Councilors push a relook at downtown’s future
Empty offices prompt worry about a decline in tax base
Two Boston city councilors on Wednesday will call for further examination into the city’s property tax base and the future of downtown.
Brian Worrell, the District 4 councilor who also serves as chair of the Ways and Means Committee, will ask the council on Wednesday to schedule a hearing on the future of commercial property tax revenues ahead of the city’s fiscal 2025 budget presentation next month. Property taxes generate nearly threequarters of the city’s $4.3 billion budget.
“The city of Boston should have a clearer understanding of the future of its largest revenue base, and how to best deal with commercial property relief,” Worrell wrote in a March 4 hearing order.
Also on Wednesday, Councilor Ed Flynn of District 2 will propose creating a blue ribbon commission of business leaders, city and state officials, advocates, and other stakeholders to examine strategies of how to fill empty downtown offices. The office vacancy rate downtown is currently 18.1 percent, the highest in decades, according to CBRE research.
In an interview, Worrell said he’s heard from commercial property owners in the city that their properties are worth less than when they first bought them — and that has him concerned. If that leads to declines in Boston’s property tax base, it could impact the city’s “ability to pay for services and to be able to serve the constituents of Boston,” Worrell said.
Taxes from commercial and residential property were expected to generate $3.2 billion this year; of that, some $2.1 billion was expected to come from commercial buildings, including offices and retail, Worrell’s hearing order states. One recent study estimated that if Boston office values drop by 20 percent to 30 percent, tax revenue could fall $1.5 billion below prior projections over the next five
years.
“Any significant decline in property values can present a problem for cities as dependent on the property tax as Boston,” the city’s 2024 budget states.
There’s a “significant” gap between Boston’s effective tax rate of 1.4 percent and the 2.5 percent rate that’s allowed by the state’s Proposition 2½, the city’s fiscal 2024 budget states. That gives the city some flexibility to raise tax rates if needed to make up for any revenue decline. Many residents in Worrell’s district, which covers Mattapan and Dorchester, are retired and on fixed incomes, and he wants to avoid burdening those homeowners with a higher residential tax rate.
“A lot of people ... they’re house rich but cash poor, and the last thing they want is for the city to increase taxes,” Worrell said.
Worrell’s office will invite multiple city officials to the hearing, including Chief Financial Officer Ashley Groffenberger, as well as representatives of the Assessing Department, Budget Office, and the Boston Planning and Development Agency. Beyond a discussion on the future of commercial property tax revenues, he’s looking for “more concrete data on property tax abatement applications,” Worrell said.
Some 1,715 property tax owners have disputed their city assessment and applied to lower their tax bills this year — a process called abatement. While the city has received about 100 fewer applications overall this year than last, such requests increased by 27 percent in the downtown core — home to many of the city’s most valuable buildings.
Flynn, meanwhile, is looking to tap into business community expertise to study the impact of downtown office vacancies and propose strategies to fill empty spaces.
“A vibrant downtown is critical to the long term prosperity of our city, and we all agree that healthy economic activity and higher foot traffic is muchneeded to restore confidence and also improve public safety in the neighborhood,” Flynn said in a statement.
Both proposals are slated to be discussed by the City Council at its Wednesday meeting. A hearing would likely be scheduled in the coming weeks.