The Cambridge City Council pushed pause Monday on a potential 22 percent hike in the commercial property tax rate, as city officials tried to ease concerns about the jump.
Councillor Paul Toner, who is not running for reelection, used his “charter right” to stop discussion, saying it would give the city “another two weeks for us to be able to let people settle down, absorb the information. Maybe the staff has a Zoom call with the business associations to answer their questions.” The decision is delayed until Oct. 20.
City manager Yi-An Huang welcomed the pause, acknowledging “a need to have engagement especially with the businesses that are saying, ‘Oh, this is a really high rate.’”
Huang, other staff and councillors had calming messages for commercial property owners about the proposed rate, which would shift to $14.07 from $11.52 per thousand dollars of assessed value. It was noted that total commercial property values fell by 11.5 percent based on market activity in 2024, which is studied to set property assessments for the current 2026 fiscal year. In contrast, total residential property values rose by 2.6 percent.
Values also varied across industry sectors, said Claire Spinner, assistant city manager for fiscal affairs. Laboratory space saw significant drops, while hotels did not, she said. That means an average increase in tax payments of 8 percent. “We are going to raise 8 percent more taxes, but how it will be felt across the class will be different,” Spinner said. She acknowledged some taxpayers “may indeed feel a 22 percent increase – if their value stayed exactly the same as last year and the rate increased by 22 percent.”
Restaurants and hotels will feel more of the brunt of the higher tax rate, retail somewhat less so, said Gayle Willett, the city’s director of assessment. Commercial property owners carry roughly two-thirds of Cambridge’s tax levy burden.
A staff memo for Monday’s hearing noted that even with a 22 percent increase, rates for Cambridge property owners – commercial and residential – remain the lowest in the area. Cambridge’s proposed $14.07 rate is below Brookline’s existing $16.56 rate, Newton’s $18.34, Somerville’s $18.92, Watertown’s $22.83 and Boston’s $25.96. Rates in those communities are likely to rise this year, staff noted.
City officials justified the proposed rate hikes by noting that it is contending with an economic downturn and federal hostility, so must both tighten its spending and lock down revenue. Cambridge’s $991.2 million budget, approved in June, was only 3.7 percent higher than last year’s; not long ago, annually there were “budget growth rates of 7, 8, 9 percent,” Huang said.
There’s a disconnect between a budget that rises only 3.7 percent and the higher property tax rate increases, Toner said, because the city has “to pay the bills for all the things we’ve accumulated over the years,” from universal prekindergarten to weekly recycling pickups.
Business struggles
The first public speaker on Monday was Denise Jillson, executive director of the Harvard Square Business Association, who called for the vote to be postponed. On Tuesday, though, she seemed resigned to the rate increase. “I don’t think they can reconsider it,” Jillson said. “But I’m grateful to have it to chew on for a couple of weeks, to talk about what this really means.” She said the hearing was “a wakeup call.”
Stuart Rothman of First Cambridge Realty would like to see conversations held with business owners and tenants. Most of his commercial tenants have pass-through leases that put them on the hook for increased property costs. “I’m not saying [the rate increase is] unreasonable or reasonable, but there should be a conversation about it,” he said.
Some businesses may leave, warned Ted Galante, an architect based in Cambridge for 28 years. Galante’s Architecture Studio leases space, and said even if Cambridge tax rates are low compared with its neighbors, a square foot of office space in Harvard Square is $60, versus $35 in Boston’s Post Office Square. He knows of a firm that just signed a lease that moves it out of Cambridge, and said he too was “very seriously considering a move.”
In her public comments Monday, Jillson warned that while the rate might seem to affect mainly “large, possibly faceless, corporate property owners,” it would still wind up hurting small family firms and businesses that were struggling.
The next day Jillson said she follows the council fairly closely but still was taken by surprise by the arrival of the tax rate hearing. “There’s so much coming at us all the time now,” Jillson said. “We’re overwhelmed.”
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When businesses and individuals experience a slowdown, we tighten our belts. When the city experiences a slowdown, they tighten our belts too.
How about a lower commercial tax increase overall, but an increase of 50% for empty properties? They need to increase the pressure on commercial property landlords with vacant properties.
Could the article be updated to make clear if these numbers include inflation or do not? For example, if the budget growth of 3.7% does not include inflation, then the budget growth is only a little bit above the inflation rate. Thanks.
Dramatically increasing the commercial real estate tax rate is foolhardy when large commercial firms, small businesses and small business landlords are struggling. These businesses employ tens of thousands of Cambridge residents and enrich our day to day lives. Large firms are downsizing and and laying off worker. Small retail, restaurant and offices which make up over 70% of local businesses and are experiencing higher costs and lower net revenues while landlords of smaller businesses are likely to pass on higher property taxes to tenants. Empty buildings and storefronts across the city prove the challenges businesses face. While commercial property taxes here are lower than in other communities, rental rates are much higher, so raising real estate taxes is likely to tip the scales toward relocation elsewhere or simply closing. Dwindling commercial activity would decrease tax revenue and put many more people out of work.
Dramatically increasing the commercial real estate tax rate is foolhardy when large commercial firms, small businesses and small business landlords are struggling. These businesses employ tens of thousands of Cambridge residents and enrich our day to day lives. Large firms are downsizing and and laying off workers. Small retail, restaurant and offices which make up over 70% of local businesses and are experiencing higher costs and lower net revenues while landlords of smaller businesses are likely to pass on higher property taxes to tenants. Empty buildings and storefronts across the city prove the challenges businesses face. While commercial property taxes here are lower than in other communities, rental rates are much higher, so raising real estate taxes is likely to tip the scales toward relocation elsewhere or simply closing. Dwindling commercial activity would decrease tax revenue and put many more people out of work.
The problem with Cambridge is that it spending too much money on superfluous things. Once again, go no further than the City of Cambridge Daily Update to see some of the “nonsense.”
Cambridge has continued to be a spendthrift city during the last 20 years, believing that the biotech boom would last forever.
The large increase on the commercial tax rate is only one manifestation of the problem. As importantly, the increase in the personal property tax rate has led to a situation where middle class (economically) homeowners have been forced out of the city. House rich and cash poor.
Councilors just don’t realize what their profligate spending is doing to this city. This has got to stop. If not, the consequences will continue to push out small businesses and middle class homeowners.