vincent, Chief Assessor

Thank you, Mike.

Mike Tarello, Vice President

Sure.

Richard Vincent, Chief Assessor

So the next presentation is the report of real estate market trends. This is the report that | had mentioned earlier. This is
a report that | did back in September of this year. | looked at sales from October 1° of 2020 to July 7" of 2021. That was
one report that | ran. The other report was from April 18 of 2021 to July 7", so | included all the valid sales in those two
time periods. What | found was on the second page of this report, | compared my findings and | broke the findings down
into several categories. The first category, the first role is all sales. That's every type of sale that was in the study.
That's residential properties, commercial properties, vacant land, and industrial properties. So what | found was in the
October 1 study, the study that started on October 1* of 2020 from that time period October 1 to July 7", on the mean
ratio - I'll back up explain a little bit how we come up with these ratios. So the last revaluation was in 2018. The
valuation date is April 1s. So the last revaluation that we did was April 1%! of 2018. That reflects the value goes up as of
that date. What happens in the meantime is the market values can change and they can go up. They can go down.
They can stay stable. So what we do is we look at the sale prices that occur after that date and compare the sale prices
to the assessed values. Once we set that April 2018 value for assessment purposes, we hold that value at the 2018
rates.

In the meantime as | said, the market is fluctuating. So we want to compare — so what I’m doing in these reports is I'm
comparing the sales that occurred after October 1 of 2020 to the 2018 assessments and that's what the ratio is. So on
this first ratio it’s 77%. That's the mean ratio for October 1*!2020. That tells us that the assessments are 77% of market
value. So the property values have increased roughly 23% since April of 2018. Compare that to the April 2021 study
and that ratio was 72%. So it's a 5% change. That's telling us that property values went up between the two studies was

Special Board of Aldermen 11-15-2021 Page 4

an increase in the values of 5%. That's just in that six month time period essentially. Then you can follow those ratios
down. So a mean ratio is a median ratios.

| broke it down below the all sales role. | have all commercial industrial sales. That’s a ratio of 93% for October 1 and
then April 1 is a ratio of 90%. That's telling us that the commercial industrial sales are 90 to 93% of market value. You
can follow those down. | won't go through every one of them but | break them down between residential sales, and
break those further down into residential condos with land, condos without land, manufactured housing, single family
homes, and two family homes. So most of the residential ratios are in the 70s - between 71 to 76% for the October 1
study. One exception is the manufactured housing. The median ratio is 58% and that's common with manufactured
housing because the sale prices are so low that any small - or relatively low - so any small fluctuation in those values
could affect the ratios in a larger amount. But you'll also see on the manufactured housing, that the mean ratio between
October 2020 and April 2021 went from 70% to 59%. That's a large increase in manufactured housing values. One
exception that you'll see in this report is the office building sales now is 1.18% - 118% and those are the same between
the October and the April reports. That’s because it was the same five sales, so it didn't have any additional sales in the
later report.

So what that's showing is that the residential values are increasing faster than commercial industrial sales. On the third
column, you have a change. That's the change between the October and the April values. That’s not from 2018 to
2021. That's just from October to April. So you'll see going down will columns, you have a 5% change, 3% change.
Most of them are right around 5 - 8%. Again, the manufacturing housing changed 11%. That was the largest change in
all the different classes. That's telling us that roughly if you project that out for an annual increase, its right around 10 to
15% generally. I'll turn it back over to Mike Tarello and he'll present a couple of reports that Vision has provided.

Alderwoman Lu
Excuse me. Are we gonna wait till the end for questions or could we ask question as we go along?

Richard Vincent, Chief Assessor

Yes, I’m sorry.

President Wilshire

Ok, you can.

Alderwoman Lu

Thank you. May | - you know, | just wonder why did you find it - I'm not sure what’s useful about looking at the three
months, you know, looking more specifically at that three months. Just curious because you've got it kind of embedded

in the first column anyway, right, because that goes through July 7 at 21 but then you took a smaller...

Richard Vincent, Chief Assessor

Took a smaller sample, which was more reflective of current values at that time.
Alderwoman Lu

So did you do it so that you could more easily extrapolate what it might be per year, you know, annualize it because you
just sort of suggested what it meant as an (inaudible)

Richard Vincent, Chief Assessor

Well yes and | wanted to see where values were between April 15! of 2021 and July of 2021. So it really gives us a good
snapshot of where our assessments are at that time in relation to current market values. The market has been really hot
and so | wanted to see if property values have been increasing rapidly and | think most people know that. So | wanted to
see where our values were at the present time.

