Boston has historically relied on growing property tax revenues driven by development to power a range of new investments. The city now relies on those taxes for 70 percent of its budget.

Michelle Wu, now the front-runner as the Boston mayoral race enters its stretch run, has big plans for transforming Boston, from universal pre-K to rolling out a local Green New Deal. 

But big plans require big money. And when it comes to raising money to pay for new initiatives, Boston mayors for decades now, from Kevin White to Thomas M. Menino down to Marty Walsh, have relied heavily on rising tax receipts from new development. 

Amid Boston’s epic building boom, that strategy, while not perfect, has worked. Some mayors tilted downtown, others towards the city’s traditionally tight-knit but now fast-changing neighborhoods, but none tinkered with the basic formula which encouraged, even prioritized new growth. 

However, even as she proposes sweeping progressive plans for Boston’s transformation, Wu also seems determined to wring the neck of the goose the lays the city’s golden eggs. 

BPDA Demolition Would Be Messy 

Wu wants to bring back some form of rent control, a proposal that is anathema not just to landlords, but to developers interested in building new housing in the city. 

Capping rents scares off potential developers, while also deterring landlords small and large from investing in their properties and doing more than basic maintenance, if that. 

It’s no coincidence that the Devonshire was the only new apartment tower built in Boston for a couple decades until voters across the state banned rent control in the mid-1990s, unleashing a wave of new apartment and condominium towers that has remade Boston’s skyline. 

And yes, while the residential boom has been heavily tilted towards luxury housing, Boston’s inclusionary housing regulations have meant that thousands of new affordable units have also been built, while also increasing the overall supply of housing. 

Wu, a city councilor since 2014, has also proposed abolishing the Boston Planning & Development Agency, which has played a crucial, probably indispensable role over the decades as the traffic cop for the city’s development boom. Under her proposal, the agency’s redevelopment powers would be scrapped and its planning functions carved off into a separate agency. 

That is likely to be a messy process that could result in regulatory holdups and uncertainty until a new system is finally in place. It’s the kind of uncertainty that developers, and businesses in general hate, and will vote with their feet to avoid. 

Longer term, that new system, by neutering the city’s muscular ability to clear the way for important projects, is likely to shift the balance of power to NIMBY opponents of all new construction, housing and otherwise. 

Both proposals, in turn, threaten to throw a monkey wrench into the building boom that has kept the tax coffers full at City Hall for decades now, while also fatally undermining Wu’s ability to implement her ambitious progressive agenda. 

$56M Per Year for Pre-K 

The vast majority of Boston’s revenues – 70 percent – come from property taxes, which, in turn, foot the bill for all sorts of city services and programs that have helped make the city one of the most coveted places in the world to live. 

New tax revenue from new development has enabled Boston to cover relentlessly rising expenses, like pension fund debt and city salaries, while also having the financial wherewithal to respond emergencies like COVID-19 and launch new initiatives to deal with other pressing issues. 

Boston saw a nearly 31 percent jump in revenue from 2014 to 2020, primarily driven by rising tax receipts from new office, lab, apartment and condo towers, according to a city budget summary put out last year. 

Scott Van Voorhis

The city’s $3.61 billion fiscal 2021 budget included $161 million from new development projects, which helped cover for $42.1 million drop in excise taxes, fees and fines amid the pandemic and economic disruption it triggered. 

Wu, if she should she win this fall, will need all that money, and likely more, to fulfill her various campaign pledges. 

Just paying for universal pre-kindergarten alone could cost $56 million a year, a price tag that stymied Wash when he proposed the same thing. 

At the end of the day, new programs require new money. Candidates can tout all sorts of contradictory proposals, but if Wu wins the race, she’ll learn what all her predecessors have figured out, one way or another: You can’t have your cake and eat it too. 

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.