PEABODY — Peabody homeowners may be facing a hefty property tax hike after the City Council sets the new tax rate Thursday night.
An early projection from city officials during budget talks in June pegged the expected increase at $189 for the owner of an average valued home. And once property taxes are dealt with, Mayor Ted Bettencourt will ask the council to consider raising water and sewer rates to help pay for recent infrastructure upgrades.
Bettencourt attributed $115 of the projected property tax hike to the city’s $3 million assessment for the new regional vocational school in Danvers. The anticipated burden on taxpayers that will eventually come due for Peabody’s new middle school is expected to be a similar amount.
Bettencourt and Finance Director Patti Schaffer cautioned that the early tax estimate was dependent on the final outcome for revenues in the fiscal year, property values, certified new tax growth and the classification factor ultimately adopted for businesses.
According to information submitted to the City Council, Bettencourt is pledging to offset the tax burden with $1 million in city reserves.
The tax classification factor employs a split tax rate for residential and commercial properties. The current residential rate is $12.40 per thousand dollars of valuation, while the commercial rate is $24.46.
Assessors also use the average value for owner-occupied homes — condos, one-, two- and three-families — in tax calculations as opposed to just single-family homes. Last year’s average value was $287,700 for an average bill of $3,567.
Assistant Assessor Eric Henderson told The Salem News in a recent interview that the presentation Thursday night will show the total value of Peabody real estate has increased, as of Jan. 1, 2014. Earlier this year, the Board of Assessors projected a 10 percent uptick in home values and a 5 percent increase in commercial properties.
The tax classification hearing is Thursday at 7 p.m. in Wiggin Auditorium at City Hall.
You can reach John Castelluccio at 978-338-2527, firstname.lastname@example.org or via Twitter at @SNjcastelluccio.