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

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and many more.

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Thanks for watching!

Good afternoon, my name is Ben Weber. I'm the District 6... Do we have paper towels? Good, we're on the record for that. Culpepper is trying to drown me for the hearing. Hold on a second. It's coming out of your...

Thank you.

I just wanted to hear you all. He's still got something. Okay, let's just pretend that didn't happen and bang the gavel again. Okay, for the record my name is Ben Weber. I'm the Boston City Councilor for District 6 and the Chair of the Boston city council committee on ways and means. Today's October 8th, 2026 The exact time is 2.07 p.m.

This hearing is being recorded, it's also being livestreamed at boston.gov slash city dash council dash tv and broadcasts on Xfinity Channel 8, RCN channel 82 and Fioschannel 964. Written comments may be sent to the committee email at ccc.wm.boston.gov and will be made part of the record and available to all Councillors. Public testimony will be taken at the end of this hearing, individuals will be called on in the order in which they've signed up and we'll have two minutes to testify. If you are interested in testifying in person, please add your name to the sign-up sheet near the entrance of the chamber. If you're looking to testify virtually, please email our central staff liaison Karishma Chauhan at karishma.chouhan at boston.gov for the link and your name will be added to the list

Today's hearing is on docket number 0586, order for a hearing to review discrepancies between market value and tax assessed value for residential properties in the City of Boston and to evaluate the city's tax assessment practices. This matter was sponsored by Councillors Meanyard-Culpepper, Aaron Murphy and Brian Worrell and was referred to the committee on March 18th, 2026. Today we'll have two panels. The first panel were joined by Interim Commissioner of Assessing... Is it interim still? Do I have that right? Interim Commissioner of Assessing, Hinlan Wang. The second panel will have Chris Lehman as a board member The Small Property Owners Association and remotely we'll have Associate Professor Ruchi Singh from the Terry College of Business, University of Georgia. She's an associate professor in the real estate program.

Before we hear from our panelists, I'd like to give my colleagues... I'm joined today by the lead sponsor Councilor Culpepper And in order of arrival, I believe Councilor Flynn and then Councilor Fitzgerald. So I'd like to give room for a short opening I'm going to set the clock. If you want, we'll have three minutes each for an opening if that works for you, Councilor. Okay, well, I'll start the clock and keep track whenever you're ready.

Thank you, Chair Weber, for holding this hearing. I want to thank the administration, other panelists and members of the public for joining us today. I'd like to thank my colleagues for joining I filed this hearing order because I want to better understand whether Boston's property assessment system is accurately and equitably valuing residential properties across the full spectrum of our housing market. Property taxes are based on assessed value, and the City's annual valuation process is intended to approximate fair market value. The data that prompted this hearing raises some important questions

Especially when you're looking at the lowest price single-family sales and the highest price residential sales over multiple years, we see a fairly consistent difference. and the data set provided to us, the 20 lowest priced single family homes sold in 2022 were assessed at a weighted average of about 105% of their sale price. For 2023, it was about 103%. For 2024, approximately 95.5%. On the high end, that's why we're here today, the pattern looks very different The 20 highest priced residential sales were assessed at approximately 80% of their sales in both the 23 and 24 data sets. That figure

were also approximately 68% for the highest price, 20-25 sales. There are individual examples in Boston that make these differences particularly striking. The Globe highlighted 59 coming with that which sold for $21 million, but carried an assessed value of $12.5 million. That's one of the reasons why we're here today. The underlying data set contains properties where the gap is even larger including a $15 million Commonwealth Avenue sale assessed at approximately, can you believe it? $4.4 million. Let me just say that again. That $50 million Commonwealth avenue sale Assess that $4.4 million. Today's hearing is an opportunity to understand why we are seeing the pattern, whether the comparison being presented to us is an appropriate way to evaluate assessment equity

And if there is a problem, what changes the city can make to ensure that every property owner is treated fairly and equitably? Thank you Mr. Chair.

Thank you Mr. Chair and thank you to Councilor Culpepper for bringing this debate before us, it's incredibly important that we discuss it and learn as much as we can. So I do want to say thank you to Councilor Culpepper for his leadership. Want to say, thank you Thank you for assessing Commissioner, for being here as well. Commissioner Wong thank you and I do know you come from a wonderful family dedicated to public service so I want to acknowledge your families Commitment to helping people in our city. I wanna make sure that residents know exactly

What the rules are, how taxes property taxes are determined. How much the city can increase property taxes based on The increase of the value of your house. And also want to ask and find out some more information, why do some people's house residents such as Reverend Culpepper mentioned have decreased in value. But I also know that some people don't, they haven't had any increase in their property tax and other people had significant increases in their property taxes. I just want us to be all on the same page, transparent accountable Thank you very much.

It is impacting working class families and seniors when they see a 13% or 10% increase in their taxes especially when they're on fixed income. Not sure how long we can continue doing that to residents. Residents are struggling and a 13% tax increase or a 10% tax over the last two years, and then another potential Increase. It's devastating working class families, families on fixed income and homeowners that might own more than my own like a double two family because they have to pass that Those are some of the questions I will ask, but again want to say thank you to the Acting Assessing Commissioner for being here. Thank you, Mr. Chair. Okay thank you Councillor Fitzgerald

Thank you, Chair. I would like to thank Councilor Culpepper for bringing this forward as well and thank you too Acting Commissioner Wong for being here today to educate us on a little bit more of this As you can imagine, we got lots of calls in the last two years when we had both double-digit increases in property tax. And I know for myself and Dorchester, which is predominantly middle and lower class families, we've got a lot of incoming. Thank you very much. The answer we got is it's more of an art than a science. And that just doesn't... You know, when you go to constituents and tell them that, that doesn't fly. And so what I hope to learn today is more of an understanding about how

They are applied, how they're applied fairly across all socioeconomic spectrums and really help us be able to give a better answer Thank you very much for being here to educate us.

Okay, thank you very much. I'm just briefly from the chair. You know, I think this is a—I want to thank Councilor Culpepper for filing us. Ever had to learn so much new information for one hearing. I think we'll hear in the hearing about vertical equity, which my understanding of it is we've achieved vertical equity where the assessed price of a home is in line with the sale price across the board and you're going to find that either we're assessing over or under within a certain percentage of what the sale price would be, and it doesn't matter what the value of the home is. I learned about regressivity. So if we have regressility, what that means is we are taxing lower value homes at a higher proportional rate than the higher-value home.

That means the burden is unfairly being placed on lower-value homes. If we have progressivity, we are taxing the higher value homes at a higher rate than Lower Value Homes. And so certainly, given Boston's troubled history with discrimination and institutional Racism, and with practices like redlining. You read the Boston Globe editorial and you think okay this is another example of a regressive system that We're allowing to harm low-income, low-value homeowners. But I think when you dig a little deeper the story is not as clear. I think Ron Rakow was the commissioner of assessing

did an analysis and if you look at the system for the whole city, there is a slight amount of regressivity so we are taxing and so on. Homestead exemption or residential exemption, which allows people to write off essentially like $350,000 if I'm understanding this correctly of their home value which converts are in the tax bills, they're actually according to Mr. Rakow were actually a progressive city because that flat I think this is an incredibly complex technical field, and I look forward to the conversation.

I don't see any of my colleagues. With that said, Interim Commissioner Wong the floor is yours.

Thank you, Councilor. You presented basically everything I was supposed to bring, but I'll reiterate everything again. Good afternoon. For the record, my name is Henlon Wong. I am intern commissioner for the City of Boston assessing department. I'm here to discuss docket 0586 regarding my office's assessment practices and evaluating residential properties. This topic is deeply important to my department. My staff of over 50 live in every neighborhood of Boston, from East Boston to Hyde Park. They're in our neighborhoods every day speaking with residents and business owners to ensure our property data is accurate, fair, and equitable. Annually, our department values over 190,000 parcels and an assessed valuation of over $295 billion. Property taxes generated over 3.5 billion in revenue for the city in fiscal year 26

My office is also responsible for excise taxes on boats and motor vehicles, administering the pilot program and tax agreements. We also manage personal exemptions such as the residential exemption and senior exemption programs. Under state regulatory guidelines, we are required to inspect each property at least once every 10 years. The primary goal of these inspections is to ensure our property data is accurate. As I mentioned earlier, my staff is out in the field every day collecting this information, completing over 470,000 inspections over the past decade. We also leverage technology to verify property details, utilizing tools like street imagery, ortho maps and real estate listing services. All this information is entered into our computer-assisted mass appraisal software known as CAMA, which helps us manage data and value properties across the city.

Key details we track include building style, living area square footage, parking spaces and the number of kitchens and baths in bedrooms to name a few. We also assign each property to an assessing district per regulatory guidelines. These districts are completely distinct from standard zip codes, wards, voting districts or neighborhood boundaries. We use them to ensure our models factor location directly into residential valuations so that market trends in Back Bay, for instance, don't actually skew property values and Hyde Park. At the same time we're collecting data, our team is reviewing all recent property sales and transfers. This review serves two main purposes. First, it allows us to establish property ownership under state law. State regulations require us to determine the owner of record as of January 1st known as the lien date for the upcoming fiscal year. So for example, January 1, 2025

is a lien date for fiscal year 26. Under state guidelines, that means our sales analysis must use data from the calendar year prior to January 1st lien date. So for fiscal year 26 we analyze sales from calendar year 24 excluding any sales that occurred in 25. Calendare 2025. Second, reviewing these transactions helps us measure broader market trends. Under state regulations we only include arm's length transactions. Fair cash market sales between a willing buyer and a willing seller. We screen out non-arm length transfers such as a parent selling home to a child at a steep discount, a forced foreclosure sale because they don't reflect true market value. Our sales analysis, once our sales analysis is complete we feed all valid sales and property characteristics into a statistical model called the multiple linear regression to establish residential value citywide.

Our model calculates how much each feature contributes to a home value's final price. The property value is our target or dependent variable, while attributes like living area, bedrooms and locations serve as the inputs or predictors. If you look at one of the variable charts with blue dots, this plots square footage against sales price. The model draws a line of best fit right through the center of those data points. Points standing far above or below that line are outliers. and the model prevents those extreme sales from distorting overall values. When we add dozens of property attributes at once, the model does its exact same pattern seeking work across multiple dimensions simultaneously as we can see in the two variable plane graph. By running our data through regression models, we filter out the noise in individual property transactions. Whether a buyer pays for a specific school district, a seller rushes a sale due to divorce or someone

What pays a premium to live in the aforementioned of a seven-time Super Bowl champion? Each year, we continually calibrate our models to reflect current market conditions and produce accurate assessed values. To guarantee these valuations are fair, we run a rigorous battery of statistical tests. What you see on the screen is just a sample of the metrics we monitor. These include a median ratio test, the coefficient of dispersion also known as COD to measure uniformity and the price related differential to measure vertical equity which I'll cover shortly. Beyond our internal checks, we operate under strict state oversight. The Bureau of Local Assessment within the Massachusetts Department of Revenue oversees valuation standards across 351 cities and towns in the Commonwealth. Their responsibility is to ensure fairness and equity in location property valuation. Every year, my office submits our data set to the Bureau of Local Assessment for review.

