As Boston city councilors weigh a property tax proposal from Mayor Michelle Wu, they’re wrestling with ways to maintain the viability of small businesses while also keeping high housing costs from pushing out families.
Wu in April filed a proposal that would temporarily change how the city splits up its property taxes between commercial and residential parcels. Wu’s office has said she’s seeking to protect homeowners from a “potentially dramatic increase in their property taxes due to declining commercial property value.”
Boston charges different tax rates for residential and commercial properties. Wu’s plan would temporarily shift more of that burden onto commercial property owners. The balance would gradually shift, resetting to the current system over a five-year period.
At a committee hearing Thursday on Wu’s plan, councilors said they’d heard both from homeowners burdened by the cost of living and businesses concerned about how they’d shoulder higher tax bills.
Residents who spoke in support said they worried that a major property tax hike would further drive up the price of homeownership — or get passed along to tenants by their landlords — and displace more of their neighbors.
“I grew up in my neighborhood and have lived here all of my life, and I see friends and relatives and older members of my community like myself having to move out because they just can’t afford to stay,” said Tom Cunha, chair of the Charlestown Neighborhood Council.
Cunha said a 16.5% tax hike — which the Boston Municipal Research Bureau projects could be in store for the average single-family homeowner under the current system — “scares the heck out of me.”
Symone Crawford, executive director of the Massachusetts Affordable Housing Alliance, said high property tax rates present a barrier to homeownership because banks consider the total expense when underwriting a mortgage. With interest rates and home prices both high and some households facing “humongous increases” in home insurance, she said higher taxes would be “a burden that most of us could not rebound from.”
“In addition, homeowners of color have lower homeownership rates and will be the hardest hit, so this is the worst time, we think, for a big increase in property taxes,” Crawford said.
The Boston Municipal Research Bureau issued a report this month recommending other optionsthe city could consider before moving forward with the property tax shift.
Marty Walz, the research bureau’s interim president, urged councilors to remember that the proposal’s effects would go beyond large office buildings downtown.
“This is every commercial property in the city and nearly every tenant in those commercial properties, because the way commercial leases operate is the commercial owners will pass the costs on to their tenants in nearly all leases,” she said. “So this is a cost increase to operate in the city for restaurants, retail shops, nail salons, barber shops, convenience stores and any nonprofit organization that’s a tenant in a commercial building.”
Back Bay Association President Meg Mainzer-Cohen said businesses in her neighborhood, mostly small property owners, pay about $315 million per year in commercial taxes.
She said small property owners are “really struggling right now to find tenants where the commercial market is so weak,” especially those with older buildings that lack the amenities of new construction.
Councilor Erin Murphy raised the fact that Wu’s proposal faces an uncertain future on Beacon Hill even if it does win the council’s approval.
Boston Rep. Aaron Michlewitz, who chairs the influential House Ways and Means Committee, earlier this month declined to stake out a position on the idea, citing the potential for changes during the legislative process at City Hall.
“It’s a little early to kind of make a determination on whether we’re going to be supporting it or not, until we actually see it,” Michlewitz told reporters.
To become law, the measure needs approval from the City Council, the state Legislature and Gov. Maura Healey.
Murphy on Thursday said she was “afraid that we’re going to be giving false hope.”
“My concern is if it passes here on the council, what if it doesn’t pass up at the State House?” she said. “We’re going to be back in the same situation, so I do think we have to look at all of the other options that we could wade through so we’re not then put in a time crunch if it comes back from the State House not passing.”
