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By Stephen Mackey, president/CEO of the Somerville Chamber of Commerce

The City of Somerville faces unprecedented financial pressure as it heads into 2020. Big bills are coming due at City Hall for a number of substantial capital projects. For example:

• $257 million is due for Somerville’s new high school, which is under construction and due to be completed in Spring 2020
• At least $50 million will be needed for a new municipal public safety complex, according to the most recent City of Somerville Capital Investment Plan (CIP), with costs anticipated to rise by at least 5 percent annually, suggesting the final cost could be as high as $80 million
• Another $50 million must be paid to MassDOT for the Green Line Extension

Of course, on top of all of that, there’s the usual maintenance – water and sewer infrastructure and other miscellaneous costs that every city faces. Somerville has always operated as one of the leanest municipalities of any urban core city in the Commonwealth. However, capital needs are continuing to grow as the city seeks to address its need to upgrade facilities and infrastructure.

The high school was recently warned by the New England Association of Schools and Colleges that a failure to advance renovations would jeopardize the school’s accreditation. A new campus featuring a state-of-the-art learning environment is far more preferable than a facility with a failing exterior, outdated steam heating system and improper insulation. Since 1985, the Somerville Police Department has operated from a location that wasn’t designed to function as a public safety headquarters (the building originally served as a car barn for the MBTA). The building recently experienced severe flooding that displaced some of the department’s essential services.

Somerville’s capital budget is roughly $750 million, which is substantial for a community of its size, and far greater than anything Somerville has faced before. City officials have worked diligently to increase the city’s commercial tax base, which has the dual effect of reducing the tax burden on residential tax payers and increasing available revenue for capital investment.

If the city’s efforts to broaden the commercial base stall, the burden to pay for capital projects will fall upon residential property owners, who – in the most recent fiscal year – paid 76 percent of Somerville’s overall taxes. By comparison, business property taxes accounted for less than 17 percent of municipal revenue.

It’s easy to demonize the commercial sector, but communities that balance their tax base more efficiently have the opportunity to minimize the financial strain on homeowners, while generating sufficient revenue for services that residents want and deserve. Look no further than Cambridge, where the business sector pays more than 60 percent of the total tax burden. Cambridge has substantially more commercial properties than Somerville, because it has long pursued commercial development to support its budgetary needs.

Since the turn of the century, Somerville has adopted a similar approach, with Assembly Row as the most prominent example of growth that benefitted the city budget. Assembly Row has surpassed all of its projections and produced millions in new commercial tax revenue for the city.  Somerville’s next opportunity to broaden its commercial base awaits in Union Square, where Union Square Associates (US2), the master developer selected to revitalize Union Square is moving toward approval for the first phase of its development.

The first phase, which includes a 175,000 square foot lab and office building, will generate tens of millions of dollars in land acquisitions fees, permitting fees, linkage payments and new tax revenue.  Those payments, will only be realized, however, if the city’s Planning Board approves the project and the City Council transfers a small parcel of property that the SRA has already agreed to convey to the developer.

Recent reports indicate that the Union Square Neighborhood Council and US2 are close to an agreement on a community benefits package, though it appears a sticking point may lie in the Neighborhood Council’s demand that US2 enter into a project labor agreement, which could stop the development due to fiscal impacts.

In December, one Union Square resident told The Boston Globe that his “greatest fear is that in seeking to get everything, we get nothing. When is good enough good enough?” For City Hall and residential tax payers, an influx of millions of dollars to defray the rising cost of capital projects could be plenty good. Time will tell if that’s good enough for Union Square.