Minutes of the City Council - Tax Rate Public Meeting - October 6, 2025 6:30 PM

CAMBRIDGE CITY COUNCIL VICE MAYOR MARC MCGOVERN, CHAIR TAX RATE CLASSIFICATION PUBLIC MEETING TRANSCRIPT OF PROCEEDINGS OCTOBER 6, 2025 6:30 PM, SULLIVAN CHAMBER

1 VICE MAYOR MARC MCGOVERN: Okay, great. A quorum being present, I call the meeting on the -- the Public Meeting of October 6th, 2025. The purpose of this meeting is to discuss the Property Tax Rate Classification. The first order of business is a roll call of members present. INTERIM CITY CLERK PAULA CRANE: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Vice Mayor McGovern? VICE MAYOR MARC MCGOVERN: Present. INTERIM CITY CLERK PAULA CRANE: Present. Vice Mayor McGovern? VICE MAYOR MARC MCGOVERN: Present. Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: Present. INTERIM CITY CLERK PAULA CRANE: Present. Councillor Siddiqui? COUNCILLOR SUMBUL SIDDIQUI: Present. INTERIM CITY CLERK PAULA CRANE: Present. Councillor Sobrinho-Wheeler? COUNCILLOR JIVAN SOBRINHO-WHEELER: Present. INTERIM CITY CLERK PAULA CRANE: Present. Councillor Toner? COUNCILLOR PAUL F. TONER: Present. INTERIM CITY CLERK PAULA CRANE: Present. Councillor Wilson? COUNCILLOR AYESHA M. WILSON: Present. INTERIM CITY CLERK PAULA CRANE: Present. Councillor Zusy? COUNCILLOR CATHERINE ZUSY: Present. INTERIM CITY CLERK PAULA CRANE: Present. Mayor Simmons is absent. You have one member recorded as absent and eight recorded as present. VICE MAYOR MARC MCGOVERN: Okay, great. Sorry for folks who've been here since the beginning, you're going to have to hear this again. Public Comment may be made in accordance with Massachusetts General Law, Chapter 30A, Section 20, Section G, and City Council Rules 23D and 37. Once you have finished speaking, the next speaker will be called. Individuals are not permitted to allocate the remainder of their time to other speakers. We ask that you please state your name and address for the record. There are nine members -- or nine people signed up, sorry. So, folks will be given three minutes. And with that, we will go to Public Comment. Ms. Stephen. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Our first speaker is Denise Jillson, followed by Theo Bisbikos (PHONETIC), then Dan Marshall. Denise, you have three minutes. Please go ahead. MS. DENISE JILLSON: Good evening. My name is Denise Jillson. I'm the Executive Director of the Harvard Square Business Association. I appreciate the opportunity to speak this evening. It was only today that we learned of this special hearing and of the proposal to raise the commercial tax rate by 22 percent for 2026. This abrupt and significant increase will have far-reaching consequences for our community. While it may be tempting to view this measure as a way to address fiscal shortfalls by targeting large, possibly faceless, corporate property owners, the reality is that in Cambridge, property ownership varies, and this will have deep, profound consequences. Our commercial property owners include small family firms, local universities already struggling, and countless small businesses, retailers, restaurateurs, and service providers, who either rent or own their spaces. They are our employees, our neighbors, in the heart of our commercial business districts. A 22 percent increase in commercial property taxes will not

2 stop at the property owner's door. It will be passed down to tenants in the form of higher rents, and ultimately to consumers through higher prices. At a time when so many are already struggling to cope with rising costs, this measure risks doing real harm to our small business community and to the economic vitality of our city. We urge the Council to reject or postpone this proposal until there can be proper analysis, transparency, and stakeholder input. Let's work together on solutions that are sustainable, fair, and that keep Cambridge small businesses strong and keep our residents and visitors shopping and dining in our community. Thank you. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Thank you. Our next speaker is Theo Bissios (PHONETIC), followed by Dan Marshall. Theo has not joined us. We will go to Dan Marshall. Dan, you have three minutes. Please go ahead. MR. DAN MARSHALL: Hi, can you hear me? EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Yes, we can. Please go ahead. MR. DAN MARSHALL: Thank you very much. I'm Dan Marshall, the President and Executive Artistic Director of the Cambridge Community Center for the Arts. We are a service organization. Most recently, last few years, we renovated the Multicultural Arts Center and have been operating out of there. However, we are in a process of identifying and negotiating a couple of new Art Center locations for the benefit of Cambridge. And one of them, we would have to pay commercial real estate taxes if we either purchase it or rent it. As the previous speaker said, you know, there's a lot of small businesses, as well as tenants, who would be affected, you know, if we're paying triple net rent, then it passes along to us. The real estate taxes in Cambridge are already really high, as they are in other small towns, and raising them 22 percent is a significant proposal. I also -- you know, I'm surprised that the notice was just today. I was just very lucky to see the email and wanted to say something. And, as you may know, getting a tax abatement if a nonprofit owns a building is not a given. It takes time. And a few -- a couple of thousand dollars more a month of real estate taxes on a rent of, let's say, $10,000 a month is a significant chunk, and sometimes can make or break the ability of a business to survive. I do con- -- you know, I do want to repeat what the previous speaker said, that this should be a process, you know, beyond what has already been done, that's open, that you get a lot more feedback and discussion from the community. I want to add to that, that also we have not recovered from the pandemic, not by a -- you know, not even close to recovered from the pandemic. A lot of businesses are still -- especially in the arts, but also in bars and restaurants are still not seeing the same level of customers as before the pandemic, but the taxes have kept going up. And it is not the time to raise taxes when you have a bunch of empty storefronts as well. And instead, let's work together to revitalize the city and create real income. And once there's real income, there's more contribution, more commerce, and there's other ways to enrich the city. And eventually, when we all recover, then just having a nominal tax increase is totally fair as the City has increased expenses. But 22 percent is not great at this moment, and I think will make or break some businesses. Thank you so much, and I hope -- thank you for your consideration. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Our next speaker is Ivy Moylan, followed by Raj Dhanda, then Nicola Williams. Ivy, you have three minutes. Please go ahead.

