A Taxing Situation – October 2, 2023 City Council Meeting and Tax Rate Hearing
As expected, the property tax bills for owners of one-, two-, and three-family homes is leaping upward this year, and next year and future years are likely to see even more dramatic increases. Shockingly, the rapid expansion of new programs (and more) actually costs money, and there are limits to just how much revenue you can raise by growing more commercial property to cover those costs.
Including the likely ordination at this meeting of the zoning amendment that will allow stratospheric heights along some streets and squares with no meaningful mechanism for public input, here’s a sampler of what’s on deck this week:
TAX RATE HEARING
The Cambridge City Council will conduct a public hearing related to setting the property tax rate classification. Under the laws of the Commonwealth, the City has the option of taxing residential and commercial/industrial property at different tax rates. At this public meeting, the City Council will review tax rates/classifications proposed by the City Manager and the Board of Assessors. The votes taken will result in property tax rates that reflect the City’s property tax levy for Fiscal Year. [City Manager’s Tax Rate Letter]
The bottom line is that: the FY24 Adopted Operating Budget increased by 10.0% ($82.3 million) over the FY23 Adopted Budget, though $24.6 million of that increase represents a shift of funding for the Affordable Housing Trust from the Capital Budget to the Operating Budget. A better accounting therefore is that the FY24 Operating Budget represents an increase of $57.8 million or 7.2% over the FY23 Adopted Budget. The FY24 Budget adopted by the City Council in June 2023 projected a property tax levy increase of $48.8 million, or 9.2%, to $580.3 million in order to fund operating and capital expenditures. With approval of the recommendations in this memo, the actual FY24 tax levy required to support the FY24 Budget is $575,418,489 which is an increase of $43.9 million or 8.3% from FY23. This increase is lower than the estimated increase of 9.2% projected in June 2023 as part of the Adopted Budget, due in large part from higher than projected investment earnings, hotel motel taxes, and building permit revenue.
The property tax levy increase of 8.3% is above the FY23 increase of 7.45%. The property tax levy increase is also above the five-year (FY20-FY24) annual average increase of 7.03%, and the ten-year (FY15-FY24) annual average increase of 5.77%. The FY24 residential tax rate will be $5.92 per thousand dollars of value, subject to Department of Revenue approval. This is an increase of $0.06, or approximately 1% from FY23. The commercial tax rate will be $10.46, which is an increase of $0.08, or 0.7% from FY23. By property class, an average a single-family home will see a 8.41% tax increase, a condo will see a 6.5% decrease, a two-family will see a 4.7% increase, and a three-family will see a 5.4% increase.
FY2024 Taxes
| Residential Property Type | FY24 Median Tax (incl. CPA Surcharge) | Median $ increase |
| Condominium | $1,555 | – $ 7 |
| Single-Family | $7,674 | $ 743 |
| Two-Family | $6,713 | $ 494 |
| Three-Family | $8,246 | $ 598 |
History of changes in residential property taxes
| Median Annual Tax Increases – Cambridge | ||||
| Tax Year | condo | single-family | two-family | three-family |
| FY2009 | $ 18 | $ 40 | $ 24 | $ 72 |
| FY2010 | $ 69 | $ 119 | $ 47 | $ 41 |
| FY2011 | $ 77 | $ 306 | $ 132 | $ 154 |
| FY2012 | $ 60 | $ 269 | $ 177 | $ 215 |
| FY2013 | $ 65 | $ 159 | $ 80 | $ 85 |
| FY2014 | – $ 38 | $ 109 | $ 110 | $ 201 |
| FY2015 | $ 15 | $ 11 | $ 334 | $ 253 |
| FY2016 | – $ 18 | $ 64 | $ 101 | $ 217 |
| FY2017 | $ 11 | $ 324 | $ 237 | $ 336 |
| FY2018 | $ 76 | $ 136 | $ 33 | $ 61 |
| FY2019 | $ 21 | $ 124 | $ 292 | $ 469 |
| FY2020 | $ 43 | $ 449 | $ 366 | $ 369 |
| FY2021 | $ 3 | $ 246 | $ 131 | $ 218 |
| FY2022 | $ 33 | $ 545 | $ 301 | $ 335 |
| FY2023 | – $ 107 | $ 419 | $ 269 | $ 379 |
| FY2024 | – $ 7 | $ 743 | $ 494 | $ 598 |
| 5 year average | – $ 7 | $ 480 | $ 312 | $ 380 |
| 10 year average | $ 7 | $ 306 | $ 256 | $ 324 |
| 15 year average | $ 20 | $ 268 | $ 207 | $ 262 |
| number of properties (FY2023) | 14841 | 3910 | 2292 | 1168 |
As you can see from these figures, it’s the large number of condominiums (nearly 15,000) that enables the City to declare such things as “80% of residential taxpayers will see a reduction, no increase, or only a modest increase.” For owners of single-, two-, and three-family homes, the story is quite different – especially during the last 5 years. Indeed, this year continues the sweet deal for condo owners. This year’s median change for condo owners is a reduction of $7, while it’s increases of $743 for a single-family, $494 for a two-family, and $598 for a three-family. Next year promises to see even greater increases.
