Residential property taxes in Boston are going down for the first time in five years, thanks to the city's red-hot commercial real estate market, declining home values, and a little legislative maneuvering by Mayor Thomas M. Menino.
The tax bill for the average single-family house is expected to decrease by $142 in 2008, to $2,949, a 4.6 percent decline, according to the city assessor's office. Owners of two-family houses can expect to pay $180 less on average, and three-family owners will owe an average of $152 less next year.
The decreases are in sharp contrast to annual property tax increases in recent years. Between 2002 and 2007, the bill for the average single-family house skyrocketed 78 percent, or $1,351.
"I think it's great news. We've got a lot of people who are just getting killed by taxes," said Dr. Francisco Trilla, medical director at Atreva Health Care in Jamaica Plain, which serves many elderly city residents and young families. "You've really got to look at the most vulnerable populations and those are the people who are really going to benefit from this."
The good fortune of Boston homeowners is not being played out across the state, however. The vast majority of cities and towns that have set their tax rates so far are imposing increases to keep local services functioning.
State Department of Revenue records show that property tax bills for single-family homes are increasing in 48 of 54 cities and towns for which 2008 tax rates are set. Those bills are going up an average of $193.
The difference in Boston is that commercial development continues to boom. That is creating a deep well of new tax dollars that is coming to the aid of residential property owners. Even though residential property values are falling, city officials do not need to increase residential tax rates.
Also, changes to a state law that were sought by the mayor this year helped fend off a potential hike in residential taxes while placing more of a burden on commercial property taxes.
Boston was the largest of 13 communities that, under a four-year-old state law, opted to set a floating ratio between the tax rates of residential and commercial properties. The changes in the law sought by Menino this year staved off a further shift of the tax burden from business to residential property owners.
Another part of the bill eliminated language in the 2004 law that prohibited the residential share of the tax burden from being less than the prior year. That made possible the decrease in Boston.
"If the mayor's legislation didn't pass, no matter how much the home values dipped, the tax bill couldn't go down," said Ronald W. Rakow, commissioner of assessing. "Now, the residents can get the relief they're entitled to."
Had the law failed to pass, homeowners could have been looking at a slight increase, about $5 for the average single-family home, city officials said.
"This is a real victory for us," Menino said yesterday in a statement issued by spokeswoman Dot Joyce.
Commercial property in the city gained $2.6 billion, or 12.7 percent, in assessed value between January 1, 2006, and January 1, 2007, and business owners will pay $64 million more in property taxes in 2008 than they did this year, an increase of about 8.8 percent. In 2007, they paid a total of 795.5 million. The 2008 tax rates for both residential and commercial property are based on property values as of January 1, 2007.
Samuel R. Tyler, president of the Boston Municipal Research Bureau, a business-funded city watchdog group, said he believes the increased tax bills for business owners is not neccessarily bad news.
"For business I think the good news is we're seeing strong growth," he said.
Home values in Boston dropped an average of 3 percent between January 2006 and 2007. With new construction, though, the total value of residential property in the city increased slightly, about $100 million, from $59.3 billion to 59.4 billion. Overall, the city will collect an estimated $1.33 billion in property taxes next year. That represents an increase of 5 percent from 2007, when it collected $1.27 billion.
A spokesman for Governor Deval Patrick said yesterday that Patrick hopes to provide more widespread property tax relief across the state in the coming years.
"This is a step in the right direction, but more still needs to be done to give Massachusetts homeowners the property tax relief they need," spokesman Kyle Sullivan said of the legislative changes Menino sought.
The governor has introduced legislation that would allow cities and towns to charge local taxes on meals and hotels and to charge property taxes on telecommunications equipment.
Donovan Slack can be reached at dslack@globe.com.