Alderwoman Lu

Okay, thanks.

Special Board of Aldermen 11-15-2021 Page 5

Mike Tarello, Vice President

Do you want to put up the other document? You can start with the Manchester. Thank you. So we just wanted to go
over and explain a couple projects that we've just finished. Manchester, New Hampshire, and Salem, New Hampshire,
which are other sister cities of Nashua and what they went through during their revaluation, which was just completed for
this year 2021. Somewhat similar to some of the patterns that Richard was talking about for the percentage changes. If
you look in the middle lower end, Manchester as a whole increased 40% from the last revaluation of five years ago.

The single families were up 46%. The condos were up 52. The two families and three families were up a very large
number of 64 and 61. As for the apartments also 57. The vacant land went up about average and as similar to what the
pattern that's happening in Nashua so far, the commercials to go up less at 14%. Industrials went up a little bit more at
21. And then you can see the different styles of homes, ranches, split levels, bungalows, colonials, capes, so forth.
They pretty much all range except for the modern contemporaries which there are not a lot of them in the city - in the 40
to make 40 range. Some 50 or higher. There definitely are certain properties that are more desirable and certain
locations other than (inaudible). But you can see that there was large increases over the five year period.

And just to further a few other categories, the mixed use which is a combination of residential and commercial property
went up somewhere in between 2 to 22. Mobile homes went up 40% and the 4 to 8 unit families went up actually 76%.
The multi-families are in a very large demand. | think a lot of this is that they're going up for many years in Boston area
and Massachusetts area and it's saturated. For better deals coming up north and now the people are purchasing it and
it's really increasing at a higher rate. Then you can see from the sales that we brought the properties in at 100% - almost
2,000 sales that we had. We looked over a period for 4/1/2022 to a few months after 4/1/2021 so we could get a full
picture. We did see that properties were rising between 1 to 1.5% a month during that time. Thank you. Would you like
to put up the other one please Kim for Salem?

So Salem was similar in the sense that they went up 37% over a five year period with their single families going up 47%
and condos 50. Somewhat similar to Manchester. The two families were up a little bit less, but in the vicinity of the
average. Vacant land also was up 40% similar to Manchester and the commercial industrials were a lower amount.
Also similar to Manchester and the mixed use around the same as Manchester. You can see what the residential styles,
the ranches were very popular in their increase, the capes, and raised ranches. There’s a big demand for one level
properties and that was shown in the data. But also the colonials and other properties also rose quite a bit.

This showed again that for all the groups of properties, they were up approximately 100% for that same time period and
there was 631 sales for all these different groups and showing a 1 to a 1.5% increase per month over that time period.
So if anyone has any other questions that Richard or myself or our team could answer, we'd be more than willing to take
the questions for you.

Alderman Klee

Thank you, Madam President. | just | have a question. | remember, perhaps, Ms. Kleiner can answer. So | remember
when we first started talking back in 2018 about doing our evaluations and one of the things that we realized at that point
was that commercial property didn't rise as fast. So they didn’t go up the same as residential. We talked about doing
them differently, doing them more value of business versus value property. | don't know if we went down that direction
and if we did, would COVID have affected that or are we actually just looking at physical property value of the
manufacturing business?

Kim Kleiner, Administrative Services Director

So Madam Chair, I'm gonna ask Mr. Tarello who has a wealth of experience to discuss that. But as a side note, | would
say there's nothing that COVID hasn't affected. Right but Mike would you?

Mike Tarello, Vice President

Sure. | can talk about that from a moment. Yes COVID has had a negative effect on certain types of properties, maybe
a little bit more than other types of properties. It's had a strange effect because actually before COVID hurt, the
residential market was starting to level off but then what happened was with the COVID, people were still in demand to
buy a home but people the supply came off the market unexpectedly because people didn't want people in their homes
and they were concerned about the safety, which kind of drew up the market higher than what was predicted to happen.
And on the opposite effect with the commercials obviously having to shut down, restaurants, and retail, staying at home,
and working from home instead of going to the opposite, no travel, you know, to theaters and so forth.