The state must certify our values before the city can set tax rate or issue bills and I'm proud to report that the city constantly passes those reviews. Beyond state requirements, we leverage the Lincoln Institute of Land Policy's analytical tool to evaluate vertical equity. Ensuring lower priced homes are not over assessed relative to higher price properties. The software applies both established industry standards and modern statistical methodologies, including Gini distribution measures, Spearman-Rent coalitions, price related differential, and the coefficient of price related bias. Our team routinely runs Boston's property data through the system and the city constantly passes all statistical equity tests while fully meeting industry benchmarks criteria. Once our analysis is complete, a final assessed value is generated for every property across the city.

To circle back, assessed values are derived from market patterns during a fixed time period using specific property data points As you can see from the examples on the screen, even similar properties sold within the same timeframe can yield vastly different assessed values and tax bills. To cushion the financial impact on residents, this council votes every year on two critical relief measures. The tax rate shift and the residential exemption. First without the maximum tax rate shifts homeowners would pay significantly higher taxes at a rate of $15.40 per thousand. By approving the maximum allowable shift, the council shifts a larger portion of tax burden on commercial properties lowering the residential tax rate to $12.40 Second, the residential exemption provides direct relief to qualified owner occupants by deducting a flat amount off their property assessment.

Because this dollar deduction is identical for everyone, it functions as a progressive tax measure delivering the highest percentage of savings to lower and middle valued homes and Fiscal Year 26, this tax savings amount to $4353.74 in actual tax dollars. However, no model is perfect. For instance, property attributes might be outdated if we haven't inspected the property in a while. This is why state law provides an abatement process allowing property owners to contest their valuation The abatement window runs from January 1st to February 1st. During this time, property owners can submit applications and share their concerns. We verify property data points and issue a decision within three months. If a taxpayer remains unsatisfied, they have the right to appeal under Massachusetts general law. On average, fewer than 2% of property owners file an abatement and fewer than 1% appeal our decisions to the Appellate Tax Board.

I also want to highlight that thanks to the combined tax relief measures passed by the Council, Boston residents pay less in property taxes on average than our neighbors. On average, single-family tax bills remain lower than those in Medford, Quincy, Arlington and Newton proving that Boston can provide high quality city services while keeping residential taxpayers among the most affordable in the area. In closing, my team and I live here work here and many of us are property owners here. We see firsthand the measure the pressure rising property taxes placed on households due to broader market increases that is why we actively promote tax relief programs for owner-occupants. We offer the residential exemption for our most vulnerable constituents, we offer senior exemptions and thanks to this council, we recently expanded income and asset limits to qualify more seniors. We also provide target exemptions for veterans and their surviving spouses who account for roughly half of all personal exemptions granted.

Our Taxpayer Referral Assistance Center directly assists residents in identifying eligible programs, We also work closely with the Age Strong Commission, Veteran Services, the Boston Home Center and this City Council body to spread the word about these vital resources. The administration and city council have worked hand in hand to deliver real relief to Boston residents, most recently adopting the 41D program that increases asset and income limits for senior exemption. And I look forward to keeping that work together. Thank you, and I'm happy to answer all your questions.

OK, well thank you. Just another hearing where we have to talk about Spearman's rank order correlation it seems like. Every day, you know. But so how about eight minutes for a first round? And then I think we'll have most likely a second round. I think some of my colleagues will be joining us. Culpepper, Europe, and then Councilor Flynn, Councilor Fitzgerald.

Great thank you Chief Long. In your presentation it explains that the city uses a computer assisted mass appraisal system incorporating property characteristics, location, condition and other factors. How does that happen? Is that what your staff is doing when they're out in the neighborhoods compiling their data or the data that goes into the computer, where does it come from?

Yep. I'm live, sweet. Thank you, Councilor. So this data is essentially collected so we have a property record card with probably 30 to 40 attributes that we collect properties typically don't change that often. They do change, but a house from 100 years ago is probably going to have the similar number of bedrooms and many more. We also have a number of building permits, number of kitchens potentially but to account for those we go out in For example, if they created an extra level on the home we'll go out there and make an addition onto that field card.

So the conditions I'm talking about this data That's what is going into the computer to determine the assessment.

Correct. So there are certain property attributes, so there are property attributes that we have in there and then we enter that into the system as well as with our regression model to generate a value.

So where there's $15 million or $20 million property That's the assessment and it's in your data was far lower than the $400,000 or $500,000 assessment. How does that happen? The $20 million Yeah, there was a $20 million property. The $15 million property... I can go down the list of more expensive properties. So if you go down on the list on Commonwealth Ave., sales price of 21 million was assessed at 12 million. Boylston Street, 776 was sold at 17.

So when did these transactions occur, Councilor? I don't think that was from my data set.

It is, this is what came out of it. I'm just asking you the questions about is it more difficult to assess a million dollar property than it is a $400,000 property?

It should be relatively the same if we have similar sales in the area. So essentially, we're looking at the forest so if we are similar properties selling for a million dollars The model should generate similar, with the similar property attributes it should come out around a million dollars. If properties, similar attributes in the same location sell for half a million dollar, the same output should be coming out of

So when you look at the assessed values on this sheet, for property that's sold at $21 million, assessed at $12 million and it's only at 59% of the sales price. How do you get to that? When you look at the less expensive properties, they're right about where The sales percentage should be of the sales price. And so how, when you, and I can read them all, seven, 76.

Yeah, do you have the sales date on one of them?

Yeah, 76 Borelson Street, 17 million. Assess at $15 million. There's two Commonwealth Avenue sales price was $15,000,000. It was assessed at $4 million. 94 Mount Vernon 14 million, sold 14 million. The assessment was 4 million. Here's one that's even more ridiculous. 44 Beacon Street, sold for 10 million Assess that $3 million. And I'm looking at these high, the more expensive properties and then you go to the properties like 93 Wambach Street. $346,000 was a sale price. You know what it was assessed at? $366,720 the exact same amount of the sales price.

So my point is how do you have these that and some are even higher Thank you very much.

I believe those sales on the higher ends happened in calendar year 25. Am I correct on that?

It doesn't have the year on this, 24.

So the sales transactions occurred in calendar year 24 for the higher-end properties.

For all of them? For all

Okay, so even in that case we have outliers all the time. So as one of the graphs mentioned Do you know why there's such a difference in the assessed value of the high-end property and such an accurate assessment

on the lower end properties.

I would have to see those data points specifically, to give you an answer on that.

Okay. On this differential and the regressivity, you talked a little bit about that. Your presentation identifies a price-related differential as a measure of whether assessments are progressive or regressive in the cities PRDs are approximately 1.00, indicating relatively uniform assessment. You with me so far? Yep. Does that analysis adequately capture The potential disparity amongst Boston expensive properties versus their lower value properties?

Yes. So in the example that we have on, that I presented earlier, we have sales price quartiles.

Which one was that?

The one you're talking about right now, the price-related differentials. So if you look at those we have sales price quartiles so those are basically We bucket those into lower end sales and higher end sales. So when we do this analysis, we're just not looking at the overall numbers. We're breaking it down by low-end properties, high-end The style, the living area, the type of grade for example to see if there's any issues with our numbers.

So you're not using a cost approach are you?

The cost approach is another technique that we use, but for residential properties the most appropriate is the sales approach or market approach.

So you use the market data approach?

Correct.

How do you use the accrued depreciation with that if you're using it on?

The accruing depreciation for... For the assessments.

So your staff goes out and they do an analysis.

Can you finish this question?

When they do their analysis and they come back with the data that they have, it goes right into the computer. Correct. And as there Determining what data that they want to record, how are they instructed before they go out? Let's say for a specific home. How are they instructed? You talked a little bit about if there was an improvement. What are they looking for when they're instructed to go out and collect that data?

So our assessors go on the field annually to go out and make sure our data is accurate. So they would go out either for a 10-year syndical We have a manual that Well, two parts. We have a manual that we have that'll assist the assessor in determining what accurate property attributes should go in there. We also have a bunch of checks in there, we have supervisors and managers that also reviews these data points to make sure that they're accurate and representative.

And so can I just add something?

Sure.

So when they go out and they determine an area of the city, how do you determine the area of a city that they go to and whether that's within that 10-year period Assessment period.

We don't target specific neighborhoods, we go out citywide.

No I understand but they they don't go citywide that day how do you determine what area they go to when they go out to make their assessment?

Yeah, we don't go out to specific neighborhoods. We don't got the Jamaica Plain one year or Alston one year. We are out in every single neighborhood across the city.

I know but how do you determine? How do we... Is it the 10-year cycle?

It is multiple factors. So, it could be a building permit that was pulled. It could be taxpayer that gave us a call asking us to come and take a look at the property. Could be the 10 year cycle, could be a bunch of various factors.

And so these appraisals are estimates right that they employee goes out and makes it. It's an estimate, right? When they look at the let's say a new kitchen that they make an estimate of what goes into the data

I'm not following an estimate.

In their opinion, how do they record the value of a new kitchen to a home? How do they report that?

That's a great question. So they're taking down data points. Once those data points are collected, we then run... Remember I mentioned about the forest? We're looking at the market trends post that So once everyone comes in and enters all these data points, then we're looking at what types of trends. And so good data goes in. If good data goes in, we have good valuations. If bad data comes out then we had that valuation. Based on someone's opinion though?

That's my question. It's based on their opinion when they put that data and what data actually goes in.

Well, there is a data collection portion of it. I mean if an assessor sees three bedrooms, it's three bedrooms so I don't know if that's an opinion or not but yeah.

No no no, I'm trying to get to the value that kitchen or that new bedroom What's the value? How do they determine that value? That's based on their opinion, right?

No. That valuation is determined based off a linear regression model. So we input all those data points into that mathematical model. So the assessor isn't going to say, I'm going into Alston Breadon changing that modern kitchen for $50,000. He or she is not going to put $50,000 on there. It's what the model is going to generate. Okay. Can I?

Councilor Culpepper? Yeah, I'll come back. Second round.

So we've been joined by one of the sponsors, Councilor Worrell. I don't know if you... You want to go now? Okay. Councilor Flynn, you're up eight minutes. Thank you Mr.

