5 Questions for the Beacon Hill hearing on Mayor Wu's CRE Tax Hike

On Tuesday at 1 PM state lawmakers on the Revenue Committee are hearing testimony on the home rule petition to allow Boston to tax commercial properties above state-mandated limits

It has been three and a half months since Mayor Michelle Wu sent a letter to the Boston City Council requesting a home rule petition to hike taxes on commercial property in Boston over the state-mandated limit, and now the home rule petition is getting its hearing before Beacon Hill lawmakers on Tuesday, July 16, at 1 PM.

BPI has been following this issue closely. Tuesday’s hearing is the last opportunity to publicly resolve a number of issues where there are not clear answers, or where the Wu administration and outside analysts are either explicitly or implicitly at odds.

BPI has five questions and two follow-ups for state lawmakers to clear up all of those unanswered questions and disputes:

QUESTION #1: Does the City of Boston still think that the decline in office values is a “short term challenges of certain parts of the commercial office sector,” as Mayor Wu wrote in the letter she sent to the City Council on April 1 that accompanied the home rule petition? Why or why not?

QUESTION #2: Daniel Swift, an attorney with Ryan Tax, produced a report that projected that “this tax shift or additional tax shift will only further that [office value] decline and result in far greater burden on the residential class.” Assessing Commissioner Nick Ariniello disputed Attorney Swift’s finding in his testimony to the City Council at the May 30 hearing: “I do not in any way envision that this [the home rule petition] is going to lead to that level of property value loss, if any, honestly.” Can the City of Boston explain in detail why they believe their home rule petition would not have the impacts identified by Attorney Swift?

QUESTION #3: What additional evidence or analysis caused the City of Boston to change the expected increase in residential property owners’ tax bills if this home rule petition is not passed from 17%, which Boston’s CFO Ashley Groffenberger wrote in a May op-ed published in the Boston Globe, to 33% which Mayor Wu said in appearances on Radio Boston in June and Boston Public Radio in July? Back in June WBUR reported that the City declined to shared that analysis: is the City planning to share it publicly?

• QUESTION #3A: In the City Council’s April 15 hearing on this home rule petition Councilor Worrell asked Commissioner Ariniello: “what level of commercial property value growth or decline does the city forecast over the next 5 years?” to which the Commissioner answered in part “it's not something where we have the resources to kind of commit to projecting into the future the way that you've asked . . . honestly, even if we had more people, it's not something that is such a easy thing to forecast and to do anything more than, like, an educated guess.” In the City Council’s second hearing on the home rule petition on May 30 the idea that the City cannot do forecasts was again discussed by the Commissioner and Councilor Worrell. What changed between the May 30 hearing and the Mayor’s appearance on Radio Boston in June that allowed the City of Boston to produce forecasts of the impact of this home rule petition? Why was the City able to produce forecasts for state lawmakers, but not for its own City Council?

QUESTION #4: Several City Councilors said that this home rule petition was necessary to protect ‘house rich and cash poor’ home-owners from big increases in their tax bills, but this measure is temporary. What is the City of Boston’s plan for protecting these home-owners after the expiration of this temporary home rule petition if it is passed?

• QUESTION #4A: The Greater Boston Real Estate Board (GBREB) produced a report in June that projected that putting this home rule petition into effect would “create a very unstable situation for residents, whose tax rate would drop substantially for one year and then climb 40 percent over the next 4 years.” GBREB’s report went on to argue that Boston already has relatively low residential real estate taxes and taking no action would result in a “series of gradual increases in these rates could be less disruptive than the down-and-up impact of the current plan.” Why is the home rule petition a better idea than doing nothing?

QUESTION #5: In her April 1 letter to the Council asking them to pass this home rule petition, Mayor Wu wrote: “therefore, without legislative action, the result of a trend of declining commercial property values is an automatic jump in residential tax rates in order to fully fund City services.” If the Mayor believed this to be the case, why in her April 10 speech introducing Boston’s FY25 budget did she call the report ‘The Fiscal Fallout of Boston’s Empty Office’ produced by the Boston Policy Institute and Tufts’ University’s Center for State Policy Analysis and which projected that Boston faced a shortfall in commercial tax revenue of up to $1.5 billion over the next 5 years “false information?” Since the Wu administration has not produced its own public report on how declining office values will impact the City of Boston’s budget, can the City of Boston explain what specifically in BPI’s report the Mayor believes is “false information?”

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