Cc.

about matters relating to Nashua community, historic and cultural events, Nashua
organizations, businesses and individuals, including but not limited to coverage of the
following Nashua special events, subject to availability of resources, such as:

Nashua Memorial Day Parade
Fourth of July

Summer Fun

Nashua Art Walk

Nashua Veterans Day Parade
Nashua Holiday Stroll

Survey to facilitate AccessCorperation_G.c. Contractor) production of local programming
material: ys ckroker

To facilitate A¢cess” =Corpeestion production of local programming of interest to the
Nashua community, the Contractor will circulate a community media survey to
Nashua residents, organizations and community leaders to ascertain local
programming interests. Aceess-Corporation staff \ will be guided by such survey results
in prioritizing subjects for staff-produced local programming in accordance with the
above. Access_Corporation production of programming consistent with interests
identified in the Survey shall be a priority hereunder, consistent with Accss-Corporation
retaining control over programming production activities and decisions.

Importation of Non-commercial material of interest to the Nashua community:

In addition to producing programming as indicated in above; and in addition to
cablecasting of programming produced by public access producers in accordance with
the terms hereof, the es rporation may import non-local, non-commercial
programming and sponsor cablecasting of same on the public access channel, if and
when additional programming material is beneficial for programming purposes.
Although the Contractor shall retain control over its own programming decisions,
Contractor will make good faith efforts to import such non-commercial programming
that relates to issues of interest identified in the community surveys implemented
under paragraph (b) above.

E. a oo <r

1.

op plore the x cepertuacty tp

Contractor shall Purste, develop and implement non-City revenue generating activities,
which may include, but not be limited to:

a.

b.

identifying grant opportunities and applying for grant funding;

implementing traditional fund-raising activities, such as charity auctions and other special
events:

developing and holding additional, fee-based advanced training seminars and workshops;
and

promotion sponsorship and underwriting of programs consistent with underwriting
standards for noncommercial, tax exempt television stations;

charging of customary and reasonable producer and/or membership fees.

Special Board of Aldermen 11-15-2021 Page 6

Many types of properties commercial wise really were devastated during it and a lot of restaurants haven't recovered and
even now, we're slowly starting to see progress but it's really in specialized areas. Areas that have done very well
actually more than industrial type properties with the new demand for warehouse space and manufacturing space. That
area is going stronger than the commercial properties are. So there are still types of commercial properties that are
doing well. The apartments are still doing really well. So it's a mixed bag with the commercials. It's not that all of them
were, you know, affected negatively from it. Some were affected positively but when you value the commercials, it really
is more of a specialized process of looking at their income stream for leasing, their expenses, and what the capitalization
of the cost of money is in determining the values of these properties and they're really class base like office, retail,
restaurant, with manufacturing, warehouse and each one of those classes will be going in order of value. Some higher,
some level, some maybe even declining from five years ago. So it's a little bit different than what the residential is where
you can see most of the classes or townhomes were up or down or up a lot. But the difference was 5 to 7%. We've
analyzed the commercials. You're going to see that each category might have quite a difference in the evaluations.

Alderman Klee

Thank you. Having heard what was said about COVID having an effect and we know that it's affected everything and
you say that it's even affected residential because of supply and demand. You know, there's whispers, there's yelling,
there's all kinds of things that’s saying it will be a market correction, or things are going to kind of turnaround in a year,
hopefully, so just COVID but the bottom line is we're doing this evaluation where residential is high. Do we foresee
anything happening? And | know that we had a big huge market correction back in the ‘70s, and the ‘80s, and the ‘90s
we seem to kind of see these trends. Do you foresee - and | Know you don't have a crystal ball so please I'm not holding
your feet to the fire on this - but do you foresee a correction happening not long after we do this reval?

Mike Tarello, Vice President

Both the pattern so far is still increasing. So in the New Hampshire area and in the Massachusetts area where | do a lot
of evaluation, one thing I've noticed is four or five years ago the greater Boston area really increasing at a high rate.
Now they're increasing a little bit lesser rate but maybe 5 - 6% a year instead of the 10 or 12. | think because prices
have gotten so high in this market area but what's happened is the areas to the west and north of Boston and to the
south have started to get those increases from a few years ago because their values were lower. They were more
desirable for someone that could get more home even though they had to go further away from maybe where the jobs
were and so forth. What's happened is when | did the reval. in Manchester five years ago, they were only going up
maybe 5, 8% over a five year period. Then over the last five years, they've gone up 45% or 40%.

