a communication from Mayor McGovern, transmitting amendments to Policy Order # 3 of May 21, 2018 regarding the creation of a structured tax rate system for FY20

CITY OF CAMBRIDGE OFFICE OF THE MAYOR mayor@cambridgema.gov Marc C. McGovern Phone: [phone removed] Mayor Fax: [phone removed] To: The Honorable, the Cambridge City Council From: Marc C. McGovern, Mayor Date: May 31, 2018 Subject: Proposed Amendments to Policy Order #3 Subsequent to the introduction on Monday, May 21, of Council Policy Order #3, “That the City Manager is requested to create a structured commercial tax rate system for FY20 that prioritizes lowering the tax rate for small businesses,” our Office has been in communication with the Director of Assessment to build upon the purpose stated therein to support a diverse, locally-owned small business ecosystem by lowering costs to those proprietors. A potential program that would allow the Assessing Department to take into account landlords who are offing and maintaining below market leases is being vetted through the appropriate municipal and state departments. In order to allow those conversations to continue, we have been asked to amend the policy order in a way that grants the City more flexibility in fulfilling the stated goals. Attached are amendments which will be proposed at Monday’s meeting, and are submitted here to allow the public an advance reading. Sincerely,

Propose to Amend Policy Order #3 by substituting the following: WHEREAS: Cambridge’s commercial tax rate of $14.81 per thousand dollars of value is applied equally to all commercial property owners (accounting for 65.4% of the property tax levy for that year) regardless of their size, applying a flat tax to the City’s largest and smallest businesses; and WHEREAS: The City has been able to reduce the commercial tax rate for five consecutive years, and decreased the tax rate by 8.1% between FY17 and FY18; and WHEREAS: Landlords who might wish to offer and maintain below market rate rents for their commercial properties are still taxed on the property’s assessed value, removing any financial incentive for trying to keep rents low for certain tenants; and WHEREAS: The City Council has repeatedly heard about the challenges facing Cambridge’s small business community and has voiced its commitment to supporting a diverse, locally-owned small business ecosystem; now therefore be it ORDERED: That the City Manager be and hereby is requested to work with the Director of Assessment to draft a Home Rule Petition creating a program that takes into account landlords who are offering and maintaining below market leases and other means to lower costs for small businesses, and to report back to the Council on any progress prior to releasing next year’s tax rate.

1 Perez, Lori From: Lopez, Donna Sent: Thursday, May 31, 2018 2:45 PM To: Perez, Lori Subject: FW: Communication and Report from City Officer Attachments: Amendments to PO #3 on Reducing Tax Rate for Small Businesses.docx     From: Durbin, Wilford   Sent: Thursday, May 31, 2018 2:43 PM  To: Lopez, Donna <dlopez@cambridgema.gov>; Perez, Lori <lperez@cambridgema.gov>  Subject: Communication and Report from City Officer    Donna,     Please include the following memo in communications and reports from a city officer for the Monday, June 4, 2018,  Council Agenda.    Thanks, Wil     ‐‐  Wilford O. Durbin Chief of Staff Office of Mayor Marc C. McGovern [phone removed] | wdurbin@cambridgema.gov Follow us @Cambridge_Mayor