A Boston city councilor’s push to hike property taxes for large apartment buildings to provide relief to homeowners and small landlords drew criticism from some of his colleagues, one of whom said it would be a “gut punch” to the business community.
Council Vice President Brian Worrell introduced a tax classification home rule petition Wednesday that would more than double the tax rate on large apartment buildings, by reclassifying residential buildings with 30 units or more as commercial properties — which, by way of the city’s tax shift, pay a higher rate.
“Homeowners and small landlords are carrying a heavier load, while large apartment owners often pay less taxes per unit, sometimes far less — same city, same services, but the people with less are paying more,” Worrell said at the day’s Council meeting. “That’s exactly what this proposal sets out to fix: a tax code that’s become unbalanced.”
Worrell said his proposal would modernize the city’s tax code in a way that would lower the yearly tax bill for the average Boston homeowner and small landlord by nearly $1,000. It was met with a tepid response by his colleagues, however, who cited its potential to further burden a struggling commercial sector.
His plan comes as the city reportedly heads toward a $1.7 billion budgetary shortfall in the next five years, as empty office buildings have commercial values plummeting.
Councilor Sharon Durkan expressed concerns that the proposed legislation would disincentivize housing production, at a time when “rents continue to rise, pushing residents out of our city, while construction and permitting are at historic lows.”
“We urgently need to build more housing, not create barriers that will make it harder to do so,” Durkan said. “It feels like this proposal is a gut punch at the wrong time … It’s a gut punch to the business community.”
Durkan said she was also concerned about commercial property owners passing the tax hike onto their tenants, by way of higher rents.
Similar concerns were raised by critics of a prior mayoral home rule petition that sought to shift more of the city’s tax burden onto commercial properties to provide relief to homeowners. Durkan, an ally of the mayor, supported that petition, which has stalled at the State House despite being passed by the City Council three times.
Unlike Mayor Michelle Wu’s tax classification push, which sought to tax commercial properties beyond the state’s 175% limit for a three-year period — and thereby lower the tax burden for residential properties — Worrell’s proposal seeks to reclassify large apartment buildings as commercial properties.
Commercial properties pay a higher tax rate than residential properties in Boston, which traditionally opts to shift 175% of the tax burden from homeowners to commercial properties each year.
Residential tax rates were approved at $11.58 per $1,000 of assessed benefit last year by the Council, for example, while commercial rates were set at $25.96 per $1,000 of assessed benefit.
By reclassifying apartment buildings with 30 units or more from residential to commercial properties, as Worrell’s proposal seeks to do, tax rates for those property owners would more than double.
Worrell said his office’s research has concluded that less than 30% of the city’s housing inventory consists of apartment buildings with 30 units or more. He also said that his proposal is not a new concept, and that other cities, like New York, Washington, D.C. and Providence have taken a similar tiered approach to taxes.
“This isn’t about punishing anyone,” Worrell said. “It’s about aligning the code with how properties actually work, delivering relief where people need it most, and keeping our housing pipeline moving.”
His proposal would also establish a 10% housing exemption to all commercial properties and create an affordable housing exemption for large apartment buildings that Worrell says would lead to lower tax bills.
Worrell said any property tax increases for corporate owners of large apartment buildings would be phased in over three years. He said the city would be able to issue standard tax agreements for new construction more freely under his proposal, which would lower the length of those agreements from 15 to seven years.
Only four councilors — Liz Breadon, Ruthzee Louijeune, Julia Mejia, and Benjamin Weber — signed onto his home rule petition, which was referred to the Council’s Committee on Government Operations for further discussion. Seven votes would be needed to pass the legislation.
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