3 MS. IVY MOYLAN: Hi. Can you hear me? EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Yes, we can. Please go ahead. MS. IVY MOYLAN: Sorry, perfect. Wonderful. Hi, Ivy Moylan. I reside at 54 Lee Street, and I'm calling because I'm the Executive Director of the Brattle Theater and the Brattle Film Foundation in Harvard Square, one of the businesses that Denise Jillson is -- was directly referring to. And I just urge that the City Council members exercise their Charter right and delay this tax decision moving forward. A 22 percent tax increase, for real estate taxes on commercial real estate specifically, is so out of bounds with the normal increase that happens. And although the Brattle is a nonprofit, we don't own our space, so we do pay real estate taxes. Currently, it is 20 percent of our budget, the real estate taxes that we pay, because we're a large space, as many arts nonprofits are, and we pay triple net because our landlord doesn't pay real estate taxes, it's passed down to us, as everyone has mentioned, and that is pretty standard for most organizations. So, the landlords are not going to be the people who are hurt, and it's going to disproportionately hurt small businesses and nonprofits. Where is a nonprofit going to find the money for something like this? It isn't even going to come from retail. It's going to have to come from fundraising. And is that going to be an option in a time like now? So, it's just -- it was sort of a -- really gob smacking to get the email about this happening today. And so, I really urge you to take serious consideration on this decision. And if it really has to go, I really need some transparency, as a resident and a business owner in the city, to understand the justification for this out of bounds tax increase to understand why this this makes sense to anyone, because I don't -- I can't understand why it makes sense right now. Thank you so much. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Our next speaker is Raj Dhanda, followed by Nicola Williams, then Suzanne Blier. Raj, you have three minutes. Please go ahead. MR. RAJ DHANDA: Can you hear me? Oh. UNIDENTIFIED SPEAKER: There you go. MR. RAJ DHANDA: Thank you. Thank you. My name is Raj Dhanda. My involvement with Harvard Square began in 1998 when I purchased what is referred to or known as Crimson Galleria. And Harvard Square from so many points of view was the place if you had any interest in real estate and all. Since then, I have fortunately been able to acquire a number of buildings in the square. And what that has given me, as we speak today -- as I speak today, is perspective of where we are and where we are going. About -- I'm going to say five, maybe a little more than that, eight years ago, it was any national, international, top of the line retailer or business, almost every time I'd hear about it. Many of them established their businesses here. Over time, some have succeeded, some have not so much. But in the last one year, maybe a little more, the demand has gone down significantly. We are not getting the de- -- the number of inquiries. We're not getting the rents. And leaving that aside from my point of view, my comment is that it's so important to have the Square be the vibrant place that it was, I'm going to say, 10 years ago. We are not getting the same inquiries. We're not getting the same quality. At the end of the day, I think the Square needs help. And if you're going to put in a 22 percent increase, which most landlords like me pass on to the tenants, but in the big picture the cost of doing business gets that much higher. And therefore, they're going to call me, and other folks like me, and say, Raj, it was a good journey, we are done, thank you. That's the challenge you have. This would be very, very problematic. VICE MAYOR MARC MCGOVERN: Thank you. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Thank you.

4 Our next speaker, Denise Haynes, has emailed to say she cannot join us. We will move on to Nicola Williams, followed by Suzanne Blier. Nicola, you have three minutes. Please go ahead. MS. NICOLE WILLIAMS: Hi again, Nicole Williams, 8 Brewer Street. So, I would love to -- I'm a facilitator of the Cambridge Somerville Black Business Network, I'm a member of the Cambridge Local First, and I'm on the Board of the Harvard Square Business Association, and I've been a business owner for more than 30 years. And regarding the tax rate, you know, not all businesses are affected the same way. I mean, it could be different from neighborhood, or even blocks. Small businesses are taking the brunt of this economic downturn. Many are still struggling to recover from the pandemic, and not to mention the tariff situation is making things worse, and it's just really trickling down. So, obviously the time is not great, but, you know, we need more transparency, we need more notice, we can't just find out day of what's going on and then mobilize. That's really unfair to the businesses, and, quite honestly, disrespectful to the small business community. So, if I missed something or a notice, let me know, but I think I'm not the only one. In terms of the -- you know, I understand the City needs funds. I mean, this is a situation that as Councillors you need to be fiscally responsible. So, our -- if expenses are increasing and our revenue is shrinking, that's the reality. We all need to tighten our belts across the board and not just lean so heavily on the small business community, because we're trying to recover too. So, I get it. I acknowledge that. I understand that sacrifices need to be made across the board. Like I said, the increase came to my attention just this morning. It was announced, you know, like really late. And, you know, I suggest we table this, not just as a Charter right, because that's not enough, one week. We need to really table it for a really thorough and healthy conversation with the business community. We need to analyze the situation, its impact on our businesses, and, you know, just we -- we just need some grace in relation to this. So, thank you for your consideration. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Thank you. Our next speaker is Suzanne Blier, followed by Heather Hoffman. Suzanne, you have three minutes. Please go ahead. MS. SUZANNE BLIER: Thank you, Suzanne Blier, 5 Fuller Place. And let me speak as President of the Harvard Square Neighborhood Association. Where is this coming from? A lot of areas, certainly, but national impacts are a key part of it. Empty offices in Kendall and elsewhere. And that is really important, but don't go after small businesses. Local businesses have been hit very hard by tariffs. I was just speaking with the owner of Bob Slate. Will these and other stores be able to survive with these additional tariffs? That is something that we really have to think about. I'll also speak as somebody who's at a local university and we had to, in our departments, come up with a plan to possibly decrease our expenditures by 20 percent. So, when you have here a potentially greater impact in terms of raising taxes, I think it's time for us to ask the hard question. Ask the City to reduce its expenses by the same 22 percent. That should be on the table. We can't simply go on as we are, and we're heading into much harder times. Let me add that for many homeowners, taxes are also going up dramatically, in part through the upzoning, but for other reasons, and neighbors will be charged even more tax as many are on fixed incomes. So, let's really put the onus on the City to come up with a plan to reduce its expenditures, the same amount that they're asking small businesses to provide. We've got to think of equity. We've got to think of the needs of the city as a whole. Thank you.

