This form is a clause regarding additional rent element of an office lease providing for tax increases. The tax increases pertain to assessments and special assessments levied, assessed or imposed upon the building and/or the land under, including any land(s) dedicated to the use of, the building, by any governmental bodies or authorities.
The Massachusetts Tax Increase Clause, also known as the Proposition 2½, is a provision in the state's constitution that restricts the amount of taxes that a city or town can collect from its residents. This clause was adopted through a ballot initiative in 1980 and has been instrumental in controlling property tax increases in the state. Under the Massachusetts Tax Increase Clause, local governments are limited in increasing their annual tax revenue by more than 2.5% of the total assessed property value of a community, plus the value of new construction. This includes both residential and commercial properties. Any attempts to exceed this limit require approval from voters in the form of a ballot question or during a public referendum. The primary aim of the Tax Increase Clause is to prevent excessive tax burdens on property owners, ensuring that property taxes remain affordable and manageable for residents. By imposing this restriction, it offers protection against skyrocketing tax rates by instilling fiscal discipline in local government spending. There are two main types of tax increases allowed under the Massachusetts Tax Increase Clause: 1. The Levy Ceiling: Cities and towns in Massachusetts are restricted in their ability to increase property taxes beyond the determined levy ceiling. Calculated based on the 2.5% annual limit, the levy ceiling sets the maximum amount of total property tax revenue a municipality can collect. However, this amount may vary depending on other factors like Proposition 2½ overrides, debt exclusions, and exclusions for certain expenses like capital projects and debt service. 2. Proposition 2½ Overrides: In certain cases, when a city or town needs additional revenue beyond the levy ceiling, they can seek voter approval through a Proposition 2½ override. This allows the community to exceed the 2.5% limit and collect more property tax revenue. Overrides can be permanent or temporary, with temporary overrides requiring renewal after a set period of time. While the Massachusetts Tax Increase Clause provides crucial protection against excessive tax increases, it does have its critics. Some argue that by placing restrictions on revenue, it limits the ability of local governments to adequately fund public services and maintain infrastructure projects. However, proponents argue that the clause encourages fiscal responsibility, prevents tax burdens from becoming overwhelming, and promotes economic growth by making the state attractive for businesses and residents alike. In summary, the Massachusetts Tax Increase Clause, also referred to as Proposition 2½, is a constitutional provision that limits property tax increases in the state. It sets a maximum annual increase of 2.5% in property tax revenue for municipalities, with specific provisions for overrides when additional revenue is necessary. This clause aims to balance the need for funding public services while protecting residents from excessive tax burdens.