Chair and thank you again to the assessing commissioner for being here I kind of wanted to follow along the questioning that Councilor Culpepper had. So, the assessing rates To me, they look like they're based on how much homeowners could sell their properties at the top of the market or how much homes were sold or bought for in and around the neighborhood. Is that accurate?

Yep, good afternoon, Councilor. Thanks for the question. So essentially assessed values and what the current market is I would say are apples and oranges The reason for that is we're looking at, so in fiscal year 26 the fiscal year that we just had. We are looking at calendar year 24 sales. So we're currently in calendar year 25 We're in calendar year 26 right now. So if you were to sell your home today, it would be vastly different than what the assessed value will be because we're analyzing calendar year 24 sales.

So for example, someone lives on a small street in South Boston. They bought their home say it was $200,000 Next to it, the same exact home was sold for a million dollars. It doesn't make the long-term homeowner That's been there a long period of time. It doesn't make them wealthy because they're living in a home now that's valued, assessed at $1 million like their neighbor So they're basically paying the same property tax as their neighbor who might be in the middle of their career making, well if you buy a million dollar home,

I don't know, five or $600,000 a year. But the person that bought their home for $200,000 might be a middle class person so you're hurting in my opinion The struggling person that owns the home for $200,000. He's now paying the same taxes. That's what...that's the disconnect In the city. And if we want to build housing, right? We need more housing. Everyone is saying we need more in Boston. Okay, let's build more housing But does that mean when we build more housing, the value of long-time residents, their home, their value goes up? Which means their taxes go up. So they're contributing to the city by supporting these development projects because they want to do what's in the best interest of the City of Boston. But on the other hand, oh, by the way your taxes just went up 13%.

That's the disconnect I'm hearing directly from residents. I'm in the city every day. I work seven days a week, I haven't taken a day off for nine years. I listen to people. People talk to me all day long. That's what I'm hearing. Is that accurate? Accurate in that...

So $200,000... property purchased in decades ago, which is a recent sale of $1 million. Is that?

Yeah. But then when you have more development taking place, residents want to support more development. It's approved by BPDA, it's approved ZBA. Your value of your property goes up and then you're paying more taxes.

So on the million-dollar portion of it, we're not just looking at that singular sale. If we were doing in 2024, we are not just look at that single sale. We're looking at other sales of, let's say it was a two-family.

Yeah, in and around the area. Correct. Yeah. Like there's homes that are bought and sold all the time in my neighborhood. Yep. And most of the longtime residents have gone. Many of them can't afford the property taxes anymore. But why are they competing with people that just bought a million dollar home? They might be making $600,000 a year. Why are they paying pretty much the same property tax as someone in the middle of their career. And they might be retired. Sorry.

Essentially, our understate statute, we have to value properties at fair cash market value. So we have look at these sales and make We have to look at these sales and make proper adjustments under state statute. So that's part one. Part two is, this individual they've retired, hopefully they're in the residential exemption program and hopefully they meet the other income requirements for us to give other statutory exemptions. So we do have other relief valves to assist residents who are struggling like that.

Long-time residents have received an increase in their property tax. The last two years, one basically 10%, and then the other year 13%. Are we looking at another... likely 10% or higher. and so on. and 13% the year before. It's likely your taxes are not going, your taxes never go down. They always go up. I just want to prepare residents that they're likely to see a 10% increase on their property tax Is that fair to say?

On the property tax side, I'm not too sure because we did. So my office deals with valuation. I think the other component that you're talking about is basically what the tax rate is. So a component of that is in a few weeks, we're gonna be talking about the tax rates shift which I discussed earlier. So that is a component into how a property would, how a taxpayer in Boston what that burden would be We deal with valuation and we're basically looking at what the market patterns are in neighborhoods.

Do you rely on any type of social media like real estate? to determine what the value of a property is.

Social media?

Yeah, Zillow.

No, so we don't use Zilllow. If we're looking at real estate transactions like... We subscribe to the multiple listing service, but that's only one tool that we have. I'd probably say We've had thousands of transactions that occurred in calendar year 24, for example, and 25. About a third of those are not on the multiple listing service So we have to go to other alternatives such as reaching out to the broker, reaching up to the homeowner or you know other.

Well let me ask one more question before my time is up. Mr. Chair may I ask this? Yes. Okay So, if you challenge the property tax that you owe to the city, why is that... and maybe I'm not phrasing it correctly, but is that person that challenges the taxes they own. And if they lose Does that mean that their property taxes go up almost as a penalty because they are challenging it? I don't know if that's accurate or not, but I did hear that. That if you challenge it There's some type of provision that your tax might go up automatically. Is that accurate?

Nope. So we don't have a provision for that, and I believe you're relating this up to one of the lawsuits that we have. So I really can't comment on most of that portion of it, but what I can say is essentially There is that legal remedy for an abatement process, and they will go through that remedy. For residential properties, for example, we'll request to go out take a look at if our data points are accurate Where they're coming from, essentially. Why did they file the abatement? What do you think their value is? Stuff like that to see what is wrong with that residential portion of it.

Someone doesn't get a penalty because they challenge the assessment, so I'm glad to hear that. because I do think that would be unfair, in my opinion. But that does not happen is what I understand now, that that does no happen. Is that accurate? Correct. Okay, Mr. Chair.

Thank you. Thank You Councillor Flynn Councillor Fitzgerald

Thank you very much, Chair. And again thank you very Much Acting Commissioner Wong for being here. So the software we use to calculate valuations is Canva? Canva, yes. Callum, sorry. And are there any limitations on this software? Are there things that you would rather it be able to do that it can't or that you think would help more or is it covers fully what you think we need to do to create the correct proper valuation?

Nope. That's a great question, Councillor, and hello. As with any statistical model, there's always fine tuning to it. We are always out looking for other alternatives if there are out there. We've also entertained other types of, so it's linear regression modeling. We have other types regression modeling out there to see if this fits within our values or we've also tried machine learning as well It's an old term for artificial intelligence, things like that. But we're always trying to figure out other approaches to see if linear regression model still works.

Great. And is the CAMA model incorporated with any other valuation equations or everything exists within this software?

So it's an assisted program, so all of our valuation modeling is in the system. And all our data points as well.

Yeah, so whatever comes out of CAMA is not then grouped with another equation or another... It's all in there?

Yeah, so essentially it's basically... It's not only how we value property. It's also a data management system as well. So it's where we collect all our data points for properties across the city.

So how is, in Kim and all the components, how is each component of the equation weighted? For instance, do we rely on potential market rate prices using Zillow or going out to brokers and things like that and many more. Thank you. Is that integer weighted any heavier than maybe other parts of the equation or not? Do you know what I mean?

Yeah, nope. That's a great question. So essentially we're looking at The overall forest, all the market sales within Brighton for example. And that will generate certain values across all these data points. The fine-tuning comes in a little later on when we might notice that A bathroom, for example, is exponentially high for some odd reason. And we're going to take a look at that to see why maybe our data points are incorrect or just have to calibrate the model a little bit.

OK. You know, I know over the past couple years we had a couple stories in Savin Hill specifically where there was some outliers. And I understand at any data set there will be a couple of outliers here and there It seemed to be a lot concentrated in one particular area. and I'm sure you'll hear some of my constituents here today that will go on talk about more about that. But how is an individual or a family to know if their valuation isn't outlier? What are some of the indicators they should be looking for If there's a homeowner right now listening to this hearing and they were to say, I get no idea if did I get grossly overvalued or not. What would you recommend they look at? And what indicators when they You know when they get their property tax, what should they be looking at year over year to see besides just the number?

Nope that's a great question. So if I would recommend you pre- the constituent or taxpayer, take a look at their property record card. All that information is available online on our website. We just updated this property database last year so should be easier to use. We also include all of our sales that we use in analysis on our website as well, they can look for comparable sales and if they want, they can come into our office, meet with the assessor in that area. We can go over everything with them, explain to them how we do what we do and any comparable sales and how we got to that. Pretty easy.

Okay, thank you. And if a landlord owns a house or triple-decker whatever it may be is there any additional tax that they pay? I know they can't apply for residential exemptions Right. But we have a lot of houses, especially in Dorchester that are owned by people that are living not in Dorchest or not even in the city so they can't apply for the resident exemption because they're not owner occupied But is that the only addition? I wouldn't call that an additional tax. They just don't get the exemption Is there any additional tax that they do have to pay for not being owner-occupied or being basically a you know A landlord that's not around or that doesn't live in the neighborhood or something like

Yep. So we don't have, under state law, any additional taxes under that scenario.

Has there been any proposed?

So how did it go? That part I'm not too sure about. But in either case, what they are getting though is the benefit of the residential tax rate and that's not only is for three families, you know who don't live there and occupy the property that also goes for apartment buildings as well. So, um, you

I'm sorry, are you saying they enjoy a benefit of the residential tax rate?

There is a benefit because this council does the commercial-residential split. So if we didn't have that split, they'd be paying substantially more. But because they're a residential unit, an apartment building, 100 plus units, they get a lower tax rate because of it.

Just for being a residence as opposed to- A residential unit. Yes. All right, I get that. That might be something interesting to look at the state. As far as the split goes, I know you just mentioned the split. It's the ongoing concern, and I just wonder how your office is sort of grappling with this. If we were to shift the burden onto the commercial, which we already know is declining and that were to further disinvestment from the city. Ultimately, that would just continue to raise residential taxes even more. With everything dropping faster and People disinvesting from the commercial core. So is it fair to say that there is a risk of dramatically raising the residential rate if in the shift to commercial spurts further disinvestment.

because that's my worry every day is like if we shift to the commercial and that's not just downtown Commercial Corp but also small businesses, that if we raise the taxes on them and have them carry the shift They either close, leave town, take all their investment with them and then when you have to balance it out it only further raises the residential tax rate along with whatever the valuation may be. Is that a fair risk that is something we should be concerned about?

On the valuation, so my office primarily deals with the valuation portion of it. So on the tax rate side, the burden is on this council to or We're at the maximum amount, allowable amount. So it would be up to this council to determine if they want increase the burden on residential properties and decrease it based off of the tax rate. But, on our end we primarily deal with valuation

No, fair enough. I don't want to put you in an unfair position that your department doesn't deal with but I feel it is very much related. and it is a concern I have, and I guess I was just looking for validation that yes, that is a potential risk. That we should be aware of when making a decision on the split. Thank you, Chair. I appreciate the time.

Thank you very much. Councilor Worrell, I gave time for openings. Say you have nine minutes and use it however you want.

