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Boston to try to convert empty downtown offices into residences by slashing their property taxes for three decades
By adamg on Mon, 07/10/2023 - 3:33pm
Mayor Wu today announced a proposal to open up empty commercial space downtown to residential use by offering 75% off standard residential tax rates for up to 29 years for building owners - and by setting up a new office to speed conversions through the city's normal development approval process.
The "Downtown Office to Residential Conversion Pilot Program, " which will begin accepting applications from owners of empty office space this fall, will require building owners who are accepted into the program to rent or sell up to 17% of units as affordable - and to give the city 2% of the revenue they receive if they sell their buildings.
The city would collect the reduced taxes through a "payment in lieu of taxes" agreement, of the sort more typically used to collect at least some tax-like money from non-profit organizations that own buildings in Boston - in a process that would require approval of specific building conversions by the BPDA and possibly other city agencies, such as ISD. The BPDA will set up an ombudsperson's office "to help with streamlining the approvals process" through City Hall.
In a statement, Wu said the move would not only add to the city's housing stock, it would help generate new foot traffic for all the downtown businesses that once relied heavily on such traffic from office workers who now increasingly work at home.
This program will help us take advantage of the opportunity we have to rethink Downtown as a space where people from all over come together to collaborate, create, live, and play.
Building owners will have to move fast - the city says the program will only accept applications through June, 2024. Also, they have to commit to begin conversion work by October, 2025.
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Comments
and by setting up a new
Well that speaks volumes, So much for fixing what's broken.
Magoo sez
This, Magoo sez, is verrrrrry interesting, verrrrry interesting indeed. Magoo.
Keep those downtown values high
As a Boston homeowner, I greatly benefit from the relatively low taxes on residential units. Property taxes on commercial space have long subsidized keeping residential taxes on the low side. If the value of all those financial district office buildings suddenly craters, we're in big trouble.
Tricky balancing act
Too much office property and that market tanks, reducing the assessed value of all office space.
It may be a matter of losing office space, but stabilizing assessments such that the city's take is stabilized.
As a Boston homeowner, I
I completely agree. This plan makes no sense. Having the city subsidize something (conversion) that would take expensive taxable real estate and convert it to residential real estate (taxed almost 250% less) while then offering tax rebates on top of that. You're effectively incentivizing a building owner to spend money to make the city a LOT less money. How is that sustainable and won't it immediately put additional pressure on the rest of the tax base? It would be much cheaper to convert existing office space to lab space (going for insane pricing right now), which benefits taxpayers and building owners. As for new downtown development, the city should require that new building development needs to be mixed use and incorporate condos/apartments.
Consider this
If the commercial sector is over built, removing commercial real estate at the bottom of the barrel - i.e. stuff built after the great fire that can't be converted to high end offerings - stabilizes the value of the stuff at the mid and top ends.
Keep the appraisals up at the top end by converting low-end space to housing and you get to avoid a crash, continue taxing high value at a high rate, and work on the housing crisis at the same time.
taxed almost 250% less
The ghosts of your elementary and middle school math teachers are looking down upon you and weeping.
what taxes are paid by empty offices?
People need places to live to have children and need schools.
The owner of the building pays taxes
Taxes are always paid. Even when politicians say no evictions during a pandemic, the owner is still on the hook for paying taxes out of their pocket when the tenant isn’t paying rent.
Of course they are.
It’s investment. You take your chances.
“on the hook”, please!
Take my chances at govt screwing me for votes?
Ya, real fair. How about no evictions AND a tax break for anyone that has a tenant that’s not paying taxes?!
What a cry baby!
You just want everything handed to you on a platter, don’t you.
I don't think you understand Bob's post
@c-girl: Did you get BobL's post? Don't think so.
My brain went screwy, too, when I saw the "250% less" remark.
Replied to wrong comment?
I was referring to the ludicrous arithmetic, not to anything about tax policy.
Where do all the life
Where do all the life scientists go?
Fort Point
And Dorchester, Allston/Brighton, the South End and Fenway. Please, don't let the facts get into the way of your Daily Snark.
Don't forget
Cambridge, Assembly, Watertown, 128 …
Good point but probably not
Good point but probably not the one you were trying to make.
What point are you trying to make?
I'm not seeing it
There is no point.
That’s kinda the point.
Love it or hate it.
Aren't those places more
Aren't those places more suitable for residential units?
They get to live in the city
And commute to their jobs on foot or by bike and/or by MBTA.
What?
Converting vacant commercial space into residential does not displace any life sciences entities...
Does it hurt to always be so full of shit? Does it ever get impacted? You should probably see a doctor.
I agree with many of the sentiments
But this plan seems risky. Commercial buildings are difficult to convert to residential. The space was laid out unequal at the onset, saving the corner office for the top execs. Windows, utilities like toliet stacks, elevator access. I could be wrong and I appreciate the Mayor trying to do something to avoid these buildings becoming worthless.