5 EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Thank you. Our next speaker is Heather Hoffman, followed by Robert Winters. Heather, you have three minutes. Please go ahead. MS. HEATHER HOFFMAN: Hello, Heather Hoffman, 213 Hurley Street. First, I want to commend the people who wrote this memo for how much information is in it. It's got so much that people need to understand all of the factors that go into figuring out how the taxes get apportioned. And I wish that the City would have a hearing to lay that out in front of people, because it really matters. One of the things I noticed is that we're eating up more of our excess levy limit. That's something that should concern people. With respect to the commercial taxes, I may have misunderstood, but I believe that commercial values are coming down by a noticeable amount and the tax rate is going up. So, it's not necessarily that the taxes are going to go up by the same amount as the increase in the rate. Again, you ought to make sure to explain this to people, so they'll know what the real numbers are. With respect to residential taxes, I would love to know how much of this is the upzoning. And how much of this -- how much of the much smaller increase in the taxes paid by condos is due to the fact that the split ownership of a condo means that it is less likely to be able to take advantage of that massive upzoning because all of the owners would have to agree. So, again, there is a lot that could and should be explained so people really, really understand what goes into this. And finally, with respect to reducing the budget, or at least reducing the increase --. Oh, I would also like an explanation of exactly what contributed to the new growth that's in the table of new growth, because that's a large number for residential, and we keep being told no residential is being built. But there are things that the City could not do and save money. Think about it. Thank you. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Our final speaker is Robert Winters. Robert, you have three minutes. Please go ahead. MR. ROBERT WINTERS: Oh, thank you for the three minutes. My name is Robert Winters. I live at 366 Broadway. Just -- primarily just a few questions. But first off, I'm a little surprised that people are saying they only learned about this today. I mean, the City Manager's letter was available Thursday night. I think anybody could have read it then. So, I don't know that I really agree with that. I think Heather sort of touched upon something, I think, that really needs to be emphasized, which is that the letter does speak about a 22 percent increase in the tax rate, but there is, I believe, an 11.5 percent decrease in commercial values. So, I don't know what that really comes out to. Maybe it's more like 10, 12 percent increase, probably. But here's the catch, is that if I was looking at the residential tax rate, and I'll speak to that in a minute, I could look at the map of the various tax districts, and I could sort of see how, well, what does that really translate into if you're in -- you know, into tax district number three, whatever, because it doesn't fall uniformly across the board, the tax rate increases or decreases. Now, in regards to the commercial tax rate, I can look at that map -- excuse me, for the residential, I could look at that map, but I can't tell from this here, and I would hope that the folks from the City can speak to this, how is the decrease -- I imagine, I'm just guessing now, that the decrease in property values, commercial values, probably was most strongly felt in places like Kendall Square with the very high vacancy rates. So, whereas -- maybe it's not true, maybe the tax -- maybe the valuations in just regular neighborhood retail, maybe those valuations were flat, which is they're going to get hit with the full 22 percent increase in their tax, not tax rate, but taxes, period.

6 So, it would be very helpful, I think, for all of us to hear a word or two about how the decrease in valuations were distributed from Kendall Square, from lab buildings versus neighborhood retail, mom and pop stores, whatever. Because I don't think it's going to be the same all across the board, and I really think the -- you know, the -- who's going to bear the brunt of this is going to really -- it's going to vary quite a bit, right? So, those are the main things I wanted to sort of just bring up here, but I do want to say one last thing on the tax rate. So, you know, the tax bill, never mind the rate, the tax bill, condominiums going up 13.3 percent, single family, 10.2 percent, two family 9.2 percent, three family 8.9 percent. The rate of inflation, my friends, is about 2.9 percent. So, we're talking about tax increases that are triple the rate of inflation. I would like you to think about it, especially in the context when people take votes like they did last week, and many weeks, for new programs, new things that have costs associated with them, and what that's going to translate into in terms of tax impacts in future years. Are we going to be seeing 20 percent next? Thank you. EXECUTIVE ASSISTANT TO THE CITY COUNCIL NAOMIE STEPHEN: Mr. Chair, that is all who were signed up to speak. VICE MAYOR MARC MCGOVERN: We need to keep Public Comment open until 7:00, which is six minutes from now. So, we will do that, but we can move on to discussion. So, Mr. Manager, do you all -- do you want to bring up your team? (Pause) VICE MAYOR MARC MCGOVERN: And this is City Manager Agenda Item 1, a communication transmitted from Yi-An Huang, City Manager relative -- oh, I'm sorry. Wrong one. A communication transmitted from Yi-An Huang, City Manager, relative to votes necessary to seek approval from the Massachusetts Department of Revenue of the tax rate for Fiscal Year 2026. So, that's what's in front of us. I will open it -- Mr. Manager, do you want to -- why don't we start, actually, with you first and then go -- CITY MANAGER YI-AN HUANG: Sure. VICE MAYOR MARC MCGOVERN: - go to questions? CITY MANAGER YI-AN HUANG: Thank you so much, Vice Mayor, and thank you all. I think we'll probably have a more robust conversation about the tax rate this year than usual. Maybe just to set some context, and I think provide a bit of the background. I would say first, a reminder in terms of when we actually start the budget process. We really started last year, in November, and had a conversation about the overall economic environment, and how we were thinking about both the economic downturn that we're going through as a City. We just went through five or 10 years of incredible growth that really supported a lot of the budget needs that we've invested in, everything from our sewers, streets, bike lanes, schools, universal pre-K, human service programs, all of those were really funded by a lot of the growth that we saw in Kendall Square over those years, and we are really seeing that turning around. And that macroeconomic cycle is going to take a little bit of time for us to get through. We set a much lower operating budget target for FY26 than in prior years. And so, we went from budget growth rates of seven, eight, nine, percent, and for the FY26 budget that we're voting on, the tax rate on tonight, we landed a budget growth of only 3.8 percent. And that was a significant conversation that we were all having together, both to ensure that we are able to make this work fiscally, we're able to invest in a number of the programs that our community really needed but also understanding that there are constraints that we're facing. One of the challenges as we were going through that budget process, that we've been discussing, is that even though the operating budget growth was only 3.8 percent, the tax levy growth is actually

7 much higher than that. And that's, again, a consequence of the economic cycles. When we were going through, as a community, these years of economic growth, a lot of the other sources of revenues, in particular, building permit revenues, are going up really fast. And all of that money essentially means that we don't have to raise taxes by as much in order to increase health benefits, COLAs, all the program investments that we are making. We're now seeing a lot of that turn around, where every year we are actually seeing -- and this will continue in the next couple of years, but whatever our operating budget growth is going to be, we're going to end up likely needing to raise a tax levy at a higher rate of growth. So, for this budget in ‘26, we had an operating budget that grew at 3.8 percent, and we had a tax levy that was an 8 percent growth. And that was the vote that this City Council approved this past June for the FY26 budget. What we're now here tonight for is the values that ultimately drive how much we raise, and where the tax rates are set come in in the fall, and then we set the tax rates. And so, I think these things can both be true. The reality is the commercial tax rate is going up by a lot more than we're used to. The values are coming down. And so, the overall dollar amount that many people will pay is going to be a little bit moderated by changes in the valuations. Now, the other challenge, and I think just to validate a lot of the Public Comment that came in, there is a real difference across classes. And so, within that commercial class, a lot of the biggest value declines are in the larger corporation's office and lab space, where we see persistent vacancies. And so, those are the areas where you're likely going to see much more moderation. So, the rate is going up, but their values are coming down, so the overall dollar change is going to be pretty moderate. And it may be the case, and I think in particular, we're sharing a bit more data tonight, but in some segments, like hotels in particular, the values have actually been pretty stable, which means that they're going to see a much higher dollar increase in line with the increase in the rate. In terms of what we're actually discussing tonight, really the votes are to decide on, first, we've always used a split rate. So, most communities that have a strong enough commercial sector use a split tax rate. And so, we have one rate for commercial and one rate for residential, and I think that will continue. The part of that that's the vote is how much we're shifting. So, what is the percent that we're going to charge commercial versus residential? And State law essentially allows us to charge a higher rate for commercial than residential, hence why you want a split rate. And we have always consistently as a community prioritized a lower residential tax rate. And so, in the case of this conversation tonight, consistent with how we've approached this every year, we are proposing a shift where last year commercial was taxed at 140 percent of the residential rate, and this year commercial will be taxed at 152 percent. That is mostly to protect the residential rates and the residential taxpayers. If we were to keep that at 140 percent, we would see significantly higher residential tax rates. And we're happy to sort of share more of those numbers. But that's been the policy that this Council and the Administration has pursued for a really, really long time. I think just the other note in terms of process is, you know, we can sort of answer a lot more questions tonight, but the decisions that really drove this were part of the budget process. And the overall amount that we need to raise ends up driving how the rates play out, and there are a lot of structural constraints. You know, we don't get to say that we want to charge certain small businesses less, and certain labs or corporations more. It really is this commercial versus residential rate, and then this is kind of how it plays out across the classes. I would probably say we've got a lot of expertise at this table. I'd love to get through all of your questions and be able to provide any more data that we can, and we can maybe go from there. VICE MAYOR MARC MCGOVERN: Before we go on, on a motion by Councillor Toner to close Public Comment, roll call. INTERIM CITY CLERK PAULA CRANE: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Yes.

