Tax burden still on homeowners
SAUGUS - Route 1 accounts for about 85 percent of the commercial tax base in Saugus, but the strip is not paved in gold for the cash-strapped town.
Commercial property taxes in Saugus account for 30 percent of tax revenue collected annually, placing the bulk of the burden on residential homeowners. In fiscal 2007, for example, Saugus collected $12 million in commercial property tax revenue and $30 million from homeowners, town officials said.
"Route 1 is very valuable to us," said Town Manager Andrew Bisignani. "But it doesn't generate unlimited tax revenues for us."
A cash crunch has forced Saugus to make steady rounds of cuts in school, police, fire, and library budgets. Tax increases, including a $5.2 million Proposition 2 1/2 override proposal last spring, are regularly rejected at the ballot box in Saugus, where the average residential tax bill is $3,227.
Route 1, home to dozens of retailers and restaurants, eases the tax burden on local homeowners, Bisignani said. "[Residential] tax bills would be much higher without it."
The building boom now underway also will generate one-time revenue for building, plumbing, electrical, and other permits. The Shops at Saugus, a new center being built at the old Caruso Diplomat, should generate about $400,000 in permit fees, Bisignani said.
Still, Saugus officials are often asked: "If you have Route 1, why do you have budget problems?"
Square One Mall paid $2.9 million last year, making it the town's top taxpayer. Saugus has a $18.43 tax rate per $1,000 valuation for commercial payers, and $8.28 per $1,000 valuation for homeowners.
Commercial property values are tricky to determine. Unlike a home, a shopping mall isn't sold often, making it nearly impossible to compare it with another property sale. Instead, assessors rely on other factors, including rents, vacancy rates, income, and expenses, to determine a value. "We generally find the [property owners] on Route 1 to be very good about giving us information," said Ronald Keohan, the town assessor.
Acres of parking lots, which are necessary for businesses, also don't generate as much tax revenue as a restaurant or retail building, Keohan noted.
Square One Mall currently is valued at $126 million. Walgreens, which opened a store last year near Walnut Street, is valued at $6 million. Lowe's Home Improvement Center, which is just off Route 1 at the site of the old Palace nightclub on Route 99, is valued at $15 million, according to the assessor's office.
"People look at all the shopping plazas, and because of the building going on, and think, 'This is incredible,' " Keohan said. "But it's not what you think it is. . . . Saugus is mostly a residential community."
