Keller: Could raising taxes on commercial properties in Boston drive investors away?
The opinions expressed below are Jon Keller's, not those of WBZ, CBS News or Paramount Global.
BOSTON - It's a dilemma that could mean big trouble for the City of Boston's budget - how to prepare for the fallout from an ongoing collapse of downtown commercial property values.
Boston Mayor Michelle Wu wants the right to raise taxes on those property owners, but critics say that's the last thing she should be doing.
"An existential issue for Boston"
"This is an existential issue for Boston," says Greg Maynard of the Boston Policy Institute. His think tank rocked City Hall back in February with a report forecasting huge problems looming ahead for Boston's finances due to the pandemic-era collapse of downtown office building values as the working-from-home fad took off and stuck.
The pandemic might be over, but the implosion of this key revenue-generator is not.
"This is a tool in our toolbox to protect residents," said City Councilor Sharon Durkan at today's debate, where she and others argued for raising commercial tax rates rather than risk political backlash from tax-weary homeowners. "'I'm not sure if I can afford to live here anymore, this is truly crazy.' I got this email probably times 20 in one day in the course of an hour of people being updated of their new tax bills," said Durkan.
Why not push wealthy but tax-exempt institutions to pay more, several councilors suggested. "Why is it OK for Harvard not to pay property taxes on the huge amounts of land they own in Boston when our constituents in Roxbury and Charlestown and Hyde Park have to?" asked Councilor Erin Murphy.
But a development industry spokesperson warns against killing Boston's longtime golden goose. "In essence we're really kicking large property owners and commercial taxpayers while they're down, at a time when we really want to be drawing in tenants and businesses to our downtown to ensure we have a thriving and vibrant economy," says Tamara Small of NAIOP Massachusetts, the Commercial Real Estate Development Association.
Mayor Wu refuses to make cuts to city budget
The commercial tax hike option now heads to Beacon Hill for legislative approval. But in a key test for Mayor Wu, the researcher who triggered the uproar says the moment calls for maximum political creativity.
"This problem was created in a lab to hurt Boston's budget," says Maynard. "Boston is just so uniquely vulnerable to this particular kind of downturn. And so that means that the response needs to be equally unique."
The last time this happened a decade ago with the end of the dot-com boom, then-Mayor Tom Menino did the same thing, getting Beacon Hill to ok commercial tax hikes. But Menino did something Wu is so far refusing to do, making serious cuts in the city budget and giving the green light to Seaport development that triggered a boom in city revenues.
But that boom is over for now, new development downtown has come to a halt, and the fear of some is that Wu's plan could drive investors away from Boston in search of friendlier places.