8 INTERIM CITY CLERK PAULA CRANE: Yes. Vice Mayor McGovern? VICE MAYOR MARC MCGOVERN: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Siddiqui? COUNCILLOR SUMBUL SIDDIQUI: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Sobrinho-Wheeler? COUNCILLOR JIVAN SOBRINHO-WHEELER: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Toner? COUNCILLOR PAUL F. TONER: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Wilson? COUNCILLOR AYESHA M. WILSON: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Zusy? COUNCILLOR CATHERINE ZUSY: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Mayor Simmons is absent. You have eight members recorded in the affirmative. One recorded as absent. VICE MAYOR MARC MCGOVERN: Okay. So, Mr. Manager, were you going to pass it to Ms. Spinner, or do you want to go straight to --? ASSESSING DIRECTOR GAYLE WILLETT: Let’s go straight to questions. CITY MANAGER YI-AN HUANG: I think straight to questions is good. VICE MAYOR MARC MCGOVERN: All right. I have Councillor Azeem first, and then Councillor Nolan. COUNCILLOR BURHAN AZEEM: Thank you, Mr. Vice Mayor. I just had some quicker questions at the beginning, just to get facts straight, and then like more complicated questions at the end. My first question was that the budget has been set for FY2026. Is that correct? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: Through you, Vice mayor. Yes, that is correct. Yeah, when the City Council adopted the budget in June, the adopted budget was set, and that included the revenues. And at the time, as we were setting the budget, we did -- you know, as part of that, we talked about what the levy would need to be, because our property taxes funds approximately 68 percent of our operating budget. And so, and even -- and at that time, we discussed with the Council that the levy was going to increase by 8 percent. COUNCILLOR BURHAN AZEEM: So, through you, Mr. Chair, Vice Mayor. My second question is, so then the only decisions that we have, given that the budget are -- is already set for us tonight, is what is the balance of how much commercial will pay versus residential? Not, you know, are we going to reevaluate what the total budget is going to be? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: That is correct. COUNCILLOR BURHAN AZEEM: I just thought that that was helpful table setting, in the sense that I know people can be very -- have strong feelings about taxes and for rightfully good reasons. We're at a place tonight where the only vote is just how do we balance the two, not, you know, like, can we scale programs back or anything like that. My next question is that we heard about this 22 percent rate, right? I just wanted to confirm something, which is that -- and I think the City Manager mentioned this a little bit, because the -- because the rate is based on the value of a property, and the property values are going down, the rate can

9 go up, but that's not how much more you're paying in taxes? I don't know, like if you paid $100 in taxes last year, if the average is going up by 8 percent, you might be paying $108, even though it's a higher rate. So, it might go up 8 percent on average. Is that right for commercial? VICE MAYOR MARC MCGOVERN: Ms. Spinner? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: I would say, I think as -- through you, Vice Mayor. I think to the City Manager's point earlier, that as we -- the values across commercial did decrease across the entire class by about 12 and a half percent. And I think the assessors can go more deeply in this, but it did not impact within the classification properties in the same way. So, values for labs decreased significantly, for instance, but hotels did not. And so, across the class, we are going to raise 8 percent more or a bit more -- 8 percent more taxes, but how it will be felt across the class will be different. And so, some taxpayers may indeed feel a 22 percent increase if their value stayed exactly the same as last year and the rate increased by 22 percent. And yet if your value fell by 15 percent, you won't experience a 22 percent increase. VICE MAYOR MARC MCGOVERN: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Um. VICE MAYOR MARC MCGOVERN: Sorry. ASSESSING DIRECTOR GAYLE WILLETT: Through you, Vice Mayor. I think I would also add that it does depend on what type of property it is. So, the office and lab classes have had the greatest decreases. Retail slightly down, no more than 3 percent. But hotels have actually gone slightly up, somewhere between 1 and 3 percent. So, how that does play out is the hotels will take the full brunt of that, plus the value increase. And you can see on where we did an example chart as a handout tonight, because there were so many questions, to give people some idea of how this plays out across the different classes. So, I would say, you know, retail, restaurant, hotel will feel more of the brunt of the higher tax rate. It will be less felt by the lab and office, and that's just shifts within the commercial class. COUNCILLOR BURHAN AZEEM: Thank you, Mr. Vice Mayor. Through you. So, I think that you actually got to my next question as well, but on average, we're going to see an 8 percent increase in commercial tax rate. It's going to be different by sectors, but on average, like it's 8 percent. So, not -- like people are not going to see their taxes on average jump by 22 percent, obviously some might. My next question was that that's a percentage. We still have the lowest commercial tax rates in the area, right? ASSESSING DIRECTOR GAYLE WILLETT: Yes, and you can see that on the chart that we provided, it's comparing last year's tax rates for the other communities, this year's tax rate for us because we set our tax rate much earlier since we're semi-annual as opposed to quarterly. COUNCILLOR BURHAN AZEEM: So, I think that that was just the part of setting the stage, that like there is a bigger than average tax increase, and it makes total sense that some people are concerned, and we're still doing better than our neighbors, and on average you're going to see an 8 percent not a 22 percent tax increase. My like first question was that I saw that we have a $38 million increase in budget overall. We have also seen growth shrink by, I think, $11 million? And so, I assume like a third-ish of our tax rate increase is just because we have less development in the city. Is that correct? VICE MAYOR MARC MCGOVERN: Ms. Willett? ASSESSING DIRECTOR GAYLE WILLETT: Not necessarily. I mean, the growth is about how much we can collect, how much the levy can go up. And so, it's also feeding into how much we have for excess levy capacity.

