Salem council sets FY26 residential factor, limits special exemptions

The Salem City Council on Dec. 4 adopted a minimum residential factor of 0.861738 for fiscal year 2026, deciding against the open-space discount, a residential exemption and the small-commercial exemption. The vote implements the Assessing Department’s recommendation following a full revaluation certified by the Massachusetts Department of Revenue.

The mayor told the council the vote sets how the city will pay for services outlined in the FY26 budget, noting enterprise receipts and new-growth revenue that helped limit property-tax needs. Steven Cortez, Salem’s director of assessing, said the revaluation—based on calendar-2024 arms-length sales and certified by the DOR—shows overall assessed value rose roughly $847,024,984 (about 9%), with the city’s taxable value at about $10,129,379,012.

Cortez recommended an MRF of 0.861738 (the agenda listed this as 86.1738% for clarity) and explained the alternatives the council was required to consider: an open-space discount, a residential exemption and a small-commercial exemption. He told the council the recommended shift would lower the residential tax rate to about $10.78 per $1,000 while changing the commercial/industrial/personal-property rate to about $21.89 per $1,000.

The presentation showed class-by-class valuation changes (single-family +11.7%, two-family +11.9%, condos +5.8%, apartments 4+ +11.1%) and $119,136,621 in new-growth value, producing roughly $1.83 million in allowable tax dollars. Cortez said spreadsheet modeling estimates the median single-family tax bill would rise by about $338 over the prior year under the recommended shift.

Councilors pressed staff on how new growth and TIFs are captured and on the city’s excess levy capacity (about $8.49 million under current calculations). Cortez and a finance official explained that growth is captured as projects phase and that the city taps excess capacity “when needed” for major projects or obligations.

On roll call the council adopted the residential factor (9–0 recorded, 2 absent). Separately, motions not to adopt the open-space discount, the residential exemption and the small-commercial exemption were carried, with staff and the Board of Assessors noting the limited commercial base and expected distributional impacts.

The council closed the hearing after receiving public comment earlier in the meeting and moved on to other items. The adopted classification and the council’s choices on exemptions will be used to compute the FY26 tax rates and the quarterly tax bills mailed next year.