| think that it's difficult for that increase to occur because it's not as if people are making that kind of salary increases on a
yearly basis. | think what's helped a lot is that the capital for getting loans and so forth, interest rates have been
extremely low. If those stay low, they will continue to help your increases because money is cheap to borrow. But if
those types of go up and the cap rates and interest rates start to go up, that could definitely slow the trend of people
purchasing properties because most people borrow a large amount of it when they buy the property and don’t put a lot
down or cash. So | would first say that | still think things are going to probably increase over the next year or so but it
appears that it could be at a slower rate. Declining wise, | would say that that still may be a couple of years behind. But
again, | do not have a crystal ball. But in Massachusetts, we're valuing now for the 2020 values, January 1, 2021 and
we're looking at sales in 21 for next year for them and they're still going up 5 to 10 to 12% depending on the locations. |
see that now with continued sales on the reval. that we just finished in Salem and Manchester that they're still going up 1
to 1.5% a month.

Alderman Klee

Thank you

Alderwoman Lu

Thank you. Just a couple of questions. Just for clarity, Alderman Klee asked about the likelihood of a change after this
reval. — measure and list but am | right in thinking that every year the equalization step addresses fluctuations in value so
that equalization that gives us a chance to modify - okay. Is that correct? So that is one tempering - that is one way to

protect us against, you know, a decrease.

Richard Vincent, Chief Assessor

The annual equalization study tells us what our assessment ratio is to market values. So we watch that every year and
that tells us where we are. If we get too far out of range from market values, then we need to do another revaluation. In

Special Board of Aldermen 11-15-2021 Page 7

New Hampshire, we’re mandated by State Constitution and State Statute to revalue at least once every five years. So in
that five year period, we're watching the market. That's why we do that annual ratio report — the equalization study.
Again if we gets too far out of whack, then we do another revaluation within that five year timeframe. Does that answer
your question?

Alderwoman Lu

Yes and just to follow up. So the equalization ratio that we are given will allow us to be taxed less if our values have
gone down? Is that correct?

Richard Vincent, Chief Assessor

Well, no. The municipality still has to raise whatever the funds are that they need. So if the ratio goes down, it doesn't
mean that you're taxed less. What can happen is the individual burden on the total taxes can shift from property to
property or class of property to class of property. But it doesn't mean that your taxes will go up or down in total.

Alderwoman Lu
Thank you. | guess | just misunderstood that. Could | ask one last question? When you were looking at your
September - when you were going through your September report, you said that it included all valid sales. | just

wondered did you mean that it was based on what's the word — verified sales?

Richard Vincent, Chief Assessor

No. Matter of fact, I'll correct myself on that. Thank you. So we did not have all the sales validated. | did not include the
known invalid sales. So it might be a name change, a property put into a trust. | did not include those but we haven't
had the opportunity to qualify every sale, validate every sale and so it did include some sales that may not be truly valid
qualified sales.

Alderwoman Lu

Okay. And is Vision now doing the sales verification data - sales data verification?

Richard Vincent, Chief Assessor

The Assessing Department is qualifying the sales. We do the initial qualification. Vision will go out and do a field review
of the sold properties and then they do the sales analysis. As Mike had mentioned, that's one of the phases in total
process. They will do the sales analysis to determine what the 2022 assessed values will be.

Alderwoman Lu

Okay. So in the two months since you did that report, have we been able to verify those sales?

Richard Vincent, Chief Assessor

We're still working on the sales validation.

Alderwoman Lu

Okay. Thank you.

Alderman Dowd

Yes. We've been reading that the people in Manchester are really concerned about their increase in values. It looks from
your data as though the impact in Manchester would be greater than it is in Nashua per the difference in assessed value

versus sale value. So can you just address that for a couple minutes? Is Manchester worse off | guess if you want to go
that way? For values of the sales versus the assessed value on the books.

Special Board of Aldermen 11-15-2021 Page 8

Mike Tarello, Vice President

Want me to take that Richard?

Richard Vincent, Chief Assessor

Yes please.

Mike Tarello, Vice President

Well it's, again, Richard’s data is really not most of the sales that we're going to use when we do the valuation. Actually
haven't really occurred yet because some of them have but majority of them are going to happen over the next six to
nine months. So we’re really not sure what will happen. It could be that properties do level off somewhat or they go up
further. So it's hard to say what a comparison is to Manchester with Nashua until all the data is in, and verified, and then
look at the data physically, and then do our analysis like we did in Salem and Manchester. But because they're only a
year off and did appear that over the summer values was still going up, that | would think that Nashua will probably have
a similar increase as a whole to what we see in Salem and Manchester. To the degree of the variance from class to
class, it’s too early to tell right now.

