City Council - Ways and Means Committee Hearing on Docket #0586

Chair Benjamin Weber convened the hearing on Docket #0586, an order to review discrepancies between market value and tax assessed value for residential properties in the City of Boston and evaluate municipal tax assessment practices, sponsored by Councilors Miniard Culpepper, Erin Murphy, and Brian Worrell.

• Councilor Miniard Culpepper highlighted data indicating that the 20 lowest-priced single-family homes sold were assessed at 95.5% to 105% of their sale prices between 2022 and 2024, whereas the 20 highest-priced sales were assessed at approximately 68% to 80% of sale prices, citing specific luxury properties assessed at fractions of their sale figures.
• Councilor Edward Flynn voiced concern over the direct impact of double-digit property tax increases—noting jumps of 10% and 13% over the prior two years—on working-class families and seniors on fixed incomes.
• Councilor John Fitzgerald expressed the need for transparency in assessing methodologies to explain valuation adjustments to constituents rather than framing assessments as "more of an art than a science."
• Chair Benjamin Weber discussed concepts of vertical equity, regressivity, and progressivity, noting prior findings that while gross assessments may show slight regressivity, the city's residential exemption provides a flat deduction that creates a progressive net tax outcome.

Interim Commissioner of Assessing Henlon Wong testified on behalf of the Assessing Department, detailing the city's Computer-Assisted Mass Appraisal (CAMA) system and linear regression models.

• Valuation Scope and Revenue: The department values over 190,000 parcels across Boston with an aggregate valuation exceeding $295 billion, generating more than $3.5 billion in property tax revenue for Fiscal Year 2026.
• Statutory Compliance and Mass Appraisal: Under state Department of Revenue (DOR) Bureau of Local Assessment guidelines, properties are inspected at least once every 10 years, with 470,000 inspections performed in the last decade. Assessed values for FY2026 were based on calendar year 2024 arm's-length market sales, using multiple linear regression across distinct assessing districts.
• Equity Benchmarks: The city regularly benchmarks data using the Lincoln Institute of Land Policy equity tools and DOR standards, passing all median ratio, Coefficient of Dispersion (COD), and Price-Related Differential (PRD) tests.
• Tax Relief Measures: The city applies the maximum allowable commercial-to-residential tax rate shift (lowering residential rates from $15.40 to $12.40 per thousand) and a residential exemption providing a flat reduction of $4,353.74 for qualifying owner-occupants in FY2026.
• Disparity Inquiries: Councilor Culpepper questioned significant gaps in high-end sales versus assessments, including properties selling for $15 million to $21 million that were assessed at much lower values. Commissioner Wong responded that some sales occurred in calendar year 2025 outside the statutory FY2026 baseline and emphasized that mass appraisal regression models intentionally filter out singular high-end outliers.
• Council Inquiries: Councilor Brian Worrell arrived during the hearing and questioned the application of the income approach versus the sales approach for large multi-unit residential buildings. Commissioner Wong agreed to provide Assessment-to-Sale Ratios (ASR) for luxury sales over $2 million and breakdown data by assessment district.

Members of the public provided testimony regarding city assessments and tax burdens:

• A member of the public residing in Savin Hill stated that multi-family apartment buildings are undervalued and recommended establishing a separate tax assessment tier for three-to-six-unit properties to ensure commercial investors pay their fair share.
• A member of the public and former city councilor stated that escalating assessments—noting their personal property assessment rose by $200,000 over three years—have inflated monthly mortgage and insurance costs, placing an unmanageable burden on middle-class homeowners.
• A member of the public and former Assessing Department employee testified regarding observed operational practices between 2018 and 2019, stating that employees were discouraged from pursuing abatements and that represented taxpayers appeared to receive differing levels of review.

The committee heard analysis from Chris Lehman, Board Member of the Small Property Owners Association (SPOA), and Associate Professor Ruchi Singh of the University of Georgia.

• Small Property Owners Association Testimony: Chris Lehman stated that the city's appraisal models suffer from systemic bias by under-assessing luxury homes at 68% to 80% of market value while assessing lower-end single-family homes and triple-deckers at 99% to 113%. He calculated that under-assessing the top 20 luxury homes resulted in an untaxed valuation base of $83 million in FY2026. Lehman further argued that the residential exemption shifts the property tax burden disproportionately onto rental housing, which is ultimately passed on to lower-income tenants.
• Academic Assessment Analysis: Associate Professor Ruchi Singh explained that comprehensive analyses incorporating all DOR-qualified sales indicate Boston consistently meets International Association of Assessing Officers (IAAO) standards for assessment equity. She noted that valuation models naturally show greater variance at the extreme tails of the price distribution due to sparse comparable sales and unobserved interior condition differences.
• Recommendations: Professor Singh suggested adopting spatial quantile regression models, integrating detailed interior condition data from lender appraisals, or deploying on-site individualized appraisals for the very top tier of the residential market.
• Progressivity Findings: Professor Singh demonstrated that while gross assessments show minimal regressivity across the broader market, the flat $351,000 residential exemption produces a net progressive outcome, resulting in an effective tax rate of approximately 0.4% on a $500,000 owner-occupied home compared to 1.2% on a $5 million home.