The Data Scientist: Does Lost Lake Pay 40% More in Taxes?
If you want to live in the town of Groton with access to water, then the Lost Lake neighborhood is probably your best if not only option. Unfortunately the unique way the property in this neighborhood was developed over the years brings with it a number of challenges: drinking water access, sewage disposal, invasive weed treatment and fire protection. This year at town meeting, as in many years past, voters were asked to consider providing additional services to this area of town. This year town meeting voted to install a $2.5M fire protection system which to date has been available only in areas within the town's water district.
One of the arguments that often comes-up in these discussions is that "Lost Lake pays more in taxes" which is meant to justify, partially at least, additional outlays by the town for services in this area. This article looks at the numbers behind this assertion. It does not address the merits of any of these proposals nor does it delve into the legal definition of property tax which is a "wealth tax" based solely on the market value of an individual's property and not on the consumption of services.
Post proposition 2.5 property values are required to be maintained by the town assessor to reflect closely the market value of real property. This means that assessed property values in Massachusetts are often more accurate than you would see in surrounding states such that you can safely assume that assessed values, on average, are reasonably close to the actual market value of the property.
Method
Although we are familiar with many different ways to structure a study of this nature, the public assessor site(s) tend to be very limited in the sense that they don't include a facility to extract data in bulk-each property has to be transcribed individually into a database for analysis. Therefore, we decided to keep it simple and look at a few sample neighborhoods and average the values across a large sample of homes on a single street in that neighborhood. Since assessments are being actively maintained, the numbers reflect consistency between adjacent properties, so we feel this simple methodology is valid to reach a conclusion on this question.
Sample Neighborhoods
We looked at a cross section of neighborhoods in Groton plus a lake-front neighborhood in Ayer which is similar to Lost Lake. These included:
- Birchwood: Lost Lake close to the water (many homes with access to the water.
- Pine Trail: Lost Lake a block or so from the water but with similar homes.
- Nashua Road: traditional Groton 2 Acre lots, modest houses, vintage 1960
- Overlook Drive: very new development with large homes; nice landscaping.
- Oak Ridge Drive: Ayer lakeside neighborhood with homes newer than Lost Lake.
The Numbers
Looking at the average values of land and livable building space per square foot we see:
| Neighborhood | Building/sq. ft. | Land/sq. ft. | |
|---|---|---|---|
| Birchwood | $75.54 | $15.55 | |
| Pine Trail | $94.45 | $6.77 | |
| Nashua Road | $84.63 | $1.76 | |
| Overlook Drive | $106.47 | $4.00 | |
| Oak Ridge Drive | $100.17 | $6.23 |
From this table it appears that the building values appear to be tied more to the size and age of the property than to waterfront access. In fact the homes in Lost Lake have the lowest value per square foot. However, when you look at land value assessments the situation is reversed and the land values in Lost Lake look to be quite a bit higher than those in other neighborhoods.
Another aspect would be to look at the average cost of actually residing in a particular neighborhood. To put it another way, "paying more in taxes" should include the total cost of both land and house per address. Looking at the average total cost we get a different picture.
| Neighborhood | Avg. Total Value Per Address |
|---|---|
| Birchwood | $289,258 |
| Pine Trail | $329,520 |
| Nashua Road | $332,181 |
| Overlook Drive | $515,243 |
| Oak Ridge Drive (Ayer) | $263,920 |
From this table we see that, in fact, living in Lost Lake is the least costly of the four Groton neighborhoods in terms of property taxes, although residing in Ayer is a relative bargain compared to Groton. It is hardly surprising but families living in large, new houses pay quite a bit more taxes since their property is more highly valued by the market.
Conclusion
It appears to us that the assertion that the Lost Lake neighborhood "pays more in taxes" is not accurate. Although the land costs are extremely high in Lost Lake, the actual tax bill per address is low. There may be other ways to look at and rearrange these numbers, and different neighborhoods to examine, but the average tax bill per address is conclusive, in our opinion, and aligns with common sense.
There may be other reasons for the town to invest in services for the Lost Lake area but residents there paying more in taxes is not one of them.
Links to the information sources for the story are provided below