Thank You chair and thank you for being here I guess my first question will be around something that Councilor Culpepper has brought up. He brought up home, very expensive homes with discrepancies in their sale to assessment value On page seven, you showed the ASR but starting at 1.17 I think it was? It said like 1.2 I think Councilor Culpepper's examples were far above that 1.2 number. Are you able to provide the assessment ASR for homes that sold for $2 million? 3 million, 5 million, 10 million and above because we're losing so much of a large range when we're capturing everything above 1.7

Yep, so all that information is actually listed on our website. And so I believe that report is using calendar year 25 sales for fiscal year 26 assessments And so again, fiscal year 26 assessments were using calendar year 24 sales. And so those 25 sales we would not be able to use in our analysis to generate those values. So it's kind of like An apple and an orange, divide them together. It's not going to taste good.

Right. No, I'm just saying, are you able to provide the information for $2 million homes that sold $5 million? We'd love to see like the ASR to those type of homes.

Yep, I can provide that over to you.

Awesome and then within each section right like you have single-family homes Q1, Q2, You do that for a few different properties. Are you able to tell us how many of those properties are below the 0.92? Yes Okay Yeah, I can provide that over to you. Awesome and then we stop at three family homes knowing that with your conversation Fitzgerald, we have 20 units, 30 units, 40. Is there a different type of approach that you use when evaluating?

Yep, oh sorry I also forgot to say hello. But there's actually another class that we forgot to provide in here just because we didn't have the space for it. That's condominiums and that is basically our largest We use different approaches for units over three, so like a 50 unit apartment building. We use a different approach. So we use the income approach just because we don't have enough sales transactions to use the sales approach on that.

OK, and then what's like the ratio For you to use, to determine what's like fair value. When you're doing the income approach, how do you determine?

It's similar statistics to what we've presented. We have similar guidelines presented to us by the Department of Revenue.

Are you able to provide us with Like the assessment value versus the sales values to those properties that you do use the income approach. Yes. Awesome. Let me look through my questions. And then do you break it down by neighborhood? Are you able to provide it by neighborhood.

Neighborhood. So in the presentation, we use assessment districts and that might overlap with what we... In Brighton-Alston, you know, Sorry, bad example. So in like Jamaica Plain and Roxbury we might have overlap assessment districts in that area but we can provide what we use for the assessment districts and maps over to you.

Got it. And you're able to provide the same information in terms of like ASR, PRD and everything else based off an assessment district? Yes. Awesome. That would be great. I think for now, those are my questions. My council colleagues asked a lot of good questions.

Okay, thank you very much. I have a couple questions. We'll have a short second round. We do have another panel. So I'm just gonna give myself a few minutes. Okay, so can you just explain to the Bureau of Local Assessment what their role is in what you do?

Yep, so the Bureau of Local Assessment is an agency within the Department of Revenue. They are our regulatory agency they not only regulate and They basically provide classes. They also look at all our data points to make sure that we're in line with all state guidelines and industry standards. There's about a 20-page report of minimum standards that we have to follow every year, They also do a five-year revaluation. So that's basically kind of like an audit And in that audit where they basically review everything that we do all our procedures, all our standards We also have to basically redo our model from the ground up. So when I meant model, I mean like all our residential models and then they evaluate that to make sure we're within regulatory standards.

Okay, well when's the next audit? I believe it is in 2030. Okay, so if...

If the homestead exemption is a tool, you have to apply for it. Do we have a way of measuring how many People who are eligible for that apply, and what percentage? And if it's equitably distributed. Do we have areas where people just aren't applying for that?

Yeah, that's a great question. We can give you the data on how many applicants there are. That's also listed on our Analyze Boston dataset where we have We have a field that says, yes, residential exemption on there for fiscal year 26 in our prior years. Whether they are getting it and should be eligible, that is a difficult question to ask because you have to prove that you own it and occupy it. So the occupancy portion

Do you have a sense of what the percentage is of eligible people who apply? Yeah, unfortunately I wouldn't have that.

I don't know if there's a separate data source for that but fortunately we don't have one.

And then I know Councilor Fitzgerald brought up CAMA. So can we make manual adjustments to the model and do we? We can, so in the CAMA system

For the modeling, you mean like the regression model correct instead or the CAMA system?

Well in the CAMAS system I don't know.

So in the CAMA system is basically, think of it as data management kind of like a field card. We do make changes to that all the time You know, overall make changes to that all the time. So a single family home if we go out, you know, if they added a kitchen, we would add a kitchen to that on the model. We will make certain adjustments just to see just to make sure that we're in line with

Have you made any adjustments that go toward these high value properties to handle Do you think that there is an issue with assessing high value properties and whether you do or not, have we made any CAMA sort of adjustments to deal with that?

So I think On high-end properties, this is the case for every city and town across Massachusetts. We are going to have high end outliers. As Councilor Culpepper mentioned I think it was like a $20 million... 20 million. I believe that was a two family, and that might have been one of the most expensive or high priced sales in the city of Boston for a two-family. I've had my staff take a look at it real quick and I believe like on average in that area, a similar two families sold with the largest square footage for about 13 million. It's always difficult for us to try to reach into those high value properties because it is an outlier and our responsibility is to look at the The pattern and the forest, not just one individual tree.

But if there were more $20 million sales of two families that eventually come on, you know, That's a market indicator to us that two families in that area would be valued around $20 million.

Okay, yeah I mean I guess so people sell their properties and buy properties for all kinds of reasons like somebody might and so on. and almost double what it's worth. In an average year, whether you're going to have those outliers, do they... What do you do with them? Do you just cast them to the side when you do your sort of rigorous,

We're mainly looking for arms-length transactions because our mandate is to look at fair cash value. Some examples I mentioned earlier, and you mentioned too were foreclosure sales. Sales between a divorcee or divorcee. Things like those we would not include into this model, but what we do capture though is who the new owners are to make sure that we're sending the tax bills appropriately to the correct person.

Okay, and then so one of the other issues with sort of ways to Thank you very much.

So in some communities, I believe what they do is they do a reassessment and then they, as you mentioned, leave it flat for five, ten years until another reassessment cycle occurs. We are constantly reassessing values every year. Applied Trends to them, because eventually on our five-year cycle we are gonna have to under Department of Revenue, we are going to revalue all properties We're in an appreciating market right now. We don't want that hit to be staggering for homeowners. and under guidelines, we're able to account for those market trends upwards or downwards.

Okay. And then I guess do you use the Lincoln land We do use the Lincoln Land Institute Vertical Equity app.

We run them since we found out about it, I think that was in 2024 or 2025. and they also part of the report also uses industry standards from the International Association of Assessing Officers in that application so we met all those standards.

Okay, and it just for the non... Mathematicians, or whatever it is that use these things. You said there's a bunch of different metrics in there? I know they say not to look at one metric, try to look all them. Why is that? Or do you agree with that? Um... Why would that be the case?

Yep. So on the Lincoln Land Institute portion of it, there are some, apart from the industry metrics that they use, they use fairly new metrics That are used and you know not all metrics are the same or even they measure certain other attributes. And so just take this as a whole for, you know, the reporting of it

That's as simple as I can say. Okay, that's fine. So let's go for a second round. Can we do three minutes? That's fine If people have a quick follow-up after that.

I want to come back to these discrepancies between the, let's say, the $21 million property that was assessed at 12 million and the $346,000 property that was assessed exactly at $347,000. How do you account for those discrepancies that I've been asking about consistently?

Yep, so on the higher end one I believe that they were using a sale that was outside of our regulatory guidelines. That's part 1. Part 2 is...

They would go what now?

So the sale that was used in the report, I believe, were using calendar year 25 sales which under Department of Revenue guidelines we're not able to use. So we're able to only use calendar year 24 sales in that assessment. So for fiscal year 26, we can only use calendar year 24 sales.

No, these were. These were lowest single family revenue Residential sales from 2024. These were from 2024?

Yep, so on the high end I believe they used calendar year 25 sales and then on the low end they use calendar year 24 sales and so as I mentioned earlier, we have a regression model. So it's trying to fit on the Best Line of Ken on all these property attributes and sales within that area. Sometimes we're on the mark, sometimes we're a little high, sometimes were a little low.

But how do you explain for such discrepancies consistently? I'm looking at the list here, 21 million assessed at 12 million. 17 million assessed 15 million. Even 15 million assessed 4 million. 14 million assessed four million. 14 million assessed at nine, 14 million assess at six. How do you explain the consistent discrepancies in the sales for high-end properties and the dramatically, extremely low assessment in these same properties. How do you explain for those discrepancies?

So on the high-end properties, they're using calendar year 25 sales. So we can't look at those sales when we're looking at that.

No, no, I'm looking at them now. I'm asking you how do we explain for these discrepancies that are so wide when you come to the high-end properties and they're almost exact when you comes to the lower end properties.

So this is based off of that, I believe it was like a report.

But how do you explain for the discrepancies? Let's say the one that was reported in the newspaper. Yes. The 20 million. It was just that, what was it? 12? Yep. How do you explain for those discrepancies in the, well let me just say, in the Back Bay Beacon Hill properties And when you get out to Roxbury and Dorchester, the assessments are almost exact. How do you explain for those kind of discrepancies?

So that sale on that newspaper was using calendar.

No, no, no tell me how you explain for these discrepancies?

Yep I am so We do not account for that 2025 sale in our analysis. So we will account for the sale this year, for fiscal year 27 because that sale is outside of of our calendar year assessments.

So for this year, how do you explain these discrepancies? That's all I want to know. Why when you come to Back Bay and Beacon Hill, the assessments are so low at multi-million dollar properties. And then when you get into Roxbury and Dorchester, the assessment's almost exact as a sale price How do you get to those discrepancies?

because we're looking at patterns across neighborhoods. So, we're look at sales in the Beacon Hill area for...

Right and the pattern is that here's a pattern downtown The assessments are real low. Out in the community where the poorer folks live, the assessment's almost exactly as the sales. How do you explain for that?

Are we going off the report or are we going based off of our assessment to sale ratios?

Assessment to sales.

So in our assessment to sale ratios overall, we've met all DOR guidelines and industry guidelines.

No, no, I'm not talking about guidelines. What I'm saying is how do these discrepancies take place? that are so far away. Thank you very much. between the Roxbury and Mattapan properties so much different from the discrepancies that you find in the higher end properties. How does that happen?

So in the report, they're using sales that we can't use for fiscal year 26. We will be using those in fiscal year 27. In our analysis. And then we're going to be checking to see all the, we have correct property debt attributes for the high end properties and low end properties, and all qualified sales in the Boston area.

