Belmont is Sitting on a Fiscal Cliff

By Max Colice, Elizabeth Dionne, and Dan Barry

Belmont is effectively insolvent. It cannot pay its operating expenses and pension debt without one-time federal aid. Compounding this problem, Belmont’s operating expenses are rising faster than its revenue. Unless Belmont increases its revenue, the town may have to cut services drastically. 

Like every other town in Massachusetts, Belmont’s revenue comes mainly from property taxes. The Board of Assessors assesses each property’s value, then computes the property tax by multiplying the property value by the property tax rate. Even though Belmont’s property tax rate is relatively low, its single-family property tax bill is the 10th highest in Massachusetts due to relatively high assessed values. So how can Belmont increase its revenue without increasing the property tax burden on town residents or relying on fickle state and federal aid? 

The only way to achieve this is by promoting new, profitable growth of Belmont’s property tax base. By profitable, we mean real estate that generates more in property tax revenue than it costs the town, whether those costs are for building and maintaining roads and sewage lines or for town services like education, fire, police, or public works. 

Dense commercial real estate tends to be particularly profitable because it consumes minimal town infrastructure and services. Commercial real estate also tends to be profitable for two other reasons: it can have a much higher assessed value per acre and it can be taxed at a higher rate than other types of real estate. This means that a commercial building that occupies a small plot and requires fewer roads, sewers, and services can generate much more property tax than recreational land or several larger homes. In other words, even a very small amount of commercial property can generate an outsized amount of property tax revenue thanks to its high value per acre. 

Six of the 10 most valuable properties per acre in Belmont are commercial properties. Most of these commercial properties are located in Belmont Center and have assessed values of more than $17 million per acre, which is about two-and-a-half times Belmont’s average assessed value per acre of about $6.7 million. Together, these six commercial properties occupy about 0.81 acres and generate about $170,000 in annual property taxes–about 0.2% of Belmont’s property tax revenue from about 0.03% of Belmont’s land. They also impose few, if any, costs on the town. 

Since Belmont has a fixed amount of land, it should strive to achieve an appropriate balance between profitable commercial real estate and less profitable housing and open space. This does not necessarily mean building on open space. It could also mean making more efficient use of land that is underused, for example, by encouraging redevelopment that generates enough new property tax to offset less profitable (from a town revenue perspective, as defined above) real estate.  

Practically, since commercial real estate tends to be more profitable than other types of real estate, the town should promote new commercial real estate development to increase its property tax revenue without driving up property taxes on residential real estate. Right now, commercial, industrial, and personal property accounts for only about 4% of Belmont’s total tax levy: For comparison, commercial,  industrial, and personal property make up more than 38% of Watertown’s property tax levy and over 22% of Lexington’s property tax levy (and as far as we know, neither Watertown nor Lexington is considering an override to pay for operating expenses any time soon). Acton, Concord, Hingham, and Sudbury also have significantly higher commercial, industrial, and property tax revenues as percentages of their total tax levies (all percentages are from the Massachusetts Division of Local Services Data Analytics and Resource Bureau website).

According to the Board of Assessors, commercial real estate historically accounted for approximately 10% of Belmont’s property tax base, but that has not been the case now for many years, as new construction has focused primarily on homes, not businesses.

So what can Belmont do to encourage new commercial real estate development while maintaining or improving the town’s quality of life? Here are a few ideas. None of them will cost any money. But all require work, cooperation, and political will.

Municipality	FY2022 Residential and Open Space	FY2022 Commercial, Industrial, and Personal Property
Waltham	41%	59%
Watertown	61%	39%
Lexington	77%	23%
Hopkinton	83%	17%
Hingham	89%	11%
Acton	89%	11%
Sudbury	90%	10%
Concord	92%	8%
Milton	94%	6%
Arlington	94%	6%
Belmont	95%	5%
Winchester	96%	4%
Overall average	83%	17%
Overall average without Belmont	82%	18%

Communities sorted by percent commmercial tax levy. Source: Massachusetts Division of Local Services Data Analytics and Resource Bureau.

