Boston’s Tax Rates Set for FY21
Historic High for New Growth: $103M
Boston’s total assessed property value continued a decade long trend of growth in FY21, rising $14.5B or 8.2% from FY20 for a total of $190.7B. Spurred by additional taxable property value generated by new construction and renovations (“new growth”), Boston’s overall tax levy is expected to jump by $166.1M or 6.6% this year.
Tax Rate Changes Boston’s residential tax rate increased by $0.11, or 1.0%, from $10.56 to $10.67 for every $1,000 of assessed value. The commercial tax rate decreased by $0.37 (1.5%), from $24.92 to $24.55. The tax rate changes reflect residential property value increasing at a greater rate than business property value and the City’s application of classification, which sets different tax rates for residential and business property and maximizes the business share of the levy allowed by state law.
Sustained Growth in Value
Boston’s property value growth of $14.5B has been heavily concentrated in residential property. New mixed use development continues to drive increases in that surpass growth in business property development. Total residential property value rose by 9.8% from FY20, almost double the 5.2% increase in assessed business property value. Since FY17, residential property value growth has outpaced business property value 36.0% to 25.8%, which reflects residential new growth in the city relative to commercial new growth. The valuation date for FY21 was January 1, 2020, which captures the market activity of 2019.
Boston’s largest operating revenue is the net property tax, which accounts for 74.3% of total revenues in FY21 when accounting for the $3.7M budgeted for the overlay reserve. The property tax levy is expected to grow by $166.1M or 6.6% from FY20, from $2.5B to $2.7B. New growth, budgeted at $102.7M, plus $593,677 in amended growth, represents 62.2% of Boston’s levy increase. The standard 2.5% levy increase totals $62.7M or 37.8% of the total levy growth.
New growth is projected to increase by 3.7% from FY20 ($98.7M, not including amended growth) and is significantly above the $65M originally budgeted in FY21, mostly due to a combination of conservative revenue estimation in the adopted budget and levels of personal property development that exceeded projections. New growth in business property accounts for $62.4M or 60.8%. Personal property, which refers to movable, physical property including machinery used for business operations (such as telecommunications and utilities infrastructure), represents a disproportionate share of FY21 new growth, accounting for 22.7% of overall new growth but just 4.0% of all assessed property value ($7.6B out of $190.7B). Personal property from Eversource and National Grid contributed approximately $190M in new growth value, which accounts for $4.7M of new growth revenue in FY21. New growth in residential properties accounts for $40.2M or 39.2% of total new growth, most of which is concentrated in new residential condominium units.