Oh, And One More Thing... Send a Check for $424k -- Er, Make That $660k

While Mayor Thomas Menino spent a couple of days last week in various interviews with reporters stating his opposition to key elements of Boston College's undergraduate housing proposals in their revised institutional master plan, he forgot to mention one thing: BC's proposed conversion of the apartment building at 2000 Commonwealth Avenue into an undergraduate dormitory would remove more than $400,000 from the city's tax rolls, because BC is a tax-exempt institution.

Today Mayor Menino continued his feud with the BC administration by insisting that BC should increase their Payment In Lieu Of Taxes (PILOT) by the $424,000 that will be removed from the tax rolls, according to the Boston Globe:

Today, Menino, through his spokeswoman, took aim at the college. "He believes BC should make that up somehow," said Menino press secretary Dorothy Joyce. "They don't do as much as their counterparts, and he'd like to see them do more."

Missing from the story is that the building is currently heavily under-assessed relative to similar, nearby comparable apartments; the city should be pushing for $660,000 in increased PILOT, not $424,000.

Mayor Menino's comments Tuesday echo earlier comments by District 9 Councilor Mark Ciommo, who called into question the wisdom of BC removing the property from the tax rolls.


Under-Assessed Property: Taxes Ought To Be $660,000 Not $424,00

Missing from the story is that the apartment building appears to be significantly under-assessed relative to a comparable apartment building in the immediate neighborhood.

The apartments at 2000 Comm Ave are typically split between 1-bedroom/3-room units with 700 square feet assessed around $165,000 (e.g., #806), and 2-BR/4-room units with 1000 sf assessed at around $240,000 (e.g., #805).

Comparable apartments at 1933 Comm Ave across the street are 1-BR/4-room units with 660 sf assessed at nearly $280,000 (e.g., #408), and 2-BR/5-room units with 1150 sf assessed at $350,000 (e.g., #403).

At $36 million, the total assessed value for the 188-unit apartment building at 2000 Comm Ave is therefore under-assessed; a more accurate assessment would be around 56% higher, or $56 million. The current property taxes for the entire building ought not to be $424,000 per year, but instead 56% higher, or $660,000 per year.

Note that 2000 Comm Ave is also a more modern building than 1933 Comm Ave and offers a range of additional, luxury amenities -- including the swimming pool in the photograph, spectacular views of the Chestnut Hill Reservoir, and others features you can see at Archstone's website. So, if anything, 2000 Comm Ave should be assessed even higher than the comparables.

When Mayor Menino is pushing for BC to increase their PILOT to account for the property tax payments on 2000 Comm Ave, the city should use $660,000/year as the baseline for negotiations -- not $424,000/year.

Why would the apartments at 2000 Comm Ave be so heavily under-assessed? I can only speculate that the developers of the building managed to get a "sweetheart" deal with the city to assess the property so low -- but, admittedly, I have no evidence whatsoever of any such agreement. It's a good question to ask the city's Assessing Department.


Is Raising PILOTs an Implicit Acceptance of the Conversion to a Dormitory?

One other problem with Mayor Menino's statement on Tuesday is that, as long as BC continues to operate the building as open market rentals, they already have to continue to pay property taxes since the property is not an "institutional use." Only if and when it switches to institutional use -- such as if it is converted into a dorm -- does the loss of property tax revenue come into play and the modified PILOT is a way to address it.

By raising the PILOT issue now, it sounds like Mayor Menino is implicitly accepting that BC will convert the building into a dorm. Doesn't the city have a say about the conversion? Doesn't BC need approval of that conversion both through the Article 80 review process (requiring approval of both the BRA Board and the Zoning Board) and through a city-issued dormitory license? If so, then the city could easily erect hurdles for BC by blocking their move through either the Article 80 review or the required dorm license.

University PILOT vary widely in their amount. Harvard University pays Cambridge, Watertown, and Boston a combined $5.1 million, while BC pays Newton and Boston a combined $315,000. Better uniformity in the PILOT would make sense, particularly since BC has demonstrated that they are not in dire straits -- having paid $173.4 million for the St. John's Seminary land in 2004-7 and $67 million for 2000 Comm Ave last month.