Denser construction in commercial areas

To start, Belmont can change its zoning bylaws to encourage the development of dense, valuable commercial real estate in areas that are already zoned for commercial use. Specifically, it can increase the maximum building heights allowed by right in Belmont Center, Waverley Square, and Cushing Square. In Belmont Center, for example, the maximum building height allowed without a special permit is two stories, even though 68 Leonard Street — the town’s most valuable commercial building on a per-acre basis — is three stories tall. Increased building heights could also contribute to mixed-use development, which tends to strengthen local businesses by putting customers closer to them.

Eliminate or Reduce Parking Minimums

Belmont can also reduce or eliminate parking minimums for new businesses. Parking lots tend to have relatively low assessed values and generate little property tax revenue. They also sit empty much of the time. Reducing the amount of required parking would hopefully increase property tax values, discourage driving, and encourage walking, biking, or taking the bus, particularly in mixed-use areas of greater density.

Develop Underused Government-Owned Properties

 Belmont can also promote the development of town-owned land in the major commercial districts. For example, the Claflin Street parking lot and Waverly Square parking lot are excellent candidates for commercial or mixed-use development opportunities and are in areas already zoned for commercial development. They are in densely developed parts of Belmont and are close to train stations and bus stops. Selling the properties would lead to immediate, one-time revenue plus new, recurring property tax revenue. Another parcel ripe for development includes the state-owned, five-acre parcel at the east end of Route 2 (322 Concord Turnpike). This entire parcel is surrounded by Route 2 and access roads and is already zoned for commercial use.

Update Zoning to Promote Commercial Development and Prevent Undesired Development

 At the same time, Belmont should review zoning for the largely undeveloped land in the northwest corner of town. In April 2020, the Belmont Country Club sold 13.2 acres on the Lexington side of Winter Street for $14,223,250 for the development of senior housing near Route 2. The Club could also sell land in Belmont that is currently used as private recreational land but zoned for single-residence use. If the Club sells, a new owner could build a huge development of single-family homes by right. Although these homes would increase Belmont’s property tax base, they most likely would not generate enough new property taxes to offset the increased infrastructure expenses and costs in town services for the new residents. In addition to preventing unprofitable development, rezoning also offers an opportunity to promote commercial development, for example, next to the new senior housing development next to Route 2, within two miles of Route 128, and about eight miles from downtown Boston, and to preserve open space in a way that balances the need for tax revenue with quality of life for Belmont residents.  

Commercial development is not an immediate solution to Belmont’s financial problems but one that will play out over the next five to 20 years. However, taking steps now to increase Belmont’s commercial property tax base should eventually create enough wealth to support Belmont’s infrastructure and services so that Belmont can thrive. 

Following are some suggested next steps in planning for Belmont’s sound fiscal future:

Convene a citizen committee to study the problem with various stakeholders (this could be similar to the citizens committee that petitioned the Planning Board several years ago to change General Residence and Single Residence A zoning to avoid over-building on small lots)

Identify potential developers willing to work with the town on appropriate long-term commercial development

Present a petition to both Town Meeting and the Planning Board to rezone west Belmont in a way that protects Belmont’s fiscal and physical future

The authors of this article are contemplating forming a citizens committee to propose changes to Belmont’s zoning bylaws that would address commercial development, preservation of open space, and historic preservation in western Belmont. If you are interested in getting involved, please reach out to any of them. Stay tuned for future articles on these topics!

Dan Barry is a Town Meeting Member. He can be reached at danbarbara1@verizon.net. Max Colice is a Belmont resident. He can be reached at max.colice@gmail.com. Elizabeth Dionne is a Town Meeting Member, member of the Warrant Committee, and chair of the Community Preservation Committee. She can be reached at eharmerdionne@comcast.net.