10 COUNCILLOR BURHAN AZEEM: Got it. Okay. That's actually very helpful. So, I think that with those questions, my last two were just what are the options before us, right? So, I think that this year's budget is kind of baked already, and this tax rate as well. What do you see going forward for like next year, for example? ASSESSING DIRECTOR GAYLE WILLETT: Oh, so, I think, you know, for next year, based on where we are right now, it looks like the trends are going to hold of what we have seen for the prior year. All the values that we're doing now are based on what happened during calendar year '24, we’re most of the way through calendar year '25, it would appear the trends would hold. So, unless there's something dramatically different that happens, you know, between now and the end of the year, I think that we're in a holding pattern. There is too much lab space. There is too much office space. People have changed the way that they have worked. And this isn't just a Cambridge problem. This really is a regional problem, that regionally there's just too much space in these particular areas of lab and commercial, lab and office. VICE MAYOR MARC MCGOVERN: Mr. Manager? CITY MANAGER YI-AN HUANG: If I were to just extend that, I would say, I think -- thank you, Gayle. We are sort of expecting these economic trends to continue. What we're experiencing today is what Boston is not able to do anymore because they have hit that limit. And so, you know, I think these are the challenges that when we're -- the vote tonight is really about the commercial residential shift, and our policy has been to prioritize lower residential tax rates. One of the things that we discussed last November, and that I think we'll continue to be discussing, is we're currently proposing as part of this shift, we'll be at 152 percent. One hundred and seventy-five percent is the max. Once you hit that, you can't increase the commercial anymore, and you're essentially at a single tax rate where all of the burden of the increase will be on residential. And even more if actually what happens is if commercial values continue to come down and residential rates are flat or increasing, you're going to see an even greater burden on the residential side. And so, if you think about the levers that we have, some of the challenges on this front is you're really just shifting tax burden between commercial and residential. Part of the strategy that we're trying to find from a fiscal perspective is to moderate some of that growth so that the tax burden and the increase isn't so high. And so, moderating our overall budget growth is really the best way to ensure that we don't end up with too big a jump during the economic downturn. And when there's economic growth again, it'll be easier to find those new revenues. It'll be easier to make investments. So, I think that's part of the broader story that I think we're continuing to work through, but we haven't seen significant economic changes since we last talked. In fact, I think, as Gayle was saying, mostly we're seeing a continued downturn, and it'll be a little bit before we come out of that. VICE MAYOR MARC MCGOVERN: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Thank you. My final question. First, I just wanted to comment and say, well, at least in the lab and office space, I think it may not be what we wanted, but it's just interesting to hear that we've built so much that, like, the property values have gone down, which we're always talking about with regards to housing. My final question was just about the excess levy capacity. I think we often hear like we could be going higher, funding more services. I was just wondering what is the status of our levy capacity? is it you know and where do we think that it's headed? VICE MAYOR MARC MCGOVERN: Ms. Spinner? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: Yes. Through you, Vice Mayor. Within the memo, I think we have a chart that shows our excess levy capacity over the last

11 maybe four or five years, and it is on page 7. And this is an actual -- we can see here that our excess levy capacity this year, FY26, the estimate with the setting of the tax rate, that our excess levy capacity will be at $172 million, which is actually a decrease of 8.6 percent from what our excess levy capacity was last year. And you can see ‘25, we actually had a decrease. And in ‘24, we had a decrease. And so, yes, you know, that has allowed us to actually set a tax rate, or a levy increase at 8 percent. And we have sort of gone into our savings account called excess levy capacity in order to set a tax rate to balance our budget without having to do reductions. We can do scenarios out four or five or six years, particularly if we -- if an economic downturn persists for a number of years. And that new growth, as you can see, as you noted, the new growth was about 40 percent less than the new growth last year. And so, when we're not adding new growth into our tax base, that means that we're not fully replenishing our excess levy capacity with what we spend in that year. And so, it is there for these kinds of times, right? When there is an economic downturn, we are actually a very lucky community in that we have those, and we are not forced to make precipitous reductions. But it is also one of those things that we talk about a lot, right? Our necessity to maintain our flexible -- our financial flexibility by trying to maintain a certain amount of excess levy capacity. And I think to the City Manager's point, our biggest lever is our -- ultimately our budget growth. And in the times when the economics are not in our favor, we should be trying to moderate budget growth. And then when our -- the economics turn around for us, we can again begin to think about additional expansion of programs. VICE MAYOR MARC MCGOVERN: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Thank you. So, just on the levy capacity point, I just wanted to leave off by saying, so, it seems like we still actually have a healthy amount of space in the levy capacity. I guess the fear would be if there was a downturn where we could not use it. But at least for now, even with this level of budget growth, it seems fine in the short term, medium term. Thank you. VICE MAYOR MARC MCGOVERN: Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: Thank you. First, a couple confirming questions. Thanks for putting this together. And I do want to point out one of the things I think all of us were wondering about, and it's very helpful, it hasn't been talked about as much as the commercial rate examples of a commercial tax rate by category, because I think that's really critically important for all of us to understand that the impact overall might be X percent, 22 percent on the rate, but the impact overall on the actual payment is probably more on the order of eight to 10 percent, as we had during those budget discussions. But by class, it can range from anywhere from your actual bill will go up from one percent to 25 percent, depending on your category, or it may be 30 or 40 percent. That's really important to understand. And I think it's why it's a message that I hope we take the time I think we might in order to ensure that even though this was kind of discussed in June, so many of our business community and our commercial folks throughout the city just got a shocking, oh my gosh, it's going up 22 percent. It's not. However, we do need to explain, and I think we should take the time to do that. I do want to ask, one thing I heard, these are -- we're talking about the commercial versus the residential rates. My understanding is that we can't actually -- we know we can't have different rates for small locally owned businesses versus big national chains. We would -- many of us, I would like to, we can't. Can we even have any distinction, which I don't think we can, but I want to confirm, between retail versus office versus lab, or is it just all one category? I just think it would be helpful to confirm to people because a lot of people have come to us and said, can't you do this for us? And my reply is, I'm pretty sure we can't. VICE MAYOR MARC MCGOVERN: Ms. Willett, and then I think the Manager wants to address your first question.