Required Votes:
• Transfer of Excess Overlay Balances. [Authorize $2,000,000 in overlay surplus/reserves to be used for reducing the FY24 tax rate.]
Order Adopted 9-0
• Classify property into the five classes allowed, and adopt a minimum residential factor of 65%.
Order Adopted 9-0
• Approve the residential exemption factor of 30% for owner occupied homes.
Order Adopted 9-0
Manager’s Agenda #5. A communication transmitted from Yi-An Huang, City Manager, relative to revisions to the Affordable Housing Overlay Petition. [CDD Memo]
Placed on File 9-0
Unfinished Business #3. An Ordinance has been received from City Council, relative to Affordable Housing Overlay (AHO) amendments. (Proposed Ordinance #2023-7) [Passed to 2nd Reading Sept 11, 2023; Amended Sept 18, 2023] [text of First Publication] [AHO-Sept12Edit]
Amended 8-1 (BA,AM,MM,PN,DS,PT,QZ,SS-Yes; DC-No) – further details to follow
Communications & Reports #4. A communication from Councillors Nolan, Carlone, and Toner transmitting alternative language to the Affordable Housing Overlay amendments. [text of communication]
Placed on File 9-0
Communications & Reports #5. A communication from Councillors Nolan, Carlone, and Toner transmitting alternative language to the Affordable Housing Overlay amendments. [text of communication]
Placed on File 9-0
I have stated from the outset that the entire concept of the original Affordable Housing Overlay as well as this next premature amendment was a flawed concept in a number of ways. First, it is based on unrealistic and unsustainable targets for deed-restricted housing units. The cost is not simply the cost of construction. The amount of real estate taxes coming from every such unit is the bare legal minimum (think ~$100 rather than $1000 or $8000 – see above) while the cost of services for each resident is far greater. In other words, each additional deed-restricted unit represents a permanent sizable cost that must be covered either by shifting that burden onto other residential taxpayers or by permitting new commercial construction or both. As one local expert has stated, “Affordable housing makes housing less affordable.” This, of course, does not mean that “affordable housing” should not be built but rather that the actual costs must be understood – and we never hear any of that discussion among city councillors (or candidates).
The second fundamental principle of the AHO has been and continues to be the prohibition of any meaningful public input from residents, including direct abutters.
The important question that should be asked is what the appropriate percentage of deed-restricted units should be. During the Envision Cambridge process, there was a basic acknowledgment of that percentage being in the neighborhood of ~15% of all housing units and that perhaps that should rise somewhat. However, in a poorly attended meeting late in the game, a target percentage of 25% of all new housing units appeared out of nowhere, and it is from that unrealistic figure that claims of our “not meeting our goals” is derived. This is economically infeasible and unsustainable from the perspective of residential property taxation (see above).
The AHO is based on the principle of restricting housing growth in order to force the sale and development of residential housing only toward the so-called nonprofit developers. Specifically, if you own property along some of the proposed “AHO corridors” (see map above) you may need to seek variances for even modest alterations to your property, but a nonprofit developer can snap up the property next door and build a structure more than three times as tall (up to 12 stories on “AHO corridors” and 15 stories in “AHO squares”) with little or no setbacks and not be subject to any of the other restrictions that have been imposed over time on other property owners. This is bad from a planning perspective. It is an assault on urban design. It is economically unsustainable. Nonetheless, this latest AHO amendment will likely have 5 or 6 votes to be ordained based purely on populist politics and a shallow understanding of urban planning and municipal finance.
