Time to tax the ‘swanktuaries’
ONE DALTON PLACE, the latest skyscraper sprouting in Back Bay, promises to “stand 61 stories high in the Boston skyline” and will be “New England’s tallest and most luxurious residential building.”
The bottom 24 floors of One Dalton will be a 215-room Four Seasons hotel. Rising from the 25th floor will be 160 luxury condominiums, with an average cost per unit of $6 million. The penthouse will go on the market for a Boston record-breaking $40 million.
The future inhabitants of One Dalton will, Boston Magazine gushes, “enjoy a slew of ultra-luxe building amenities, too. The golf simulation room may come in handy on rainy days, not to mention the private theater, salon, health club, and spa.”
One Dalton is only the latest “swanktuary” constructed over the last decade. It joins Millennium Place and Millennium Tower, the two Ritz Carlton residences on Avery Street, and Twenty-Two Liberty place, together adding over 1,100 units of housing for the global 1 percent.
These buildings offer unprecedented luxury and we would be smart to tax them as such, with a high-end real estate transfer tax that could be used to help Boston deal with the economic inequality that’s made their construction possible in the first place.
Instead, the city’s political leaders and media have mostly adopted a posture of unabashed boosterism, happy to accept the increased property tax revenue and prestige.
But One Dalton is a gripping symbol of the grotesque wealth inequality. It poses numerous perils to the city and its non-wealthy inhabitants.
The stampede of global capital into coastal real estate has been happening for years — a reflection of over three decades of accelerating wealth concentration. But now this global building boom is hitting warp speed. Skyscrapers that once took years to permit and construct are now rising at the speed of weeds.
Most of these apartments aren’t homes, but wealth storage units for what Suisse Credit describes as the “ultra-high net worth” class, those with $40 million or more. For them, these Boston properties are just one more option to diversify their holdings — like stocks, bonds, gold, or high-end art.
Think of them as elegant piggy banks. They’re part of a global hidden wealth infrastructure, a mechanism to hide wealth and mask ownership to avoid taxation, legalities, and oversight.
A high percentage of these housing units will sit empty or rarely occupied. In the Millennium Tower, for example, only 25 percent of units claim Boston’s residential property exemption, declaring the property their principal residence.
A glance at the Boston Assessor’s report for Millennium Tower reveals an ample number of shell corporations masking the actual owners — perhaps absentee investors from Wall Street, Russia, or China. The property-owning entity may be incorporated in Bermuda, controlled by a trust registered in Panama, and funded from a Cayman Islands bank account.
But the fixed asset is now in your downtown or residential neighborhood.
Projects like these don’t just drive up land and housing costs, fueling the displacement of less wealthy inhabitants. They also suck up vast amounts of actual fuel.
One Dalton Place is not a green building, and its construction will necessitate the expansion of a new 4,000-foot gas main extention — an expansion of the fossil fuel infrastructure at a moment when the city is attempting to reduce its greenhouse gas emissions.
In exchange, Boston should ask for more than just property tax payments.
In 2016, San Francisco voters approved a high-end real estate transfer tax on residential and commercial properties sold for over $5 million. It’s expected to generate $44 million a year, which will fund free community college tuition for city residents.
In New York City, Mayor Bill DeBlasio has proposed a “mansion tax” on properties over $2.5 million.
We should move in tandem with other coastal cities to enact similar legislation, forming compacts to defend our communities from rapacious global capital. We should also follow the lead of Boston City Councilors Matt O’Malley and Lydia Edwards, who are proposing a tax on vacant properties.
They’re taking a cue from Vancouver, which has increased taxes on unoccupied properties, and from British Columbia, which has just levied a tax on absentee owners in response to non-resident investors treating Vancouver-area real estate as offshore piggy banks.
Boston should harvest these taxes and direct them to our linkage fund, with the goal of expanding the stock of permanently affordable housing — in the form of public housing, nonprofit-owned rental housing, limited equity cooperatives, and homeownership on community land trusts.
Boston is for everyone who lives here, including new neighbors from around the world. But the priority for city policy should be protecting the non-wealthy majority. We should capture a portion of this global wealth and deploy it to protect the city we love.
Chuck Collins directs the Program on Inequality at the Institute for Policy Studies, where he co-edits Inequality.org. He’s the author of “Born on Third Base” and lives in Jamaica Plain.