Boston Council Member Pitches Tax Hike on Luxury Apartments

Another controversial tax proposal in Boston is riling up local developers.

Boston City Council member Brian Worrell released a plan proposing a hike on the tax rate for large and luxury apartment buildings, Boston.com reported. The higher tax bill for owners of buildings with at least 30 units would support lowering the tax bill for typical homeowners and small landlords by almost $1,000, according to the plan.

The applicable buildings would be reclassified as commercial properties. There would be a 10 percent exemption for certain properties and another 50 percent exemption for buildings that meet an affordable unit threshold.

The increased tax rate would be phased in over a three-year period. Additionally, the standard tax agreement for new construction would be slashed in half to enable more flexibility in tax breaks.

“This is a pro-growth and pro-people [proposal],” Worrell told the publication. The City Council is expected to take a look at the measure this week.

Several advocacy groups support the proposal as a way to help residents keep their homes as costs skyrocket. Developers see it differently, claiming it would double the tax rate for multifamily owners and drive projects out of the city limits.

“This would be extremely bad for a city that is facing a housing crisis right now,” said Tamara Small, chief executive officer of the commercial real estate development association NAIOP Massachusetts.

There are hangups. For one, Worrell did not give a definition for “luxury,” though he suggested amenities such as a doorman or a pool could be used.

More critically, the proposal needs approval beyond City Council due to Massachusetts’ property-tax rules, an issue Mayor Michelle Wu failed to overcome in previous efforts to upend changes to the city’s taxing policies. The city would need to pass a home-rule petition and win support from state legislators.

The proposal comes as the city approaches a $1.7 billion budget shortfall tied in part to the struggling office market, according to the Boston Policy Institute.

— Holden Walter-Warner