Special Bd. of Aldermen — 02/27/2017 Page 2
In any event what we did was as a result from some of the impacts we think the re-evaluation could have, we
approached the DRA and we asked whether we could have additional time in order to do a full measure enlist
for the first time in 27 years to physically inspect all the properties in Nashua. We think still that if we want to
capture all the value we have particularly in the commercial properties that would be the best way to proceed.
However, they first | think KRT talked with them in general then we met with them and what they told us is
absolutely not. What they want is this thing to be done this year pursuant to as they call it “statutory and
constitutional duties” even if we were suggesting we would do the most thorough job possible. They’re not
willing to grant any extensions. You see on the screen in front of you and in your packet a copy of a letter that
they sent us. Now the letter is less blunt than they were in person where they basically said look we’ll sue you
next week if you tell us you’re not going to do this. They said they would go to the Board and Land and Tax
Appeal, seek an order, and then seek an order out of the Superior Court to order the city to proceed.
Based upon that, we engaged further in discussions with KRT who have a lot of expertise in this area who are
only one or two entities that can work with the software that we have in the assessment area and they can
explain the details of that. A highly professional firm that we have confidence that can do a good job. So we
began to talk to them about how we might proceed. | will go further through the slides and kind of explain to
you the issues we see and why we need to proceed in a very thorough and professional manner and why we
think it’s very important that we undertake the approach since we’re being forced to do this undertake the
approach that | am suggesting. The main problem being that residential values — and you'll see some of the
specifics — have gone up significantly in the last five years. We think on average that residential properties
have gone up at least 25 percent in value. The good news there is that many people their homes are worth
$50,000, $60,000, $70,000, $80,000, even $100,000 more than they were five years ago. The issue that’s
created for the city and for our residential property owners our homeowners is that commercial values may not
have gone up as much. In fact, some of the statistics I'll show you suggest definitely not. Therefore when
values are taken from lower levels to 100 percent, it will result in a shift of property taxes from commercial and
industrial to residential property owners.
To kind of understand the way the system works, we have there is the concept of an equalization ratio. This is
a pretty technical definition and you can see it on the screen that’s given by the DRA. What it really means is if
in a category of property let’s say single family homes, the average home is worth 125 percent — if the average
home is assessed at $100,000 but if that average home is actually worth $125,000 on average across a broad
category of single family homes, the equalization ratio is .8 or 80 percent meaning that the assessment is 80
percent on average of the actual fair market value which means if you’re at 80 percent if you go to 100 percent,
the assessments will on average go up 25 percent. Justa little more background. The equalization ratio is
intended to result in all properties being treated relatively the same in the sense that if a new house is built
today and it has a value of $250,000 and sells for $250,000, you will not be on the rolls at 250. It will be put on
the rolls at 80 percent of real value. It will be put on the rolls at 200 so that it is treated the same as pre-existing
houses which on average are an 80 percent of value.
Within the area of assessments, DRA creates many different categories of property - single family homes,
condos, multi-family dwellings of four units or less, apartment complexes, and then various categories of
commercial property — industrial property, shopping mall type property. So there are a number of different
categories. To simplify the situation and we have and make it easier to kind of get an overview, we have
categorized the properties in Nashua in two basic areas — residential meaning single-family homes, condos,
and small apartment buildings — you know a couple of units, and then commercial values which include
everything else — shopping malls, multi-family complexes, industrial buildings, strip malls, and everything else.
If you look at the next slide, it shows you the approximate value of the approximate assessed value of these
two basic categories of property as they currently exist. If you look to the left, the light blue column you will see
that right now on the books we have residential property valued at about $5.3 billion. That is at an equalization
ratio the ER of about 80 percent. In other words, on average these residential properties are assessed at
about 80 percent of real value. Again on the left of this first side, the dark blue column shows you the
commercial and industrial properties with all together have a total assessed value of about $3.2 billion for a
