The fall ritual of approving the city’s property tax rate collided Monday with the fast-approaching November election and ongoing debate over the city’s affordable housing crisis, dragging out an inevitable, unanimous approval of a 3.8 percent property tax levy increase and subsequent contribution of municipal money meant to keep that increase from affecting most property-owning residents.

The approved contribution means 87 percent of residential property owners will see a reduction, no change or an increase of less than $100 in their tax bill for fiscal year 2016. That accounts for 18,882 of the city’s 21,704 parcels, at least some of whom are caught in the bind of being house rich but cash poor – and therefore in need of a lowered tax rate to stay residents.

The aid was accomplished by the City Council approving city manager advice to apply $13.5 million to that effort, including $11.5 million from the city’s undesignated fund balance (what many refer to as “free cash,” or the city’s rainy-day fund). While the coming fiscal year’s property tax levy is $354.4 million, an increase of $13 million from the current fiscal year, the city also continued its several-year streak of beating the previous year’s free cash record: Net certified free cash in the coming fiscal year is $175.9 million, an increase of $15.4 million. (Through a financial quirk, it will be $192.7 million until various state mitigation funds are taken out next month. Even without the short-term bump, the undesignated fund balance figure – pumped up by such things as building permits, motor vehicle excise taxes and motel/hotel taxes – continues a climb uninterrupted since 2009, said Louis Depasquale, assistant city manager for fiscal affairs.)

Rich and poor

In addition to the riches it has banked, the city maintains a triple-A bond rating and is maintaining a vigorous school construction plan – three campuses in nine years – even while adding 25 full-time positions to the payroll, all despite a dramatic, 60 percent decrease in state aid over the past decade.

“We have reached an incredible midpoint where we are able to do it all,” City Manager Richard C. Rossi said.

But the loss of rent control in 1994 and the ensuing and unrelenting development boom has caused a struggle for all but the wealthiest to stay living in the city, inspiring a debate Monday about whether there were better ways to use the $13.5 million meant to keep property taxes low.

Overlapping tax, election season

Nadeem Mazen and Dennis Carlone campaigning for City Council seats in 2013.

If the proposed property tax rate gets its rote acceptance by the state Department of Revenue, there will be significantly more property owners seeing a decrease in taxes in the next fiscal year – to 62.5 percent of parcel owners from 42.4 percent last year.

Resident Walter McDonald said during public comment that he felt the city should increase property taxes by 25 cents for every $1,000 of assessed value, meaning owners of a $400,000 house would pay another $100 a year, a 3.1 percent rise that would net millions in a single year that could go into an affordable-housing fund.

Councillors Dennis Carlone and Nadeem Mazen renewed a request made during the same process last year: to explore redirecting money toward housing for those who can’t afford Cambridge without the help.

Unlike last year, though, this vote was taken a little more than a month from Election Day, and their explorations incited Mayor David Maher and councillor Tim Toomey to suddenly accuse them of playing politics. A similar dynamic played out later in the four-hour meeting, when the council voted on “linkage” fees to be assessed per square foot of big development.

Carlone and Mazen are the only members of the nine-member council who aren’t part of an all-incumbent “Unity Slate” on the Nov. 3 ballot.

Seven members of the City Council have formed a Unity Slate for the upcoming election. The slate leaves out Carlone and Mazen. (Photo: Unity Slate)

Exploring possibilities

Carlone felt more money could be applied directly to the cause of affordable housing, as it was to easing residential property tax rates. “I don’t understand why we’re not trying to do more. We have the capacity to at least raise this up as an issue. We have dramatic need” and the city is in a “golden age” that will eventually end, he said. “It’s like having money in the bank and not dealing with [a problem]. I’ll admit I don’t get it. I understand the prudence and all the great work here. We’re doing more than anybody else, but guess what, we have much more capacity than anybody else … It’s like we’re closing our eyes.”

“I wouldn’t say we’re closing our eyes,” Rossi responded. “Our problem is getting in the market. I don’t think overpaying for every parcel that comes on the market is a good long-term strategy. [If we do that] and something happens, it’s going to be a real strain on the city. You have to have an intelligent plan.”

Mazen explored a different path, suggesting the city institute a progressive taxes that targeted aid better by taking into account which property owners didn’t need city tax relief. But Robert Reardon, director of the city’s Assessing Department, said it wasn’t something the city could do on its own, and conversations with state officials didn’t make the reform look likely anytime soon. Department of Revenue officials say a progressive tax option would have to be done statewide, and “the conversations are not good. We’re one of the few communities that want to do this.”

“Overpoliticizing these issues”

The conversations seemed to anger Maher, who accused Carlone and Mazen as unfairly “coming in at the ninth hour and overpoliticizing these issues” and told the city manager, Depasquale and Reardon that “what you may be hearing from one or two people is not necessarily what this body feels.”

“This is a diversity, we represent different people in the city and we have different constituencies, but, boy, is my constituency different than some of what I’ve heard tonight. Because they are the people who are struggling to stay in their houses that they bought for $15,000, $17,000, $20,000 or $25,000, many of them have been retired for 25, 30 years and they have nothing. That is affordable housing right there. How does a 90- or 85-year-old person stay in the homes they want to stay in, that they own, and they’re struggling?”

“To sit here and have this conversation, which to me sounds like we have something to feel guilty about, is to me ludicrous,” Maher said.

“Every single time we have had to take tough, tough stands in this chamber and had to perhaps grant an upzoning, who has voted for that and who has voted against that?” Maher said, citing the promise of 50 affordable units coming as part of the Mass+Main tower on the outskirts of Central Square. Carlone and Mazen voted against the tower at the time, complaining that the developer and city stinted on design work and studying the effect of the tower on the surrounding community. Mazen said then that he feared the luxury units in Mass+Main would raise property values nearby, pushing out more lower-income residents than it housed in its 50 affordable units. (When Mazen cited voting against Mass+Main because he felt promised amenities had disappeared in the final proposal, Maher said he was engaging in “revisionist history.”)

The 14 requests that made up the city’s tax rate proposal clearly had the support of the entire council, Mazen said, and “what is confusing is the assertion that this is a political conversation.”

Carlone was similarly surprised by Maher’s outburst over councillors asking about alternate ways to give relief to city residents – several members of the council had similar pre-vote proposals almost exactly a year ago during the tax rate process, including Maher – and said the idea that he couldn’t bring up such questions was “silly.”