Unfinished Business #2. Amendment to Chapter 2.78 of the Cambridge Code of Ordinance, entitled ”Historical Buildings and Landmarks.” (Ordinance #2022-11). [Passed to 2nd Reading as Amended, Aug 7, 2023; further Amended Sept 18, 2023; Eligible to be Ordained – no expiration] [text of proposed amendment]
Ordained 6-3 (BA,AM,MM,DS,QZ,SS-Yes; DC,PN,PT-No)
Applications & Petitions #1. A Zoning Petition has been received from Allene R. Pierson, regarding Cambridge Lodging House Zoning Change to strengthen Cambridge residential housing efforts, mitigate the disruptive impacts of short-term platform-based market rate rentals. [Signed petition] [Lodging House Petition]
Referred to Ordinance Committee & Planning Board 9-0
Order #1. That the City Manager is requested to work with CDD and the Law Department to review the proposed amendment to BEUDO regarding new buildings, and to propose adjustments, especially with regards to the building permit vs certificate of occupancy question. Councillor Zondervan, Councillor McGovern
Order Adopted 9-0
Order #2. That the City Manager is requested to direct CDD to meet with the Universities, large labs, large property developers and anyone with technical expertise regarding the proposed BEUDO amendment to get their input. Councillor Zondervan, Councillor McGovern
Order Adopted 9-0
Committee Report #4. The Ordinance Committee held a public hearing on Sept 20, 2023, to discuss potential amendments to the Building Energy Use Ordinance. [text of report]
Report Accepted, Placed on File 9-0
Order #6. That the City Manager is requested to work with all relevant departments to change the hours of off leash usage at Joan Lorentz Park to 6:00 to 10:00am to allow usage prior to typical work hours. Councillor McGovern, Councillor Simmons, Councillor Nolan, Councillor Toner
Order Adopted as Amended 9-0
Order #7. Appointment of Lauren Reznick to the Cambridge Redevelopment Authority for a five-year term. Councillor Carlone
Order Adopted 9-0
Order #8. Housing contributions from the City’s major institutions. Councillor Carlone, Mayor Siddiqui, Councillor McGovern, Councillor Nolan
Order Adopted 9-0
Order #9. That the City Council schedule a roundtable on Mon, Oct 23, 2023, from 3:00pm-5pm to receive an update from the City Manager, relevant departments, and community partners on Central Square. Mayor Siddiqui
Order Adopted 9-0
Order #12. That the City Manager is requested to work with the License Commission and other relevant departments to prepare recommendations on regulations that would ban or limit the sale of nips in Cambridge. Councillor Nolan, Councillor McGovern, Councillor Carlone
Charter Right – Toner
Order #13. That the City Manager is requested to reaffirm the City’s commitment to renovating the schoolhouse at 105 Windsor Street as a top priority following the completion of the Central Square lots study. Councillor Zondervan, Councillor Nolan
Charter Right – Simmons
Committee Report #1. The Civic Unity Committee held a public hearing on Aug 21, 2023 to discuss a proposed ”Cambridge Truth and Reconciliation Taskforce” from local reparations activists. [text of report]
Report Accepted, Placed on File 9-0
Committee Report #2. The Ordinance Committee met on Sept 12, 2023, to hold a public hearing on potential amendments to the Municipal Code for the City of Cambridge to Protect Family Inclusion and Relationship Diversity, POR 2023 #97. The Committee voted favorably to send the proposed Ordinance language as amended to the full City Council with a favorable recommendation to Pass to a 2nd Reading. [text of report]
Report Accepted, Placed on File; Ordinance Passed to 2nd Reading 9-0
Committee Report #3. A public meeting of the Cambridge City Council’s Health and Environment Committee was held on Tues, Sept 13, 2023. The call of the meeting was to discuss PO23#73. The Committee voted favorably that the City Manager direct relevant departments to work with the Health and Environment and Ordinance Chairs and report back to the City Council no later than the end of October 2023. The Committee also directed the City Manager to work with relevant departments on funding sources to incentivize the transition to electrification of lawn equipment. Note: PO23#163 and PO23#164 were adopted in City Council on Sept 11, 2023. [text of report]
Report Accepted, Placed on File 9-0