Do you know how it happens? If you don't, just say you don' t know. I'm just trying to get to how do we have such wide discrepancies in the areas of Boston where The poorer folks live versus the very low assessments in the high-end areas. Look, the city is losing millions of dollars because In the Back Bay Beacon hail area, the assessments are so much lower than the sale and the value of the property. And so what I'm trying to get to is how do we make that assessment closer to the actual value of the property or the value of sale.

We can do it in the poor communities, but we can't do it rich communities.

So I think we're talking about the same thing in one way or another. But so in the Beacon Hill area, That's $20 million sales. But as I mentioned earlier, we also have $13 million sales, similar attributes. I think we have a $7 million sale and an $8 million sale. So we're going to be looking at the overall pattern for those two family sales in the Beacon Hill area. What we're not going to do is, we're now going to value all two families that $20 million without adequate support

I guess we have to talk. Let's talk later because I think this is something that we really need to look at closer, because there's a major problem here that we can't seem to get to why it takes place the way it does. Thank you, Mr. Chair.

Okay, thank you, Councillor Culpepper. Councillor Flynn, three minutes.

Thank You, Mr Chair. I was listening closely to the comments by Councilor Culpepper, and I agree with them. I also know this is an issue Senator Collins provided exceptional leadership on as well. in support of taxpayers across the city. Taxpayers, in my opinion, taxpayers want to see meaningful reform of how we assess property to ensure that the tax burden is distributed fairly, equally and that no group or no neighborhood is disproportionately burdened. I think that's the question for today and I still think we don't have answers on it. Every homeowner should be assessed according to the same standards in a transparent, consistent methodology

We don't know if that's taking place. Finding solutions to our fiscal challenges must include providing meaningful property tax relief to Boston residents. I also believe We as a city, including City Council we must demonstrate fiscal discipline accountability transparency responsibility in spending. I don't believe we're doing that My question is, does Boston realize that the 10% increase in property taxes one year and then 13 the next year over the last two years, so basically 23%, probably going up another 10% again next year. So somewhere around 35%.

Do you understand the financial burden it's having on low-income residents that own property in Boston?

That's a great question, Councillor. We understand that one component of this is property tax valuation based off of what the market is showing us year over year. And the other portion of it is what the property tax rate is. They kind of go hand in hand into that, O'Neill. We are bound by state regulations to value properties at market value. And we follow all industry standards, our Department of Revenue rigorously checks Our numbers to make sure that we are fairly and equitably valuing properties across the city.

Who is the only person in the city that can increase property taxes?

Who is the person who can increase property taxes? Yeah. So, the City Council will decide on what type of shift you know the property tax rate will be and another portion of it is what the property-tax valuation is

but there's no single person that can increase property taxes in the city of Boston then, right? No. Okay. I just want to go back to my question about do we understand the pain people are going through. A variety store in South Boston two weeks ago on F Street, F and West 5th Street. And a guy was buying one of those macaroni, Kraft macaroni boxes. and he's looking at the box, and he is looking at price. And I said to him, his name is Bill, I says, Bill what are you lookin' at the price for? He said Ed, I can't afford this Kraft macaroni and cheese because my property taxes went up significantly Flynn, and I'm struggling to put food on the table. That's the pain people are going through right now across the City of Boston. Thank you, Mr. Chair.

Thank you, Chair. I just want to make sure that the number of people who are eligible for the residential exemption versus the number

The number of people who applied versus the number of who have been granted a residential exemption, right?

Over 75,000 properties received a residential exception.

Correct.

How many are eligible?

Fitzgerald, and Flynn apply.

There are 100%, but we don't apply. If the rest of us don't, I would say less than 50% of people are getting the exemption who are eligible So I think that's the question. Who like?

How many eligible properties are there in this league?

Yep, so the delts on that one is So we have who occupies it. That is the first qualifier, and we know who that is. The second qualifier is occupancy. Is that your primary residence? And that is the second portion that we don't have data points on so we can't give you what that is The eligibility portion of it.

Okay, so I guess the answer is then we're not sure because we don't collect the data of that. We're not how many properties are eligible for residential exemption?

Yep, if you have a dataset to provide us, we'll gladly take a look at it.

Interesting, okay. Okay, gotcha. And then what would it take in a minute and 30 seconds? What would it takes To look at a different tax structure for certain classes, like if you're looking at middle class, high class, low class, whatever it may be. And I'm just thinking about families to be honest, just middle-class families in the city of Boston What would it take to restructure taxes, to maybe provide them a different incentive or a higher... Residential Exemption, or like what is the process we would have to go through? You don't have to get into the numbers with me but like alright John if you want to start breaking up Landlords that don't live in the city that own more than seven plus units pay this tax. Home-owned, family residential that live in either a one-, two-, three-family home will get this type of exemption or only a tax at this much. and higher value.

Just what would, leave the numbers out of it, what would it take to create a new structure? What is the process?

Yep, so all of our exemptions are based off of state law. So you would have to go through whatever process.

Yeah, a whole new petition to the state or something like that?

Whatever processes they are and go through that.

Okay so it wouldn't trigger anything else but just say if the governor said that or the legislature said We agree with this and you know again there was some variation of numbers throughout that made it fair enough for everybody uh and we could be signing law and that would be the new There's no anything else that would have to happen.

Yes, and I believe this administration does have a couple petitions up to the legislature right now.

Understood. Thank you very much.

Thank You Councillor Worrell

Thank you. When we're looking at the income approach, I'm assuming that you're using rent and expenses Where do you gather that information from to come up with your assumptions around the income approach? How often is it updated?

We use, on the income approach portion of it we collect... We basically do a mailing out to property owners like commercial property owners. It's strictly confidential, so between my office and the property owner. Unfortunately under state law... Well not unfortunately, I can't share that with you. because it is confidential information they are showing to us you know what their rents are, what their expenses are. From there we collect that information and determine what the market trends are from there. We also look at you know Look at other industry publications, such as like CoStar or brokerage firms to determine what type of trends there are going on in the commercial market area.

So it's a lot of self-reported.

We get a good sample size for self-reporting of it.

And then when the sample size is too small for any category, are you able to use The previous year, are you able to extend or expand your... Instead of two years, are we able to go back just one year?

For the residential side? So for the residential site if we don't have enough, that's a great question actually.

And then what is not, like what's a good amount of sample size?

So the sample size under regulatory guidelines is that we have to use a full calendar year prior to the assessment date. So January 1st, 2025 we can use calendar year 24 sales. If we do not have any sales we are allowed to go back another year. We just have to be consistent and so on. We have a lot of classes across all asset classes, so if we go back in calendar year 23 sales, we need to do that for all our residential classes like single families, two

Is that a practice that's done often? I'm just trying to think of the examples that Councilor Culpepper gave.

So going back like a year or two? Right. It depends on what our sample size is, we typically go back a year The first the last six months of you know, the prior year so a year and a half or two years.

Okay, and then I guess my last question is going to be, do we break down assessment value per unit? To kind of get an idea if large buildings are paying the same per unit as other large buildings?

So for like an apartment building or similar to a three family? Right, right. So on a two-family, for example, we're valuing it based off of comparable market approach so using comparable sales Apartment then, we do break it down by bedroom count and what the mixture is. So a one-bedroom will be worth less obviously than a two-bed room for example.

Got it. And would you be able to provide that breakdown for me, to see what the per unit assessment value would be versus maybe a three-family versus a larger apartment building type?

So on the three-family end, that will be a little difficult because we do capture bedroom counts. So we could give you that. and we could probably capture the bedroom counts for the apartments as well. So yeah, I think that is possible. Okay so you'll be able to break it down per bedroom? We would break it down by, you know, number of two bedrooms, number one bedrooms on the apartments and the total number of bedrooms on multifamilies. All right. Thank you.

Okay I have a few questions then If people have one more follow-up for Commissioner Wong, we'll do that. Our homeowner exemption, it's like $350,000. How does that rank with other cities?

Yep, I believe there was a recent report done by the Lincoln Institute of Land... Man. Lincoln Institute of Land Policy. Sorry, tongue twister today. I believe they did a whole 50-state and metropolitan report on this. St. Louis, and many more. We are in the top This council has decided to be extremely generous with the residential exemption to give homeowners a lot of relief. And then who benefits from that?

The residential exemption? I mean, how does that work out across...

I know everyone gets the same amount, but because it's a progressive tax lower end properties will be benefited more than a multi-million dollar property for example.

It's a definition of progressive tax. So Ron Rocco was the Commissioner of Assessing for 500 years, no 25 years He's basically, I think he's saying that there is some regressivity in our assessments and I think the list that Commissioner Culpepper had It's going to happen, but then it's the tax bills we should be concerned with and that we take these steps. So if you just look at the assessments You will find regressivity, but if you add in everything else we're doing, we end up in a progressive sort of So should we expect some regressivity in just the evaluations or the assessments? and we have to fix it every year?

How should- Yeah, so in our models, we always are trying to... Our models are never perfect. So we are always trying to calibrate them, to make them as accurate as possible to the market value. As Councilor Culpepper mentioned, you know, we have outliers whether they're really high or really low. And so this is just evaluation portion of it, you know? This council is very concerned about property tax bills at the end of the day. So that's why we have this residential exemption program and other personal exemption programs Help out homeowners who need the help. So we're gonna be valuing low-end, the taxpayers on a low end property They'll be paying less versus a high-end property if they choose to apply and get accepted into all these exemption programs.

Everyone can ask a follow-up question if they like, but mine which I'll just go first is why is there this regressivity where we're going to see that were more off, under on the high value properties and closer to the sale amount in the lower value properties or even over.

It's because we're looking at market value sales and that we have sales that are They do fit the pattern, but we do have sales for whatever reason are beyond what our model can calibrate. Okay.

Which is what the regressivity is. Yeah, okay. So just a follow-up question for anyone who wants one. Councilor Culpepper?

Thank you, Chair, for promoting me to Commissioner. Did I say Commissioner? Yeah, that's okay.

President, Council President Culpepper.

Okay. I'm sure President Breadon would love to hear that when she gets back. On a more serious note, the data that prompted this hearing show the lower assessment to sale price ratio among most expensive properties. In your presentation, it shows that the city's assessment ratios meet the state standards across residential property types and price quartiles. How do you reconcile these two? Findings, and what explains the difference between the results?

Because so in my presentation we're using quartiles. So that is the overall you know we're looking at all the qualified sales in the area We will have high-end properties that sell beyond. In my previous, one of the other slides again we had outliers in this that's trying to fit into that model so we're always gonna add outliers To try to combat that, we make sure that we have accurate data on the property and that's why we always go out in the field and try to make sure we have correct data or looking at other sources to make you know, we have proper property attributes on there. To make sure

And so when they go out to the field, and I think I heard you say that you didn't use Zillow or you didn' t use any of the real estate companies there.