12 ASSESSING DIRECTOR GAYLE WILLETT: Oh, okay. Thank you. Through you, Vice Mayor. No, we cannot make that distinction. So, it is commercial, industrial, personal property, all get the same rate -- residential. And if we had open space, open space would get the residential rate. But those divisions are decided at the State level. That's nothing that we have control over. VICE MAYOR MARC MCGOVERN: Okay. Mr. Manager? CITY MANAGER YI-AN HUANG: I think just a clarification, and maybe I think Taha, you could prob- -- Taha or -- could confirm this, but I know there's been a little bit of discussion about people feeling surprised. And I think this is meant to be the Tax Rate Hearing. So, I think, you know, there is a need certainly to have engagement with especially the businesses that are saying, oh, this is a really high rate. It's turning out based on the valuations that we're really seeing an impact. I think this is the moment when we've got the full valuations, we're able to calculate the tax rates, we release them publicly, and then we have the conversation with the Council. And so, I think this is the moment when people are supposed to hear and then give us feedback, which I think we're getting. And I think this is always helpful for us to both incorporate as we think about, you know, how we can make some of this data more clear and also how we incorporate this into the next budget process. But I'm seeing nodding from Taha, so I think I got that. I got that, right? We don't typically release information before this hearing because this is meant to be the hearing where we bring forward the tax rate information? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: Yeah, and then I think I'd like to just add one thing to that, and Gayle and Andrew can elaborate, but we spend, you know, they spend, you know, the summer, you know, basically ticking and tying things, but we go through a process that lasts several weeks in putting in information through the State's review and certification process. So, we really are releasing the rates at the earliest moment that we can release the actual rates here with this tax hearing. VICE MAYOR MARC MCGOVERN: I -- I don’t want to -- I think the challenge, though, is we're also being asked to take the votes tonight on this, right? So, this may be -- we're releasing it early, and this, you know, may -- it may be appropriate in terms of when it gets released, but we're having this discussion and these concerns, but we're also being asked to vote for it tonight, when we haven't had the opportunity to have you go back and think about the input and then come back to us. So, I think that's where the rub is. Sorry, Councillor Nolan. COUNCILLOR PATRICIA M. NOLAN: No, that's an excellent point, Vice Mayor, Chair McGovern. I understand the timing. It's challenging. And yet, I think next year, any time we can do it to say, yes, we're having the hearing, and 10 days before the hearing, we're going to put the information out, so people know. I understand we don't have to have -- or we can't do it until we've had the rates and we understand the valuation, but it just ends up being something that people who have really busy lives, and understandably, it affects their lives. Now, I actually think, in general, the classification is good news for many of the folks who are concerned about it, in that we see for office -- if this is an example of general commercial tax rate offices, actual percent change in dollars is -- the valuation went down 17 percent, but the percent change in actual dollars they'll probably pay is only one percent more. And for labs, it's seven percent more. And retail restaurant, it is 11 percent more. So, still, that's way -- that's four times inflation. So, it's still, for those folks, a big increase. And then for hotels, it's 25 percent. So, I think the more we can do to make sure that once we have it set, we have a communication - - you know, we have business associations. We have the Kendall Square Association, the Chamber, and

13 all these others, to say, hey, we're going to have the hearing and it's going to be in 10 days, you know, not on Monday before a weekend when people may not have gotten it. And I know it's hard to get this information. It just means it's all going to be in the spirit of kind of transparency for us. I will say at this meeting, as Councillor Azeem said, it really is a question of the residential versus commercial. We do want to honor that. And I do want to note, as we had those budget hearings in June, it's a really high increase for everybody, including many of our residential, for the average single family, two family, three family. It's as much as an 11 percent increase in the average tax bill. I mean, it is -- it is high and it's something for some people. It really will affect them for -- for if they own a three- decker, and they're going to have to increase the rent for people. So, let's -- even though this is -- we've heard mostly about the commercial tax rate, this is also something to consider for the residential tax rate. And is there a way that we can shift that? I will say, if we see more residential development, taxes won't necessarily go up. That's where the new growth will come from. And in fact, taxes could stay the same, correct? ASSESSING DIRECTOR GAYLE WILLETT: Yes, that's correct. COUNCILLOR PATRICIA M. NOLAN: Okay. Because that's something we also heard, oh my gosh, this multifamily zoning, as all these houses are being built, your property taxes are going to go up. Regardless of how you feel about it, if we had all that development, we've already seen that new development actually holds taxes even and steady because it provides opportunity for us to fill in budget gaps. And I do have one other question, which is we would have the option if we so chose, and if this was a calamitous review that we found out taxes were going to have to go up 80 percent, we could midyear correct on our budget if we so choose. I'm not saying it's easier we would ever do that. But that is something that would be possible, correct? VICE MAYOR MARC MCGOVERN: Ms. Spinner? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: Through you, Vice Mayor. I would say that at this moment, the first quarter of our Fiscal Year has already -- COUNCILLOR PATRICIA M. NOLAN: Right. ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: -- has already passed. And so, making mid-year corrections would be extremely difficult, because you are saying that you would like to potentially lower the levy increase below. That would be a very difficult exercise for us to do. COUNCILLOR PATRICIA M. NOLAN: Yeah. VICE MAYOR MARC MCGOVERN: Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: Yeah. I understand. I'm just being clear. And particularly for the future, it means setting up for next year. If we don't want to see this kind of thing, we need to be very conscious and cognizant of the levers we do have. And frankly, what we may be facing, given the headwinds that we're entering, we've already seen this decline of commercial overall down 15 percent, labs down 10 percent in value. That may not change. Our largest employer is going through layoffs in a really incredibly difficult financial times. And we know what's going on at the other end of Mass Ave with a $300 million hit to an endowment from MIT that's going to really affect us. So, I hope that we have a chance to communicate this more broadly. And again, I think it is good news if people actually look at it, it's at least better than the idea of everybody is to see a 22 percent increase. But for anyone with a triple net lease, it is going to hit them. And for some of -- if I'm looking at this, this is exempt for a retail restaurant, it won't be 22 percent, but if it's an 11 percent increase in your taxes and you're already on the edge, it's certainly something that is causing some question. All right.