Alderman Lopez

Yeah with regards to class to class | guess, a little bit concerned about the possibility of tax burden being shifted from
commercial to residential in a scenario where residential is hot and turning over and property values are going up.
Where commercial may be not so much. They’re income has been dropping and I’m not sure how that all is going to
work out exactly. But in the interest of protecting the balance of burden and ensuring that the city's expenses don't
suddenly tip on top of all the residences versus the commercial, is there any kind of legislative steps you'd recommend
that we take or any strategies if it's my concerns are valid?

President Wilshire

Director Kleiner did you want to take that one?

Kim Kleiner, Administrative Services Director

So | did for a moment here and then I'll suddenly pass it to the Chief Assessor. We understand. So there's been a lot on
the news about Manchester and about Manchester's devaluation. Certainly people are heightened but we want to
caution you, and | think that that's a very important sentence in the Chief's report that he issued on September 3" is it's
just too early to tell. So when we started the revaluation, we said it was going to be a two year process because Nashua
has over 28,000 properties to look at. We need to let Vision and the Assessing office do their work. | think there's a lot
more conversation. | think that the fact that Vision issues these bi-weekly reports, the fact that they come and they
speak quarterly to the Board of Assessors, the fact that we can come and speak here and keep you well informed, and
certainly people can always book an appointment to talk to the Chief to the extent he's available. We want to keep
people informed but we also want to make sure that we're keeping people informed with good information. We really
need to allow the experts the time to dive into these sales that haven't even occurred yet.

Richard Vincent, Chief Assessor

We need to be sure that our values are fair and equitable. So if there's more of an increase to one class of property than
the other based on the sales that we receive, we need to reflect that change. Unfortunately, some people will be
affected more than others. But we need to keep that fairness and that equity between all of the different classes of
property, the types of property, individual properties. If we don't, that will be shown clearly in the different studies that are
done - the ratio studies, the equalization reports. It will show up and we'll be right back at this again well within the five
years. It's really important to be fair and equitable with all properties. Do you have anything to add Mike?

Mike Tarello, Vice President

Well, yes, just a little bit. | do think that what we try to do is although the valuations are for one, we have the time to look
at sales a month or two after that because that's a good indicator of value. Maybe more so than sales that would have
occurred in the year before because we do start pretty much 4/1/21 and then we go all the way to 4/1/22 but we also
tried to look at sales in May of 22 and June and July. As you can see in that study, there was about a 15 month period
so that we could make sure that we balance and see right up to the point that we can what the market is just in case, you

Special Board of Aldermen 11-15-2021 Page 9

know, things may be leveling off or if they are going up more so that we're reflective because the State will look at values
from October to October. So if we're not as accurate as possible by the time they do this study if things are going up
rapidly, we could be instead of at 100%, we could be at 95 or 94 right when you're starting to get your first equalization.

So our goal is to really try to encompass that time period around 4/1 before it and after to make sure that we're accurate
of all the different classes and we have the market support to show that so that when equalization comes out in the fall,
our valuations in the spring are somewhat reflective and mostly reflective of that equalization study. That gives you a
good starting point for any change that occurs. A lot of communities as Richard said, they do it within the five years but
some do them within two or three. They're allowed to. Towns like Portsmouth, and Seabrook, and other communities -
Bedford they have been doing them possibly in the third year because their increases or their changes were dramatic.
So it was a dramatic change up or down. A smaller, quicker interim analysis can be done and allowed by the State to
further adjust things if you need. So you don't have to be locked in to these values for that time period where certain
towns and cities take advantage of that and then address something before the five year occur so you don't see a
dramatic increase like some of the cities and towns. Just a little bit of information for you.

Alderman Lopez

| just want to make sure I'm understanding. Director Kleiner is basically saying the study is still ongoing like the cakes
not done so don't mess with it. And if for example we looked at a population and said okay, we're concerned about the
burden shifting over to seniors - our elderly population and we try to do something to manage that while the study is
going, it could skew the results. And then if | understand the third comment, it's also we're not trapped with this
valuation. It's likely to be an ongoing process. So if we do start to see a sudden abrupt shift, then that would trigger
another evaluation on a smaller scale but it would be correct. Am | getting close?