So we use what's called multiple listing service, also known as MLS. I think that's the industry term for it. I forgot. It is. I don't think it's the name of the company as well. Zillow uses MLS, I believe where they go hand in hand and what portion of it. But you know, it's very similar. It is still like a listing site for all the sales We do use like that, but about a third of our sales in the city are not listed on these multiple listing services or similar to Zillow for example. So we always try to research to see if these are arm's length transactions.

And so that data that you get from the MLS, that data goes into the system with your other data?

No, we don't use MLS data. So we use it as a reference point. I believe they actually use our data points

The multiple listing service.

Yeah, I believe that it goes hand in hand. I believe when a broker comes by they take a look at our assessing website and you know they compare apples to apples make sure we have the correct If they're listing a three-bedroom, they're going to double check to see on assessing if we have a three bedroom similar to that. But our sales come from the Suffolk County Registry of Deeds.

After the sale?

Yes.

Thank you, Mr. Wong.

If you have other questions submit them through me or the chair and get those answered. Councillor Fitzgerald?

You know, are we... We're looking to set the assessed value right? To match the market value. Would you think that's fair or the market though is it you know I know we're not I asked her if there any integers heavily weighted more than others but It seems that the market value certainly plays a large role in the assessment.

Fair enough? When we're talking about market value for assessed value, A full calendar year before. So we cannot look at A sale that transpired yesterday into our analysis. So when you mean market value, today's market value we cannot use. We have to use a full calendar year sample size for it.

Appreciate that. But it just sort of dawned on me as others were asking questions. What I'm worried about is a lot of the time, the market value is based on speculative development marketability. Like I know there's five houses away from me, it's got one bathroom, the shower's on one floor and the toilet's on the other, and that's the one bathroom right? But they sold to build five townhouses. So it's sold for... One and a half million dollars, right? So that is now... That would be the market. If that house sells for 1.5 based on what could be built there Then, you know next year that becomes for my around my home sort of the market rate Variable.

For the assessed values, yes and no. If there are other $1.5 million sales for a single family or sorry, I think you said two family. Single family, sorry, single family. So if it was... If we had multiple $1.5 million sales in your neighborhood then likely our Our model would try to account to get to that $1.5 million. If there was only one $1,000,000 sale and let's say all the other sales in the area like we had 10 of them for 900,000 most likely we're going The model's going to deviate towards that $900,000 sale.

But then let me ask, after these five townhouses are built and sold for a million dollars apiece, that will then be... I mean, you start to create that environment.

When you change the use on a property so in this example like you have a single family turning into townhouses we're no longer That townhouse portion valuation is no longer calculated into the single-family model because we're not, we're no longer doing apples to apples. We're doing you know apples and bananas.

Okay I appreciate that because that is just something I see happening a lot in I worry about the speculative development rate versus the assessed value.

Large buildings. If we are... The large building is still under the residential property, again it's the same type of tax rate as all residential properties but we're using a different evaluation How are we making sure that there's comparable accuracy in large apartment buildings versus owner-occupied residential? That ratio is somewhat the same.

A large apartment building versus an owner-occupied single family?

Right, or even as a owner- occupied two-family. Yep. Whatever, right.

So the accuracy between those. Right. So when we do our statistical analysis, we're not comparing that two-family to the apartment building. We're comparing it to other two families like

No, no I'm aware of that but i'm just saying like in terms of the um the assessed value like I guess I'm going back to like the per unit how or how you put it like maybe the bed count But how we're ensuring that we're getting the same amount of value out of these large apartment buildings as we're The value that's appreciated in these smaller units.

Yep, so... I would say that on the larger apartment buildings, we value them differently because most of them if not all of our apartment buildings maybe have a couple handful are investment properties. We might have a couple that are owner-occupied, but for the most part, most apartment buildings are investments.

Right, right. And I go back to like the whole progressive tax, right? When we're looking at it being that, then it should be some type of more compared. It should be closer in There shouldn't be a vast disparity between the two if it's really considered like a progressive tax. The income property versus the owner-occupied one, The disparity between, I guess like a per unit count or how it's being assessed Per Bedroom.

So on the apartment side, we're basically looking at what the rental income is. On the two-family end you know We're basically looking at what the market is selling for, for a two family. And so we would do that for apartment buildings if we had enough sales data to show like you know If apartments were being sold every day, then we would use that sales approach for apartment buildings.

Right. Now I get that. But are we trying to write Right, the assessment value seeing that maybe like in your analysis that large apartment buildings are not appreciated as fast as you know Condos or two families or three family homes, right? But the rents are constantly going up.

Yep, so when we see rents increasing we will make those market adjustments for commercial apartment buildings.

I guess I'll wait for your data analysis on per bedrooms to see if there's any disparities between the two.

Okay, well thank you very much Commissioner Wong We're going to call our second panel. Ruchi Singh, who's here remotely. So we do have some people been waiting around including Frank Baker, if you want to go now for public testimony. So we'll just have... It's two minutes for public testimony. This is the microphone over there, yeah.

No, but you can direct the questions to us and we can get them answered. Okay so it's two minutes, you'll see the clock behind me Whenever you're ready. Just tell us your name, where you live and then let's hear what you have to say.

Sure, my name is Marta Carney. I live in Savin Hill, born and raised...

I haven't started the clock but you just get closer to the mic.

Sorry, Marta Carney, Savin hill, born-and-raised a neighbor of Frank Baker And this is last minute, so I'm really not prepared. But Councilor Worrell, as you spoke just now, I really wanted to address we have properties, bigger apartment buildings that are way undervalued. This is at $800,000 and this is kind of what you were alluding to I think. And then also I would like to propose a third category so we have a residential, we have commercial. I think there's room for a third Triple Deckers for the four to six units, they're all over Boston. So a third category I know there's a lot of investors that would hurt them a little bit but maybe $2 like just a third Category The other thing is Santa Barbara has a tax. Thank you.

They need to sharpen their pencils. If they're using all this data, they need to have some subjectivity I don't know if they live in Boston I mean, my dealings with them. I just feel like the data really needs to be addressed. I think that's really all I have. You know, the NMLS, the Zillows, it really is unfair. As Councilor Flynn said, you know, somebody buys a house for $1 million and the elderly... Family are living beside them, and it just goes flying up their taxes. And then check on the residential exemptions. There's a lot of people that are dead that are getting the residential exemption in homes. They're not following up to find out. and again, just data. in the third category. I think we need a third category and i think even if it's two dollars per thousand on those apartment buildings threes fours and sixes that'll be helpful thank you

Okay, thank you very much. You have a wonderful district councillor in John Fitzgerald. You can reach out to him and reach out me. I'll also give you my card. Frank, you signed up? Okay, it's a new one.

Thank you, Frank Baker, former District City Councilor, Dorchester resident, someone that has my assessments gone up by $200,000 for the last three years. Back in the last downturn in the economy, which we're in now is a downturn of the economy. I couldn't even get an assessor to come out not an assesser by the bank Bank, Assessor to come out and get me at $500,000 back in 08. I think what we're doing now... And you made a good point talking about how we were racist back in the day during redlining and things like that. And it's a progressive tax, so because it's progressive supposed to be better supposed to take care of lower income communities of color. It's progressive, but it's not doing that like we've heard from Councilor Culpepper. We have the Back Bay Beacon Hill really pays to be rich in Boston and the people that are middle class, myself included.

My assessment is exactly about what I could potentially get if I were to put my house on the market and sell it. 1.2 million is what I'm assessed at, I could probably get that if all the stars aligned at that point That doesn't take into account what I would need to pay in taxes, what I'd need to a broker, what i would need the city. So we're actually getting taxed and so on. It doesn't seem like it's progressive to me, but yet you look around the city there is not a single vehicle that isn't brand new. The salaries in this city now, everyone seems to be making quite a lot of money. I'm a 37-year city worker. Very few people back in the day were making over $100,000. We're not talking about that but

What I think we're looking at is, we're trying to catch up with budgets that are out of control and it's being levied on the backs of the middle class people that are here. We talk about affordability and how we need to keep prices down. The one thing that's in your control, the city council and the mayor is the taxes. They've totally gone out of control. The budget's totally out of controlling because my taxes have gone up the way they've gone up My mortgage has gone up by $300 a year, and my insurance has tripled. It went from $1,100 a year to $3,300 a Year That's something that we're not taking into account when your assessments go up Your insurance also goes up. So we're adding to the unaffordability where, I'm counting myself on that where also because I used to sit on this party We are adding to the unaffordability by the decisions we are making in this chamber.

The City Council does not set the rate. My man here, the acting commissioner said that you guys set the rates. You guys don't set the ratings. The rate is set across the hall and this party votes on it. It's an up or a down, you have no say on it, it's set across the hall so thank you for your time.

Okay thank you Councillor Baker um okay uh I think that's Sorry, just one person online who's prepared to testify. Maybe not, okay.

I'm here, can you hear me?

Okay, great, so you have two minutes just whenever you're ready.

Thank you for your time. Good afternoon, Chair and members of the Council. My name is Melissa Guzman. I'm a lifelong Boston resident of the City of Boston. And previously I've worked in the City of Boston Assessing Department from approximately October of 2018 through February 2019. I'm here as both a former employee with direct exposure to assessment and abatement operations, and a Boston taxpayer who believes residents should be able to trust that these processes are fair Consistent and Transparent During my time in the assessing department, I observed situations that caused me to question whether taxpayers were always receiving the same level of review. I recall circumstances Employees were discouraged from fully pursuing or approving abatements even when taxpayers raised legitimate questions about their assessments.

I also observed inconsistencies in the review process. Some matters involving attorneys or representation appear to receive additional attention or adjustments. that did not appear to be available in the same way to every taxpayer. I was also concerned that some assessments appeared to rely heavily on broad neighborhood treatment rather than individualized review of a particular property. I raised these concerns internally about departmental practices and employee treatment. I did not feel those concerns were adequately addressed, and I did have concerns about how confidentiality was handled. I'm not here to speculate about anyone's motives, I am sharing what I personally observed and experienced because I believe these issues deserve transparency and appropriate independent review.

Boston residents should have confidence that assessments and abatements are administered consistently, objectively, and fairly. Thank you for your opportunity to testify.

Okay, thank you very much. We're going to turn to our panelists now. Chris Lehman? Am I pronouncing it right? So if you have an opening statement, we'll hear from you first and then we'll here from Professor Singh after that. Thank you, Chair Weber.

