Mayor Talks Taxes: Commercial Properties Are up, but Better Times Are Ahead

Mayor Carlo DeMaria and his financial team have long said that 2018 and 2019 would be difficult years as they wait for the opening of the Encore Boston Harbor property and the $30-$40 million windfall that will come with the opening.

That difficult year has come through on commercial/industrial tax bills this year, and the mayor and his team were on hand last Thursday morning to talk to the Chamber of Commerce to talk more about what is ahead for taxes.

“We know that 2018 ended roughly for all of us,” he said. “Everyone got their tax bills and people disappointed…However, the last five years the residential taxpayers have been paying the brunt of the taxes. Now, commercial has gone up. If you own a building or commercial property, you can be paying $20,000 on a couple properties.”

While residential property taxes rose nominally this year, commercial and industrial property taxes went up significantly – buoyed by much higher values for those properties. One of the biggest drivers is the loss of industrial and commercial properties in Boston and Cambridge due to the hot residential building market. As properties disappear in the inner core of the region, many industrial and commercial businesses have looked to Everett and Chelsea – making the land worth quite a bit more than it was.

The mayor said that the tax bills – whether or not commercial values have gone up – increase because of spending. He said that spending is one issue, and the spending comes on things that he believes will make the city more attractive – and more valuable.

“I’ve identified programs to cut,” he said. “But really I can only cut people. They’re going to be out. They’ll probably think bad of me. That’s a tough decision. We can cut parks and we can cut lighting and all the things that make Everett a place people want to be. Some of you still live here and I’m trying to create a place where people want to be. If we cut the parks and lighting and other amenities people won’t want to come here.”

He said spending by the public schools, and the tax break for the power plant have also been big factors in the tax bills as well – particularly this year.

“The schools have been an issue,” he said. “They’re been overspending for the last four decades. Hopefully with this new administration we can stop some of that. We’re not using luxury buses to away games anymore.”

He said the power plant is only paying about $15 million in property taxes because of the Tax Increment Finance (TIF) agreement, an agreement that is currently the focus of litigation between the City and the company.

“The power plant is paying $15 million and I believe their value is $1.2 billion,” he said. “They’re not paying us that much. We have litigation with them and are in conversations about settlements. But paying $15 million affects us. Before this, they paid $17.9 million. Before that, it was north of the $20 million range.”

The is hope on the horizon, however, as the casino will come online in late June, and that will unlock annual payments of between $30 and $40 million. That includes the host community agreement money, as well as excise tax monies and parking lot revenues. That will be added to a budget where taxpayers are now called upon to pay for about $110 million of the total – which runs around $200 million annually.

He said he believes bills will go down, but he also said not to expect all of the windfall to be applied to tax relief.

“We will allocate some money to off-set taxes, but that really isn’t going to get us anywhere,” he said. “What will get us somewhere is to keep increasing the value of your properties…That comes with investment in things like transportation systems, lights and even flowers. It all helps a community.”

Some power plant properties could be up for re-development

In his speech to the Chamber of Commerce last week, Mayor Carlo DeMaria told the group that the power plant is looking to de-commission its old burners and try to develop them.

“They’re looking to perhaps redevelop 1-7,” he said. “They’re planning to decommission them. We want them to be developed into something nice.”

He said there are some challenges with such a project, as the old plants – which are not used anymore – are in the Designated Port Area (DPA). Getting an industrial, marine property out of the DPA is a tough stretch, and requires numerous studies and approvals by the state Coastal Zone Management (CZM). CZM has been hesitant in recent years to remove properties from the DPA, but DeMaria was confident there is a good case for these properties.

He said it would all fit into the overall plan for Lower Broadway. “Route 99 is going to be really something,” he said.

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