This is part of a series on the 2021 city budget. The spirit of this series is: I’m interested in unpacking the budget and sharing as I go. In that same spirit, I’m sharing interactive Tableau data visualizations that help others dig into the budget. See the full serieshere. The 2021 budget documents are onlinehere.
One question I’ve gotten around the city budget is: “how much tax money goes to abatements each year?” We can answer this using public data. In this post, I want to look at this and other abatement-related insights we can glean from the 2021 user friendly budget.
Abatements – A Primer
A long-term abatement is a contract that exempts the building (not the underlying land) from property tax for 10 or more years; instead of a tax, the owner(s) of the building pay a “PILOT,” or a “payment in lieu of tax.” The PILOT can be paid by either (a) a single landlord who owns an entire rental building or (b) individual unit owners within an abated condo building. I wrote a series on abatements which contains background nuance if you’re interested in learning more of the background.
For now, let’s look at what the 2021 budget reports about these long-term subsidies. I will use the “user friendly budget” which gives the most specific view into abatement data; and, an important note: this data looks back one year (so the 2021 budget reports on 2020 abatement activity).
The Highlights, based on the 2021 user friendly budget:
- In 2020, there were 160 long-term abatements on the city’s books.
- The 160 abatements are of different project types, including: 99 market rate residential buildings, 46 commercial (hotel, office, etc) buildings, and 14 affordable housing projects.
- The total assessed value of these abatements (land and building) is $12.6 billion; this is the value pegged to the real estate as of the 2018 citywide revaluation. The total estimated market value as of 2020 was $14.7 billion.
- These 160 abatements projects paid a total $96 million in PILOT fees which primarily funds the city and secondarily the county. However, had the real estate been taxed based on 2020 rates, it would have paid over $204 million in property tax, made up of $93 million in city tax, $55 million in school tax, and $56 million in county tax based on the 2020 rates for each local government.
The Data Visualization
I created the visualization below as a way to step through these highlights and, at the very bottom, sort and filter the raw data. A reminder: this data originates in the 2021 user friendly budget (proposed). Please see “Key assumptions and factors” below the visualization for source data and related context.
Key Assumptions and Factors
All data except for market value and component tax expense (city, schools, county) is derived directly from the user friendly budget available online here.
Market Value. I computed market value by dividing each property’s assessed value by the 2020 equalization ratio of 85.9%, which is in the 2020 “Property Tax Tables” file available here.While the market value per property is not published in the user friendly budget, the equalization ratio can be used as a tool to back into an estimated per-property market value by dividing assessed value by the equalization ratio. You can learn more about equalization ratio here.
City, Schools, and County Tax Expense. I confirmed that the user friendly budget used the total 1.61% tax rate (multiplying total assessed value in the user friendly budget ($12.646 billion) times the 2020 total tax rate of 1.61% as reported in the 2020 “Property Tax Tables” file here yields $203 million in property taxes, as reported in the user friendly budget). The 1.61% total tax rate is, per the 2020 Property Tax Tables file, comprised of three component rates:
- 0.737% municipal tax rate
- 0.433% schools tax rate
- 0.440% county tax rate
Multiplying each of these component rates by each property’s assessed value yielded component tax expense for each property.
This post has been corrected from an earlier version that listed foregone tax ($204 million) as made up of $69M city tax, $41M school tax, and 41M county tax. Those were foregone tax for market rate residential buildings only; the correct grand total foregone tax is $93 million in city tax, $55 million in school tax, and $56 million in county tax based on the 2020 rates for each local government.