And thanks to the whole council for having a hearing on this important topic. Thank you to Councillor Culpepper for inviting me. Good afternoon. My name's Chris Lehman. I'm here today to represent the Small Property Owners Association which represents owners of small rental properties across Massachusetts And specifically, I'm here to share some data and thoughts about the property assessment and taxation practices of the City of Boston and how they affect both small landlords and the renters they serve. My core claim is that Boston's inconsistent assessment and taxation of different categories of residential properties is fundamentally unfair to both the owners of naturally affordable rental properties, and to renters themselves. Boston nominally has a constant property tax of 1.24% for all residential properties, but this is undermined by two practices. It's undervaluation of the highest end homes and it's higher aggregate taxation of renters via the homestead exemption. First, the undervaluation.

An analysis produced by SPOA and verified by The Boston Globe found that single family homes in Boston at the low end of the sale price range are generally assessed at values close to their same year sale prices, ranging from 99% to 105%, on average depending on the year. This pattern is similar if not worse for naturally affordable rental properties, triple-deckers et cetera for which a survey found city assessment at an average of 113% of market value. Homes at the high end, however, are meaningfully under-assessed relative to their sale prices ranging from 68% to 80% on average depending on the year These averages also hide dramatic variation. Many high-end properties are assessed at less than half of their same year sale price, with some under 30%, as Councilor Culpepper has noted. One or two instances of this could be chalked up to unusual outlier transactions, an idiosyncratic buyer whose preferences diverge significantly from the broader market for instance.

But this is happening with a meaningful percentage of high-end properties year after year In other words, it appears to reflect a built-in bias of the city's assessment system towards valuing high end homes significantly below their market values. Acting Commissioner Wong earlier noted that They have a standard practice of excluding outlier properties, and this seems to be a key factor behind why these high value properties are not being assessed close to their real market values. Models are useful to the degree that they make accurate predictions. If you have a model that's off by 2% with its predictions, you can say that's a fairly good model. With its predictions, that's a model that clearly needs significant improvement. If that were a model used in the private sector whoever was using it to make decisions would be out of business very quickly The consequences for a city like Boston are different, but still meaningful. And the city has revenue problems as has been noted.

This has a real impact on the city's tax base In fiscal year 2026, under assessment of just the top 20 homes amounted to $83 million. An amount that would scale up considerably if expanded to for instance, the top 100 properties. This is a highly salient fact given the city's current revenue crisis, and it's unclear why the city is pursuing aggressive assessments of the struggling office sector while ignoring clear revenue opportunities like this. Secondly, I'd like to talk about the homestead exemption. This policy enables homeowners to deduct up to $4353.74 from their annual property tax bill, reducing these bills by as much as 90%. As a result, Boston's homeowners pay less than half the nominal tax rate on a median-price home while rental housing pays the full bill. The homestead exemption means that rental housing paid a higher tax rate than if all housing were treated equally. This isn't just unfair to the owners of rental housing, but also to the tenants, the renters.

Recent studies show that 50% to 89% of property tax differences are passed on to renters In other words The Homestead Exemption forces landlords and renters to subsidize homeowners, an outcome that runs counter to the city's stated goal of improving affordability for renters. It's been noted that the homestead exemption is progressive That's true narrowly within the category of homeowners. It is progressive within the Category of Homeowners, but it's regressive when it looked at the city as a whole. The majority of city residents are renters and it disfavors renters who are on average lower income than homeowners. Together, these practices favor homeowners over renters and owners of luxury homes over owners of more modest ones In doing so, they exacerbate existing inequities and run counter to basic norms of tax design. Some taxes like sales taxes are flat applying an equal rate to everyone. Other taxes like income taxes are progressive

taxing higher earners at a higher rate. The tax policies I've described here tend to tax lower income residents at higher rates, a pattern that is perverse and unjust. To be clear, I'm a businessman. I like capitalism. I don't want to see punitive taxation of people in businesses at the high end But I also don't think it's right for luxury homes to be taxed at a fraction of their actual value or for renters to be taxes elevated rates to benefit homeowners. For the sake of fairness and accuracy, I believe that these policies should be changed.

Okay, thank you very much. We're gonna go to questions but first the other panelists Professor Singh can hear me?

Can you hear me okay?

Yes

Okay, great. Good afternoon. Thank you Chair Weber and members of the committee for the invitation. My name is Ruchi Singh. I'm an associate professor of real estate at University of Georgia and I study how homes are assessed and taxed. The question before you is whether Boston assesses higher priced homes too low, and lower priced homes to high? It is a fair question, and people are right to ask it. My answer is this. The examples in the hearing order are a small number of sales, most of them at the very top. When you look at all the sales Boston's assessment meets professional standards for treating lower-priced and higher priced homes alike. Once the residential exemption is accounted for, lower-priced homes whose owners live in them and pay a smaller share of their value in tax than higher priced homes do.

Any system will miss on some individual homes, and that should be fixed. But that is not evidence of a system tilted against ordinary homeowners. I will make three points and say what could be better. My first point is that we should not look at only the top properties. A sale price is one buyer's price in one deal. It is an estimate of market value, not the true value and it carries noise from that deal. So no single sale and no small group of sales can settle where the assessments are right. The top alone cannot show how the whole system is working, A fair test uses all the valid sales from the lowest priced homes to the highest not just a handful at the top. Most of the evidence I'll present comes from research by Ron Rakob. He worked in Boston's assessing department for more than 25 years and was its commissioner. He is now a fellow at the Lincoln Institute of Land Policy.

His findings do not rest on a sample he picked. They rest on the sales the State Department of Revenue considers valid. Assessors must report sales to the state and mark the ones that were not normal open market sales, such as family sales, foreclosures, homes substantially changed between the assessment and the sale, and the sales of several parcels. Those sales are not used in the analysis and the review is subject to the state audit. The limits he uses are the ones recommended by the International Association of Assessing Officers, and not his own. He studied 2017 sales in Suffolk County, most of which were in Boston. The lowest priced tent of homes sold was assessed at about 95% of the sale price. The highest-priced tent was at about 91%. Every standard measure was inside professional limits. In Boston's 2021 sales, the measures were again well inside the limit.

In fiscal year 2026 data for single-family homes, the lowest and highest trends were less than 1 percentage point apart. Most of the examples in the Herring order come from the very top of the market, but the very-top is not typical. Across the whole highest price tent assessments are in the low 90s as a percentage of sale price. My second point is why the two ends of the market are the hardest to value. Some of this is documented, some is likely but not proven and I'll say which is which. First, what is documented? Valuation models learn from sales and the more unusual a home is, the fewer similar sales there are to learn from. Valuation models estimate from sales like the regression models many assessors use also tend to treat the most unusual homes at the top and at the bottom as more ordinary than they are.

My co-author Daniel McMillan, a professor at the University of Illinois Chicago has studied similar properties in Chicago. He found that at very low sale prices, assessments were not only much higher as a share of prices but also far more wearable. One more thing can make two careful studies disagree is which sales they count. In early work, which has not yet published, Daniel McMillan found Boston inside the professional limit every year using the sale the state considers valid. With a commercial file of the kind many national studies use, it looked far worse. Until he kept only sales that the state also accepts. Then the results nearly match. Now, what is likely but not proven? Both ends are unusual markets with distressed sales at the bottom and one of a kind home at the top.

Assessors usually cannot go inside, so poor condition or expensive finishes may be missed. Whose sales may not be random either? This is my own reasoning. A seller in financial trouble may let a home run down and sell below its assessment, an owner who fixes a home up before selling may sell above it. and owners of expensive homes may be more likely to appeal. That would not be a favoritism by an assessor, Boston's appeal records could show whether that happens in Boston. My third point is that we should not look only at assessed values, but at the tax will people actually pay. Boston gives a residential exemption to owners who live in their homes. Each year this council sets it at the most the state allows. It is the same dollar amount for nearly every qualifying home. So it fatters far more in proportion to a lower priced home.

Here is an example for the fiscal year 2026 using some of my own calculation. The exemption takes about 351,000 off the assessed value of a qualifying home before the tax is calculated. Take two homes each lived in by its owner and assessed at full value. The first is assessed at $500,000 The exemption removes about 70% of that value from the tax, and the bill falls from around 6200 to 1850. The second is assessed at 5 million The same $351,000 is about 7% of its value and the bill falls from about 62,000 to about 57,650. So the 500,000 home pays about 0.4% of its value in tax and the $5 million house pays about 1.2%. That is roughly three times the rate. Two limitations

The exemption does not directly help renters or owners who do not live in the property and it reaches only the owners who apply for it. Moving on to what could be better. Even a system within standards can improve, and here is where I would focus. The first is location. Many valuation models use neighborhood boundaries that may be too broad to capture the differences in value from one street to the next. Models that use finer geographic areas or control directly for location could capture these differences. The second is methods that value homes more accurately at the two ends of the price range. One I think might help is spatial quantile regression. In plain terms, it lets evaluation model work differently for low-price and high-priced homes and from one location to another.

A second could be independent automated valuation models, one of the kinds that lenders use might also help as a check. I have not tested whether it would be better The third is better information about the inside and condition of homes. New tools such as street level and aerial imagery help with the outside. The inside is costly to collect, and it depends on owners allowing access. Appraisers already collect this information, including interior condition when they appraise homes for mortgage loans. If the city can get access to that data it could use it too. The fourth is very top of the market where there are very few comparable sales. For those homes, the city could consider sending an appraiser to inspect the house as a lender does before making a mortgage loan.

That would meet the owner's cooperation and it costs more for each home, but it would apply to only a small number of homes. Mr. Rakoff's research supports the first three points that I made. And none of this is a quick fix. In the meantime, the timely answer is the flat dollar exemption Boston already has So a practical step now is making sure that every eligible owner actually receives it because it must be applied for. To conclude, a small number of properties cannot tell us how more than 100,000 assessments are working. Overall Boston's assessments meet professional standards for treating lower price and higher priced homes alike For owners who live in their homes and apply for the exemption, the exemption more than offsets the small gap that remains. Where individual homes are missed we should fix them. Thank you I'm happy to take your questions.

Okay, thank you very much. So, Councilor Culpepper I'm gonna set the timer at seven minutes and then see where we're at.

Thank You Mr. Chair. Professor Singh What recommendations would you have or do you have with regard to what you've seen in the assessing and some of the issues that we've been discussing during this hearing? What do you recommend?

So I would start by going back to some of the questions that you were asking earlier in the sense of why do we have such high discrepancies in these high priced properties? So when we are using a model, what is happening is we're trying to come up with the value of how much would an additional bedroom cost or how much will an additional bathroom cost? and we apply the same average cost estimate for this additional bedroom or bathroom to all the houses in a particular location. But that's definitely not true. So for houses which are expensive, the quality of the bedrooms and bathrooms would be much better. And it's just harder to account for Given the data that we have, or the assessor's office has because it just harder to come up with how much better this bedroom is without having some standard measures.

