After a prolonged dispute regarding how the city of Boston should tax residential and commercial properties in the years ahead, business leaders and city officials on Wednesday reached a compromise agreement that they plan to put before city and state lawmakers.
Mayor Michelle Wu today will file a new home-rule petition proposing that commercial properties be taxed at 181.5 percent of the rate that residences are taxed in fiscal year 2025. The shift of the tax burden will then step down over three years to 180 percent in fiscal 2026 and 178 percent in fiscal 2027.
Currently, commercial tax rates are 175 percent of residential rates, the maximum allowed by state law. Amid slumping valuations and tax revenue from office buildings, Wu has proposed increasing that tax rate in order to balance the city’s $4.6 billion budget without a sharp hike in taxes paid by homeowners and apartment landlords.
“For Boston to be a home for everyone, our residents and businesses depend on each other to thrive,” Wu said in a statement. “As we continue working together on the challenges facing our communities and economy, I’m grateful for the strong leadership and partnership from across our neighborhoods and business community to plan for our shared future and economic growth.”
The finalized deal is a substantial step back from Wu’s initial proposal, which the Massachusetts House of Representatives approved in July, that called for a maximum cap of 200 percent on commercial properties over five years. That measure stalled in the state Senate amid opposition from several key business groups, and the various parties have spent recent months negotiating behind closed doors, even as a deadline for sending out the next round of property tax bills draws near.
The deal hit a snag over the weekend. Business leaders from commercial real estate group NAIOP Massachusetts, the Greater Boston Chamber of Commerce, the Massachusetts Taxpayers Foundation, and the Boston Municipal Research Bureau on Friday submitted their “final offer” of 181.5 percent of a commercial tax cap. A few hours later, the Wu administration proffered a 182 percent cap to the business consortium and the Boston Senate delegation. The gap equated to a $21 difference for single-family homeowners and $319 for a business property valued at $5 million.
But business leaders said Wednesday they are happy to be moving forward now.
“This compromise acknowledges the crisis facing the commercial real estate sector, and as we look ahead we must work together to encourage economic growth and development in the City of Boston to ensure a strong future for all who live and work here,” NAIOP chief executive Tamara Small said.
This is a developing story, check back for more soon.
Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her @bycathcarlock. Niki Griswold can be reached at niki.griswold@globe.com. Follow her @nikigriswold.