14 Just one final question. Are these actual examples, or is this the overall view that we have? Just -- I'm referring to the examples of commercial tax rate. I'm really glad to see this because we get it on the single family, two family condos. We haven't had it typically for this breakdown. I think it should be included in any future developments as we move forward. But is this typical or is this just everything we've seen that we know will happen with commercial? VICE MAYOR MARC MCGOVERN: Ms. Willett? ASSESSING DIRECTOR GAYLE WILLETT: Through you, Vice Mayor. This is just examples so that people would understand what the impact would be. I mean, obviously the exact val- -- we've picked one value for the example. So, that is what the impact would be. But, you know, the values would have different impacts on them because you have different values of property. It also depends on what's the mix of the property. But this was just to give people some examples so they could wrap their head around what does 22 percent in the rate translate into in when looking at it on value. CITY MANAGER YI-AN HUANG: Vice Mayor? VICE MAYOR MARC MCGOVERN: Mr. Manager? CITY MANAGER YI-AN HUANG: Just to provide a bit of additional color in terms of what we're sort of seeing in this downturn, and I think this does relate to we have the lowest commercial tax rate of all of our neighboring cities. I think the reason is because we've seen so much growth in a lot of the office, and especially the office and lab market. And so, you know, what we're seeing is the reverse of what we experienced over the last five to 10 years. Over the last five to 10 years, office and lab were growing so quickly, those values were going up so much that they really took on a lot of the burden. And so, a lot of our small businesses did not see significant tax increases because they were buffered from that. And so, that's why our rate is actually very low. And then as the economy has turned around, that's the challenge, that when those values come down, then it sort of flips. And then we're seeing, and especially for the hotel class right now, if those values are stable, they're getting, as Gayle noted, the full brunt of the rate increase. So, I think it doesn't change, I think, the experience of a lot of the small businesses that are going to see a pretty significant increase. I don't think most of them will see 22 percent, but it won't be the same one, two, three increase, or sort of the experience that we've had over the last 10 years. VICE MAYOR MARC MCGOVERN: Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: Yeah, I -- obviously, I understand that. And it also -- just like for our housing, our rate is really low. The chart is in here. And yet if your value is high, the amount you're paying makes up for that. So, we are still needing close to a billion dollars of the operating budget, 60 percent, right, or 58 percent comes from our property levy, 33 percent of that is from residents, the other comes from commercial. So, that's a lot of money we have to raise. So, even if the rate is relatively low, when the values continue to go up, then the taxes continue to go up. So, those are my comments. Thank you. I yield. VICE MAYOR MARC MCGOVERN: Thank you. I have Councillor Zusy, and then Councillor Toner. COUNCILLOR CATHERINE ZUSY: Thank you very much, Chair McGovern, and through you. I think the shock to the system is because the increase is so high, 22 percent. And also, because electricity bills are going up, gas bills are going up, and we know water sewer bills are going up. So, people are going to be spending a lot more too as part of the cost of business. But what I'm wondering, and again, I'm still fairly new to this. So, when we were talking about

15 the residential tax levy in June, could -- did you know that the commercial tax levy would be? Could you have modeled that it would be about 22 percent? Because I think it would have been -- so, I'd love to hear that, but I just, I think it would have been useful in our budget discussions if we had understood the implications of the budget decisions that we were making, because maybe we would have -- we wouldn't have committed to spending so much money if we realized that the commercial tax rate would have to go up so high. So, my question is, could we have modeled that the commercial tax levy would have been about 22 percent in June? UNIDENTIFIED SPEAKER: Through you, Vice Mayor. So, for both '25 and '26, commercial is paying the exact same percentage of the levy as they did last year. They're not paying more of the levy. They're paying the same percentage. They're going up eight percent. Residential is going up eight percent. We did know earlier that commercial values were looking like they were going to decline, but it wasn't really until the end of the summer where we knew how much we were going to settle on. And then once we put those numbers in and are approved with the DOR, that we really have what that rate is going to be. COUNCILLOR PATRICIA M. NOLAN: And again, through you, Chair McGovern. I realize it's counterintuitive because you're looking -- when you set these rates, you're looking through the rear view mirror, right? So, we're talking about Fiscal Year ‘25. So, the taxes that we're going to pay, the property taxes going forward will be based on property evaluations of the last year, right? Yeah. So, anyway, so I think if -- so, maybe there's some way this coming year that we can talk more candidly. I mean, if it seems clear that property values are going to continue to remain low, and growth will continue to be arrested or slow, it would just be good for the Council to understand what the implications would be for taxation. And then I just -- so, then I just had some questions about -- so, I know one of the things you want us to vote on are that we keep the five classifications classes for property tax levy. So, are industrial and commercial properties separate or are they together? I'm really confused on page 6. It sounds like industrial property -- we have tremendous growth in industrial property, but what is that? And then we've got quite a bit of growth in residential property. So, what is that, and how do industrial -- how is industrial separate from commercial? VICE MAYOR MARC MCGOVERN: Ms. Willett? ASSESSING DIRECTOR GAYLE WILLETT: Through you, Vice Mayor. So, these are classifications that we get from the Department of Revenue. It's written into State law for the classifications. Commercial is mainly office, retail, hotel, restaurant. Industrial is mainly lab space or R&D space, or it could also be like a -- you know, a car garage, a car repair garage, something like that, that would be an industrial use. But for us here, it's almost exclusively lab and R&D space. VICE MAYOR MARC MCGOVERN: Councillor Zusy? COUNCILLOR PATRICIA M. NOLAN: So, again, through you, Chair McGovern. So, it looks like with industrial, it's over a billion, you know, $323 million in new growth. So, that was new growth in lab and R&D and car garages? VICE MAYOR MARC MCGOVERN: Ms. Willett? ASSESSING DIRECTOR GAYLE WILLETT: Sure. Thank you. Through you, Vice Mayor. Yes. So, any new buildings that are built, any buildings that -- we're always looking at as of January 1st, what is the status of the building? So, any building that's under construction and, you know, typically what we're finding is any of the lab buildings, and a lot of the large office buildings, it's a three- year build out that they're doing. So, we're not picking everything up in one year. It's continuing as

16 they're finishing out the building. So, each year, as of January 1st, we're determining what's the status, and we're saying how much further along are they? How much does that affect the growth, and then we're capturing that as new growth because the Prop 2½ is you can raise your levy by two and a half percent plus new growth. COUNCILLOR CATHERINE ZUSY: Again, through you, Chair McGovern. Anyway, it’s -- we're in a very prosperous city. That's just like an amazing amount of growth. And I’m glad to hear that we're at $621 million in residential property growth too, because that suggests that residential actually is really growing, or -- or does it? VICE MAYOR MARC MCGOVERN: Ms. Spinner? ASSISTANT CITY MANAGER FOR FISCAL AFFAIRS CLAIRE SPINNER: Just a point through you, Vice Chair -- Vice Mayor. So, that was the FY25 growth, and we actually put that in as a comparison to FY26, and you can actually see how much less in FY26 new growth added to additional taxes. So, the new growth in FY25, which yielded $24 million in additional tax levy, as compared to the Y26, which yielded only $13.7 million, right? So, it's actually -- this is really to emphasize the trend that we are currently in. COUNCILLOR CATHERINE ZUSY: Thank you so much again, through you, Chair McGovern. Thank you so much for that clarification because that is a real shock to the system. So, that really demonstrates how much growth has slowed down both residentially, commercially, industrially. And so, that's really important to understand. And I wanted to ask, to pick up on Robert Winter's good question. Can you -- and maybe this is for Gayle. So, are there places that there's more growth and less growth? Is it pretty evenly distributed? Are some areas being hit harder than others? And again, this is again through you, Chair McGovern. ASSESSING DIRECTOR GAYLE WILLETT: Through you, Vice Mayor. I think I would say, you know, because it's such a long construction time for a lot of the large buildings. We certainly are still seeing new growth in Kendall Square. We have headquarters that are being built there, that is a huge part of the new growth. We also have the Volpe site that as that moves forward that will be a large amount of new growth. We certainly have stuff happening in Alewife. There are certainly lots of permits that have been pulled. Whether people will move forward on those is uncertain, I think, at this point. And I think the other thing I would say is a lot of the buildings, these large office and lab buildings, if they do not have a tenant at this point, they will not move forward on fitting out the interior. So, those buildings really are at 70 percent complete. We are not moving forward to 100 percent. We're not capturing that new growth. So, if you think about the courthouse, which I don't know if you did the tour when they opened the building, you went inside and it's raw space. And it is because tenants are very particular about what they want. And so, no landlord wants to fit it out and then -- pay to fit it out and then rip it all out to get exactly what the tenant wants. And so, I think that, you know, that's another piece of the new growth that we are losing. VICE MAYOR MARC MCGOVERN: (INDISCERNIBLE 2:03:36) COUNCILLOR CATHERINE ZUSY: Thank you so much. I'm just going to -- I'm just --. I'm about done. Don't worry, Chair McGovern. Anyway, again, -- VICE MAYOR MARC MCGOVERN: (INDISCERNIBLE 2:03:42) COUNCILLOR CATHERINE ZUSY:-- I thank you for all of your work. And I -- we need to adjust to the times. And so, what this is just making me really feel is that, again, going forward, we'll really need to be evaluating programs, consolidating programs, maybe