One idea could be is we do what lenders do when they get an appraisal done. So, when you're trying to get a home loan They actually send in an appraiser to value the house and they use the sales comparison approach, look at three other values. And of course they take subjective calls of what this additional bedroom or bathroom should cost and probably we could use a similar method for the very high-end properties where we don't have enough comparable data, enough comparable sales. The other could be using automated valuation models. Now, it's a problem in using automated evaluation models because it's more of a black box And it would be difficult to explain to the public in the sense of how these assessed values are really being calculated. That could be a second approach, but one would need to do some testing because I haven't tested it myself as to how much better it does.

Because the key underlying problem is not having good quality data for these very high-end properties. And the third could be using something like a spatial quantile regression models which would try to fit a slightly different kind of model for the high-end properties compared to those of the low end properties.

And so is that something you think that we might need to make as an amendment to an ordinance

I'm not really sure about that portion in the sense of how the law is written, in terms of what models can be used. But of course there should be some testing before it's implemented on ground to see whether this really makes a difference because this is just my hypothesis.

Thank you. Professor Lehman, You were talking about that $82 million Talk about that a little bit more. Then I want to talk a little about the burden that renters are facing as a result of this

Assessment System. Yeah, thank you. So I think it was my impression $83 million is just for the top 20 properties the degree to which their values were under-assessed relative to the actual market prices that were established by the sales? And so that is a portion of the city's potential property tax base. That was just not taxed, right? And so given the projections that various groups have come out with showing potentially fairly severe revenue shortfalls that are facing the city right now. to be ignoring that kind of portion of the tax base. While that's not a massive percentage of the taxpayers, you plausibly might also interpret it down to the top 40, top 50 properties and get more out of that Any source of revenue seems worth going after in this case, especially where It's consistent with having a more even rate of taxation across properties in the city of Boston. That's the piece on the $83 million.

The other question about the impact... On the $82 million, how many properties would

So that's only the top 20, right? The top 20 alone.

The $83 million was just a top 20.

Correct.

Okay.

Yeah. And you want to talk about the rent? The exemption, yes. So my understanding of the city's tax process is your property tax process at least. You have two categories, right? You have the commercial properties and the residential You have the split of the assessment there and that results in different millage rates. And then within residential properties, therefore some fixed amount that's been determined by that split between residential and commercial That has to be made up by the overall set of residential properties. What's done by the homestead exemption is transferring a large portion What would be an even rate of, let's say 1.24% across all residential properties and taking that burden off homeowners and placing it on to renters? It's the same total amount of money but you're shifting

and a large chunk of it, I haven't done the math on the aggregate amount but it's presumably hundreds, millions. And put over, maybe not that much but quite a large amount right? 4,000 per unit per year and transferring that over to Do you think the assessment is accurate? So there's two different issues, right? One is the assessment issue where it seems like The city is doing a pretty accurate job of assessing the values of residential properties at the low end. At the low-end? That bottom 20, the assessment is pretty accurate. Amazing! Yeah, yeah. It is a much less accurate assessment it seems at the top end but this is a separate issue. This is once we've determined what those assessments are Do we give special tax breaks to one category or another?

And here it's been determined that homeowners are going to get up to $4,300 annually taken away from their tax bill which in many cases is 90% of their entire tax bill. but that revenue still has to come from the other half or more than half, right? Because renters are about two thirds I think of a city. That has to comes from the rental properties in which renters live which again studies have shown the cost is passed on to the renters themselves.

And so for what do you recommend with regard to, so we know the costs are being passed on to rental income properties. What's your recommendation of how to fix this? Now, look, you can't say do it with the exemption because we'll get run out of Boston if we start talking about that.

What do you say? Yeah, I mean that this is an area where my expertise is in the economics of it and finances of it. And you know it's up to elected officials to determine how that meets up with the political reality but my suggestion here would be because I don't think this is a salient issue on the top of most renters' minds, right? Many renters probably don't know there is a homestead exemption. I think if more renters were aware that they're being made to indirectly, because of course they're not directly paying it. It's their landlords who are doing it They're being made to indirectly pay higher taxes because of this city policy. That changes the political dynamic, right? Homeowners are acutely aware of it because they see it taken out of their tax bill every year Renters just aren't thinking about it, and there are quite a few more renters than homeowners in the city of Boston. if your goal is to make that portion of the system more fair, more equitable. I think raising awareness with renters would be the place you would start and then you could move on to the actual reform proposals.

Well, you know, I just submitted a hearing order to relieve non-profits from having to pay part of the taxes that they're, that the owner of a building that they are renting in has to pay. They actually have to pay Texas, the non-profits. So I at least carved out non-profit's not all renters but I carved out the nonprofits because the impact that it has on them determines What they cut out from their programs.

And it's true that would benefit the subset of renters who are directly affected there, my general inclination as you know in terms of broad top level policy design principles is to have a more even and broader base rather than creating lots of specific carve-outs. Obviously, again I understand there's political considerations around all this but thinking about Boston's tax base writ large, right? I don't know hundreds of tens, hundreds of billions of property value that isn't taxed right because it's held by University, hospitals, nonprofits, et cetera. And so Boston's tax base would be much higher if that were taxed and so the question of whether to continue Decreasing the percentage of Boston's property value that is taxed is a complex one. Thank you

Okay, yeah thank you. Just a few questions for me so I mean I think we heard from Commissioner Wong like the one property everyone focuses on it was assessed at 12 and it sold for 20 he's saying that If you look at the two family in that area or whatever that unit was, that the sales were for $12-13 million. So I think he's suggesting that assessment and that there was just a sale that went for whatever reason way above What's your response to that?

Yeah, my response there is we're looking at a large number of different assessments and so if you were to find one outlier among many, many assessments That would be understandable. But we saw a list of many, many properties that have these characteristics and it suggests to me He described a few different elements of his modeling process. First, there is a linear regression where you draw the best fit line through all these dots But it's not strictly a linear regression, right? He's eliminating certain dots in order to calculate that line. So those dots don't play into the valuation Those dots are those outliers at the top, so the slope of the line is going to be different. It's going to flatter and therefore have lower assessments for high-end properties, higher assessment for low end properties because you're eliminating those pieces of data from the correlation Secondly, there's a question about is a linear fit actually the best answer? A linear fit is the simplest fit.

It's easiest to do the math on but looking at the plot that he put up there it looked closer to quadratic fit. as opposed to a flat slope. There are lots of different ways you could model it mathematically. Is it quadratic? Is it some kind of piecewise function? But I guess if we're thinking about broad trends in the economy these days, people talk about the K-shaped economy. You have dramatically different trends that are affecting and many more. and so on.

I thought your analysis was on picking 20 at the bottom and 20 at top. Yes.

Cherry picking? Well, I mean it's not like an arbitrarily selected set. It is a predefined set and then you look at it within that sample. If I were cherry-picking say Just the properties that have the highest ratio of valuation to sale price, that would be cherry picking. Instead we're looking at Two different segments predefined, right? Similarly to how he's describing. They look at properties in different quartiles, right you define upfront what the segment is based on its You know, percentiles that it makes up of the distribution and you can do analysis on that in a intellectually fair way.

Okay, I guess Professor Singh why do we use a linear analysis or you know in this regressivity and not you know a different kind?

I think most assessors office use the linear kind and my understanding from speaking to different assessors is easier to explain and easier to understand. The other models There are some cities which use other models like the spatial quantile refreshments, which are slightly more complicated. But yeah, the linear model would have that issue of missing the two tails of the distribution. And especially if you start looking at The bottom 20 and top 20, or the bottom 50. Because the bottom 20 or the top 20 is a very small share of all the assessments that are taking place in Boston in a particular year. and they would be off on those two tails.

Okay, and then the Lincoln Institute of Land Policies I know there's different tests that they're using.

Yeah, so they're using different tests. And if I even do it much finer, so rather than doing the quartiles, if I divide the whole distribution into 10 different pieces The distance in the assessment ratio, which is just assessed values divided by sale prices, is very similar or within one percentage point difference for the lowest tenth of the distribution and the highest tenth of But if you start cutting it finer and finer, instead of saying tenths, if you say 0.5% of the bottom and 0.50% of top, the gap would start to widen

Okay, and then I guess having looked in other cities when you look at the, as Councilor Culpepper, Commissioner, Council President Culpeper has highlighted in the top 20 and the bottom 20 I mean, in those you do see a pattern of more accurate assessments at the lower values. What do you make of that?

Now, you would see a similar pattern for most of the cities in the country. Most of the other cities would be much more regressive on the tax bill. Boston turns out to be much progressive on the tax bill, given the residential exemption that's there which is really on the higher end when you compare it across different cities in the country.

Okay and then just at that top end where it seems like we're just missing at the top 20, maybe it's the top 100. I guess you mentioned, Councillor Culpepper asked you having a sort of more on-site viewing. But if there's... As Commissioner Wong Is there anything else in addition to what you suggested that we should be doing?

Well, I think getting more data on the interior quality and I'm not very sure as to how Boston does it. We need more information than just whether it's one bedroom and one bathroom. We could, we need indicators of one bedroom which is better than the average bedroom in this price set in this neighborhood or worse than you know So we need some sort of a qualitative variable to measure it. And even then, it would be difficult but at least it would get us something closer for those high-end properties because I don't know to what extent we are Yeah, I mean, I guess it's just a comment. To some extent, I feel like

to the extent that there's two sides, they're sort of talking past each other. I hear Ron Rakow and Commissioner Wong, to some extent you Professor Singh saying look if you do The statistics and the math analysis, this is not regressive which is thing you'd be worried about. In fact if you look at the bills it's progressive but then at the same time You can hold up plenty of examples that show that it's not working as intended. And I assume those are on the edges, so I just... Just one last comment from you, Professor Singh about Do we just look at that and say, okay like there's always gonna be outliers. Can both things be true? That we can look at the top 20 and bottom 20 and see this pattern yet

When you look at the overall, how do we... How do the non-statistical minded people process that sort of?

No, that's a great question. yeah so on average it's doing a good job but it is missing the two tails now as the calculations showed or what was spoken should we leave 83 million dollars on the table probably not But maybe we could use more complicated models or do something different for these very high-end properties. Yeah.

Okay, thank you. Culpepper. Okay, I'll take it. I just want to thank you for this long wait get up here. I wanna thank you Professor Singh, Mr. Lehman for being here. I just want to thank Councilor Culpepper for filing this really, for me, educational hearing and I wanna thank everyone for listening and look forward to the conversation with that said This hearing is now adjourned.