The opinions expressed below are those of John Keller and not those of WBZ, CBS News or Paramount Global.
BOSTON — How to prepare for the impact of the continuing collapse in commercial property values downtown is a dilemma that could become a major problem for the city of Boston's budget.
Boston Mayor Michelle Wu wants the right to raise taxes on those property owners, but critics say that's not what a mayor should do.
“An existential question for Boston.”
“This is an existential issue for Boston,” said Greg Maynard of the Boston Policy Institute, whose think tank shook City Hall in February with a report predicting major problems looming for Boston's finances as the work-from-home trend takes hold and the value of downtown office buildings plummets during the pandemic.
The pandemic may be over, but the collapse of this major source of income is not.
“This is a way to protect our residents,” Councilwoman Sharon Durkan said during today's debate. Durkan and others argued for the commercial tax rate increase rather than risk political backlash from tax-weary homeowners. “'I don't know if I can live here anymore. This is really crazy.' I probably got this email about 20 times in one day, while people get updates on their new tax bills in an hour,” Durkan said.
Several City Council members suggested pressuring wealthy but tax-exempt universities to pay more. “Why shouldn't we have to pay property taxes on the vast tracts of land we own in Boston when voters in Roxbury, Charlestown and Hyde Park have to?” asked Council Member Erin Murphy.
But development industry spokespeople warn against killing Boston's long-standing golden egg. “Essentially, we're putting large property owners and commercial taxpayers in a bind at a time when we want to attract tenants and businesses to downtown and ensure a vibrant economy,” said Tamara Small of the Massachusetts Association of Commercial Real Estate Developers (NAIOP).
Mayor Kure rejects city budget cuts
The commercial tax increase now heads to Beacon Hill for approval, but the researcher who started the furor says it represents a major test for Mayor Wu and one that will require maximum political creativity.
“This problem was created in a lab to hit Boston's budget,” Maynard says, “and Boston is highly vulnerable to this particular kind of recession, which means the response has to be unique as well.”
A decade ago, when this happened with the end of the dot-com boom, then-Mayor Tom Menino did the same thing by getting Beacon Hill to approve a commercial tax increase, but he did what Wu has so far refused to do: He made deep cuts to the city budget, giving the green light to the Seaport development and sparking a revenue surge for the city.
But that boom is over for now, new development downtown has halted, and some worry Wu's plans will scare investors away from Boston in search of better places to live.
More from CBS News
John Keller