Nothing is a panacea
There might not be that many buildings for which conversion is a suitable idea. But why not make it easier for the buildings that fit the concept? There are a few dozen things we need to do to solve the housing crisis, this is one of them.
Depends on the building
The conversions won't be the bigger modern towers (built from around 1960 on). It's more the older buildings that don't have as large of a cross section so are better candidates for it. In NYC some of the buildings that have been converted also created a courtyard by removing a core section from the middle which makes the remaining space much more suited to configuration as an apartment.
This.
This.
I see this getting alot of the older stock buildings getting converted. Think the office space above all the retail in downtown crossing (i.e. the corner mall, at&t store, etc).
Or even along newbury. Many of those units above the ground/1st floor retail is 'office space'. Many of those buildings originally were residences that just went commercial when the street slowly did. I used to service (IT) a few realty places on Newbury and Boylston and it was clear it was a residence at one point.. there even was a shower and a full kitchen in a few of them.
I can some some post-60s highrises being used. Some of the smaller ones (think 99 high street, the datadyne building in chinatown), Those could easily be split into 1-2 bedroom units. The unit layout would just be very narrow and windows would only be on one side. THe hardest part would be additional utilities (and to split utilities off for each unit).
Not that tough
You build new (fire-rated) shafts for mechanical/plumbing systems. It's easier than you think. It's just money at that point.
Schools or education centers
I'd also like to see some of the spaces changed over to schools or training centers! Some residential conversions will bring people back to that area and yes my taxes are likely to jump up significantly in the next 5 years.
plenty of empty schools in Boston
We don't need more buildings that get used only 20% of the time.
won’t work
it wont create affordable housing
it will subsidize creation of very expensive homes for millionaires
Ha!
Reading these comments on converting buildings from one use to the other is like listening to Mike From Wilmington chiming in on Sports Radio on possible trades for the Bruins.
Leave it to the pros everyone. Nearly all of you, based on what I have read above, have no idea how complicated this process is.
PS - Don't get mad when a lot of the units, both affordable and non-affordable sneak onto the short term rental market, rules or no rules.
"Leave it to the pros everyone."
This include you too John? Some fairly declarative statements you've made here.
Unless maybe you work in the AEC industry? Or perhaps were speaking more about the real estate aspect?
The Amount of Empty Buildings...
Is not what you think. There is a 20% vacancy rate downtown. That doesn't mean 20% of buildings are empty.
It costs a lot to move tenants with leases out just to begin with.
If you have one tenant on a five year lease, a building owner is going to miss the window to convert without a huge payout to get them to move.
Which industry is your expertise in John?
Gotta be clear if it's in either the AEC or real estate industry. Seen you post about as an expert on a lot of different topics while talking down to others about their thoughts, I'm concerned you might have no idea what you're talking about.
If that's the case, you might wanna clam up and leave it to the pros.
Now do these:
1. Heavy surtax on long-term empty apartments
2. Ban AirBNB
Not just apartments
I would include commercial.
We already have, in effect, a three tiered property tax rate: residential owner occupied, residential, commercial. Could we add a surcharge for vacant property?
Revere did this
Revere did this over 10 years ago.
Prior Northgate Mall was pretty empty, especially after Toys R Us closed. That end of the mall was dead. Stop & Shop still held the lease on the store it used to rent in the mall (where Price Rite is now). They didn't want Market Basket to get that spot and affect their new store across Route 1. So they sat on it.
It became a blight. Revere passed an ordinance heavily taxing long term vacant commercial properties, and within a few years the entire mall was full again.
Also helped that Market Basket bought the Toys-R-US and Nat'l Liquidator's stores as those were not owned by the rest of the mall (or stop & shop). Hence why the MB sits less than 35' behind Price Rite. Market Basket = Foot Traffic.
But you can see the effects of this ordinance elsewhere in Revere.. Most of Broadway is fully leased. Lots of small businesses and shops. Not landlords waiting for a high paying national tenant. Amazing what a little nudging can do.
how about student housing?
Someone commenting on the Globe story mentioned this as an answer to have plumbing consolidated in one part of each floor.
I also think that you could have buildings that have mixed use. I lived in an two room place in Symphony on the top floor of an old office building. The only problem is that I found out after I moved in there was no cable access, but I couldn't afford it anyway.
Or Micro apartments with a storage room on the same floor.
Student housing isn't a great option
If the universities buy up the buildings and convert them, they leave the tax rolls completely. Plus the only schools which might be interested in downtown housing would be Suffolk & Emerson. And you don't get any affordable housing out of the deal.
Students drive up rents
When schools don't have dorms, kids take up all the available apartments. This pushes out renters, and they aren't great neighbors.
Renters drive up rents
.