Boston property values drop for second year

BOSTON, (Reuters) – The total taxable value of Boston’s properties fell in fiscal 2011 for a second straight year, but showed signs of bottoming out as some residential values ticked higher, a new study shows.

The Boston Municipal Research Bureau on Monday said taxable value of the city’s properties fell by $456 million or 0.5 percent, after slumping 3.5 percent in fiscal 2010.

Residential property values inched up 0.5 percent, while total business property values fell 2.4 percent.

The figures suggest another tough year for the city’s budget, which in 2010 generated 62.3 percent of its operating income from property taxes.

“Boston relies on the property tax more than most any other major city in the country, and should have authority to diversify its revenue base,” said the bureau, a fiscal watchdog funded by the city’s businesses and non-profits.

Still, the city can hike its tax levy by 2.5 percent each year on existing structures, and benefits from taxes on new construction. In 2011, that included new high-end condominiums and new office space along the city’s waterfront.

The report showed large commercial real estate values remained under stress: The aggregate value of 50 large office buildings fell 5.7 percent in fiscal 2011. But there was a bright spot: Two new tower properties added $123.4 million in value for the year.

Within the residential segment, condo values rose 3.6 percent on the back of new construction but excluding condos, property values were down 1.6 percent.

Two- and three-family homes, many of which are in poorer neighborhoods heavily hurt by foreclosures, dropped in value by 2.2 percent.

The bureau said that new growth of business properties was strong. Without those new units, business property values fell 5.6 percent.

Massachusetts’ economy has been growing stronger than that of the United States as a whole. In the first quarter of 2011, the state grew at an annualized rate of 4.2 percent, more than double the rate of the national economy, according to the quarterly journal MassBenchmarks. (Reporting by Ros Krasny; Editing by Jan Paschal)