Boston Residents Face 28% Tax Hike as Office Values Slump

(Bloomberg) -- Boston homeowners face a 28% surge in their tax bills if the Massachusetts legislature fails to sign off on a proposal to temporarily raise commercial rates before the end of next month, Mayor Michelle Wu said. 

The city is particularly vulnerable to the nationwide slump in office demand because of its heavy reliance on property tax revenue and state restrictions on its ability to tap other funding sources. That’s forced Boston to develop a workaround in an attempt to preserve its budget without burdening homeowners with the brunt of the revenue shortfall from commercial property taxes.

Commercial property values in Boston have fallen 7% in the current fiscal year, reflecting high vacancy rates in older and lower-quality office buildings amid the persistence of pandemic-era remote and hybrid work policies, Wu said in a presentation Wednesday. The numbers are based on a preliminary assessment that’s subject to change as the city reviews parcel-by-parcel data in the coming weeks. 

The decline in commercial property values isn’t as stark as the mayor’s office had initially estimated, in part because of resilience in retail and hotel businesses. Still, the 28% quarter-to-quarter increase in residential property rates that would be required to compensate for the commercial shortfall is significant, Wu said...

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RSK: Looks like Madison isn`t the only city in this boat.