Mike Tarello, Vice President

Yeah, I'd say you're close.
Alderman Lopez
Good for me.

Richard Vincent, Chief Assessor

One thing | can add in equalization reports that we get from the State that we do, we look at the different classes of
property. We can even look at different neighborhoods. I've done that myself and looked at different neighborhoods and
different types of properties like comparing cape style homes to ranch style homes, for looking at residential properties,
commercial properties. We're breaking it down into neighborhoods to see if there's a large shift in one specific type of
property compared to the others. I've seen that in the past where lakefront properties were going up tremendously while
all the surrounding properties not lakefront properties were not increasing. So there may be an instance where we need
to adjust that one type of property be it lakefront property or you have properties that decline rapidly that had in the past
certain condo complexes that became undesirable for one reason or another and they dropped rapidly. So you have to
keep, again, the fairness, and the equity, and proportionality which | didn’t mention between all these different types of
property.

So if we see overall that the equalization ratio is 90% but we have one class of property, or one neighborhood, or
whatever it is at a much different rate, then we would need to adjust that one type of property basically immediately to
bring it proportioned with all the other types of property in the community. So that may be done in between revaluations.
The other class of property may be fine in that five year period between revaluations, but we have to adjust that one
class of property because something affected that in a typical fashion.

Mike Tarello, Vice President

Yes, that's true. We've assisted communities in doing like a partial assessment, evaluating all of the data, and finding
that there was spotted areas and they've just corrected those areas. So for the next equalization, everything was pretty
much equitable and on par with the ratios.

Alderman Klee

Thank you. | guess | just want to kind of reiterate something that Alderman Lopez had said when he talked about the
conversation about exemptions and so on. | know we've had a lot of people that have stood up and said that we need to

Special Board of Aldermen 11-15-2021 Page 10

look at the elderly exemption and that's an exemption on value. Just for the public to understand that, it's not a credit.
Unlike the Veterans who get a credit, it's X amount of dollars off their taxes. Exemptions are X amount of dollars off the
value of their property and just like the last time when we had the increase, we changed the exemption to exempt more
value and thereby bringing down their tax burden. But we have to remember that when we do this, there are criteria so
there's a means test of what they have for income, and what they have for property, and so on.

But when we do this, we push the burden onto another body or group of people. If we did this too soon before we really
know what the values are, we may have to do it again or we may have to bring it back down and we tend not to do that.
Once you exempt value, you tend not to bring that down. So that was kind of the point that | was trying to make about
could this go down if we jumped the gun and try doing these elderly exemptions. We don't know what the property
values are going to change. | think we really should wait for the disabled, the blind, the elderly exemption. We should be
waiting until we actually know what the values are and | understand people say, you know, get ahead of it but getting
ahead of it could hurt another group of people. So that's what | did want to reiterate kind of what something that
Alderman Lopez had touched on and that is my fear if we go too fast.

Richard Vincent, Chief Assessor

You're correct in your statement and we will look at the exemption amounts. We will be more toward the end of the
revaluation project when we have a better idea where values will be.

Alderman Klee

Thank you.

Alderwoman Lu

When | went into the Assessing office at one point | spoke with someone about commercial valuation and this was since
| started my term. So it was within the last two years and | was told that the way they're valued is identical to the way
residential is valued. Now it sounds like something that Alderman Klee may have mentioned that we had considered
changing it and going on an income approach. So I'm not clear at this point are we using an income approach for

anything? So residential is on a rebuild one of those other approaches.

Mike Tarello, Vice President

Sales approach or if it’s brand new with the cost.
Alderwoman Lu
Right. Do any of the categories get valued using an income approach?

Mike Tarello, Vice President

Yes. Many of the categories do. The majority of them that get used for the income approach are the apartments. Mixed
use properties if they're large enough. The smaller ones with just a little bit like an office or something in the house is
more of a sales oriented but if it’s apartment with retail space or office, that's considered the income approach. Industrial
properties, and office retail, and other types of commercial properties are all looked at based on the income approach.
Also the cost and sales but | would say the stronger approach for those properties is the income approach and the
stronger approach for the residential properties is (inaudible).

Alderwoman Lu
Okay. Thank you. | may have misunderstood.

Richard Vincent, Chief Assessor

| want to add that the income approach looks at the income that the property generates not the business.
Alderwoman Lu

Correct.