Under the compromise plan, the resident tax rate would rise by about 9%, the same as previous increases. The new commercial tax rate is not yet available, but will be capped at a residential tax rate of 181.5 percent, up from the current 175 percent cap, and will be phased down over the next two years until it returns to current levels.
After increasingly contentious exchanges over the past few weeks, all parties announced Wednesday that they welcomed a compromise.
“For Boston to be a home for everyone, our residents and businesses rely on each other to thrive,” Wu said in a statement. “As we continue to work together to address the challenges facing our communities and economies, we are grateful for the strong leadership and partnership from our neighbors and across the business community to plan for our common future and economic growth. .”
Business leaders also said they were happy to move forward.
“This compromise recognizes the crisis facing the commercial real estate sector and, with an eye toward the future, will foster economic growth and development in the City of Boston and ensure a strong future for all who live and work here.” We must work together to ensure that , chief executive of real estate industry group NAIOP, one of four business groups negotiating with the city.
If passed quickly by local lawmakers and the state Legislature, the city could implement the new tax rate in a bill it presents to property owners in January. But there was already one problem in the process.
Shortly after announcing the deal Wednesday, Wu’s team submitted a bill to the City Council outlining the transition as a follow-on item, which would require unanimous support from the City Council to move directly to committee. It means something. City Councilman Ed Flynn, a sharp critic of Wu, objected, prompting cries of “Shame on you. Shame on you.” shame! “From the gallery.
Mr. Flynn declined to be interviewed, but said in a subsequent statement that he objected to the negotiations being private.
“It is critical that we uphold the transparency and accountability that Boston taxpayers deserve,” Flynn’s statement said.
On Wednesday night, City Council President Lousie Loujeune announced that the City Council would hold a special emergency meeting on Friday morning to address the issue.
Mayor Michelle Wu and business leaders have reached a compromise on plans to increase tax rates on commercial buildings. I will now head to the City Council and Beacon Hill. Lane Turner/Globe Staff
There are other procedural hurdles to overcome within a limited time frame. If the bill passes the City Council, it will be sent to the Legislature, which is not officially in session. In other words, it is relatively easy for a single lawmaker to block a bill. Boston also needs approval from state revenue officials before mailing out tax bills by January.
But Wednesday’s agreement appears to remove a major hurdle. Wu’s original tax plan passed the House of Representatives earlier this year but stalled in the Senate, where President Karen Spilka insisted on support from the business community before approving the changes. On Wednesday, she offered her blessing on the new deal.
“I am very pleased that our stakeholders have agreed to a proposal that helps residents and balances concerns about the impact on Boston businesses,” he said in a statement. “That was our goal when we began negotiations several months ago. We thank all parties for their efforts to reach a compromise.”
Boston would need the state Legislature to approve any changes because the commercial real estate tax rate is already at the maximum allowed by state law (175% of the residential tax rate). However, real estate values were falling due to vacancies in many office buildings, and commercial tax revenues were on the verge of declining, threatening the city’s main source of revenue. To avoid further shifting the tax burden to homeowners, Wu proposed increasing the top tax rate on commercial real estate.
Exactly how much interest rates will rise turns out to be a sticking point. Under the agreement announced Wednesday, commercial rates will start at 181.5% of residential rates, rising to 180% in fiscal 2026 and 178% in fiscal 2027, while residential rates will rise 9% next year. is.
Under the plan, quarterly tax payments for a single-family home valued at $838,000 in fiscal year 2024 with the owner-occupied deduction would be lower in January and April, according to an analysis of city data from the Boston Municipal Survey. This will increase from $1,380.43 to $1,628.91. Bureau. Commercial tax rates would also increase, but exactly by how much will depend on the size and assessed value of the building.
Business leaders said the compromise was a short-term solution. Jim Rooney, CEO of the Greater Boston Chamber of Commerce, suggested the city will focus as much on restraining spending as it does on tax levels in the coming years.
“Certainly when we talk about the future, fiscal discipline on the spending side needs to be part of the equation,” Rooney said.
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.