17 eliminating some programs, and working smarter and more efficiently because we're going to have less resources and we can't keep adding fees, linkage fees, building demolition permit fees, certificate of occupancy and zoning fees, the CPA surcharge, all these special permit and variance fees. You know, if we want Cambridge to remain a vital place and if we want people to come here, we've just -- we just have to make sure that we can't overwhelm them with fees, so they'll choose Cambridge as their location. With that, I yield and I thank you for your presentation. VICE MAYOR MARC MCGOVERN: Councillor Toner? COUNCILLOR PAUL F. TONER: Thank you, Mr. Vice Mayor. First of all, I want to thank the City Manager and the staff because, quite honestly, none of this is shocking to me. I understand people feel like they were surprised with the posting of this information, but the three prior years I've been on the Council, this is what we do every year. I think the challenge is always we build a budget, vote on a budget, and then we figure out how much the actual dollar amount is that people are getting in their tax bill, which is the surprise. I do want to point out that Councillor Nolan and I, while I was still Co-Chair of the Finance Committee and the Council, made it pretty clear to the City that we can't keep having eight percent, nine percent tax increases. And they, through the due diligence in this process, the actual operating budget is only going up by 3.8 percent. But in order to pay the bills for all the things we've accumulated over the years, at least for the past last year and this year and maybe for a little while longer, the increases in the revenues we have to bring in are going to be higher than that. And the balance is -- and this is for everybody in the public. I mean, a number of people wrote to us saying, I love my small business, don't raise their taxes. We're not raising the small business taxes. We're having to make a decision about raising taxes on properties across the city, residential and commercial, and then how that gets divvied up between the different types of properties and who's paying, whether it's the tenants or the property owner wants to absorb it completely themselves, that's all outside of the City's purview. But to the residents -- and believe me, I’m empathetic to all the businesses as well. I want to see them survive and thrive here. But every resident who writes to us and says, don't raise the property taxes on commercial, well, okay. Because you're the very same people who say, don't raise my residential property tax, which leaves us in the bind where, you know, I hear what Ms. Spinner says. Yes, I guess legally we could go back and try to undo some of our decisions in the budget, but that's going to mean layoffs, cutting programs, real hurt to people within this budget cycle, which I don't think any of us want to do. But -- and I know some people think I'm this scrooge when we have the budget conversations. I'm not. I've been saying it all along. I don't think we should be taking on new programs. We have enough on our plate just to be able to tread water with the programs that we do, and we do a lot in Cambridge, things that nobody else does. I mean most places do recycling pickup once every two weeks. They don't take large items with you. We don't have UPK in other cities and towns. You know, there's a lot of things we do in the City of Cambridge, lots of social services we provide, and lots of nonprofits we support and fund. Those are all things that before you set a budget next year, I just want to remember the heat you're taking right now from people saying don't raise my commercial property tax, don't raise my residential property tax, because the only way that's not going to happen -- it is going to happen, unless you come to a screeching halt and make some cuts at the same time. It is going to happen. But as the Council, whoever the future Council is next year, makes those decisions I hope you remember this conversation tonight. I am going to -- I'm not going to say it yet -- I just -- you know, I want to say one other thing is that I think because of the way it came out, and again, I'm not blaming the staff, this is how it always

18 happens, that, you know, some people are surprised. Some people got emails saying this is an emergency meeting, or a crisis meeting, that we're doing this, you know, with no notice to anybody. That's not true. This, again, is the way things happen. And I personally believe the staff, for a whole year, has been forecasting that this is generally what's going to happen. And -- but with that, I would like to have, you know, another two weeks for us to be able to let people settle down, absorb the information. I don't know, maybe the staff has a Zoom call with the business associations to, you know, answer their questions, etcetera, so they can answer the questions of their membership. But I also know from Ms. Spinner that we can't wait more than two weeks, because after that the money runs out. So, we're going to have to make a decision by October 20th, and there’s -- you know, I doubt we're going to sit here and talk about making budget cuts or increasing residential property taxes, --but I'll let the City Manager -- it looks like he wants to say something? Or are you just twiddling your fingers? I don't know. With that, I'd like to exercise my Charter right to give us two weeks to think about it. Thank you. VICE MAYOR MARC MCGOVERN: Okay. I got all my post-its here with all my comments, but I guess I'll save them. With that, Councillor Toner exercises his Charter right. So, that ends discussion. And so, now on a motion by Councillor Toner to adjourn this hearing, roll call. INTERIM CITY CLERK PAULA CRANE: Councillor Azeem? COUNCILLOR BURHAN AZEEM: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Vice Mayor McGovern? VICE MAYOR MARC MCGOVERN: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Nolan? COUNCILLOR PATRICIA M. NOLAN: (Response not audible.) INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Siddiqui? COUNCILLOR SUMBUL SIDDIQUI: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Sobrinho-Wheeler? COUNCILLOR JIVAN SOBRINHO-WHEELER: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Toner? COUNCILLOR PAUL F. TONER: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Wilson? COUNCILLOR AYESHA M. WILSON: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Councillor Zusy? COUNCILLOR CATHERINE ZUSY: Yes. INTERIM CITY CLERK PAULA CRANE: Yes. Mayor Simmons is absent. You have eight members recorded in the affirmative and one recorded as absent. (The Cambridge City Tax Rate Classification Public Meeting adjourned at approximately 7:42 p.m.)

19 C E R T I F I C A T E I, Kanchan Mutreja, a transcriber for Datagain, do hereby certify: That said proceedings were listened to and transcribed by me and were prepared using standard electronic transcription equipment under my direction and supervision; and I hereby certify that the foregoing transcript of the proceedings is a full, true, and accurate transcript to the best of my ability. In witness whereof, I have hereunto subscribed my name this 2nd day of February 2026. Signature of Transcriber