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Convenes Business Community in Public Forum to Discuss Concerns

NAIOP’s Advocacy Alerts are generously supported by Serlin Haley and Pierce Atwood, LLP.

On April 3 Mayor Wu filed a Home Rule Petition with City Council allowing the City to lessen increases in residential property tax bills caused by declining commercial values by temporarily shifting more of the property tax levy onto owners of commercial and industrial properties. The City Council referred the matter to the Committee on Government Operations.

One day after the Mayor’s initial announcement of the proposal, The Boston Globe Editorial Board chose not to endorse Mayor Wu’s legislation, and instead stated their agreement with NAIOP’s position, suggesting that the City consider diversifying revenue streams. NAIOP CEO Tamara Small told the Editorial Board,

“With the commercial sector facing extraordinary economic headwinds, this proposal may have long lasting repercussions that would impact the city’s competitiveness and long-term growth. Now is the time for the city to closely examine recent anti-growth policies that hinder new development, while also finding ways to diversify its revenue streams to ensure Boston does not rely on any one sector to meet its residents’ needs.”

Subsequently, the Committee has held two public hearings on the proposal, filed as Docket 0642. NAIOP has submitted testimony for consideration in advance of both the hearing on April 16, and the hearing on May 30.

On May 22, NAIOP hosted a briefing and panel discussion regarding the proposed legislation. NAIOP CEO Tamara Small was joined by Jim Rooney of The Greater Boston Chamber of Commerce; Meg Mainzer-Cohen of the Back Bay Association; Marty Walz of the Boston Municipal Research Bureau; Matthew Osborne of Eastern Bank; and Daniel Swift of Ryan, LLC.

The briefing began with a presentation from Daniel Swift of Ryan, LLC., summarizing his recently published white paper which overviews current property tax policies in Boston and the projected impacts of Mayor Wu’s proposal. Followed by a robust panel discussion which highlighted the negative impacts of this legislation if enacted, the panelists all believed that this proposal represents a cost increase for tenants ranging from small restaurants in the neighborhoods of Boston to global headquarters in the Financial District and beyond. The business community is deeply concerned that the additional cost may be the deciding factor for more businesses to divest their footprint in the City, and potentially, in the Commonwealth. The event concluded with Marty Walz of the Boston Municipal Research Bureau sharing her organization’s alternative recommendations to manage the current fiscal climate, including addressing budgetary spending and revenue diversification, two proposals NAIOP strongly supports.

As NAIOP has shared in our testimony and in the press, NAIOP is deeply concerned with the timing of Mayor Wu’s proposal. With the commercial sector facing extraordinary economic headwinds, this proposal may have long lasting repercussions that would impact the City’s competitiveness and long-term growth. Now is the time for the City to closely examine recent anti-growth policies that hinder new development, while also finding ways to diversify its revenue streams to ensure Boston does not rely on any one sector to meet its residents’ needs. While NAIOP is pleased that the City is taking the devaluation of commercial properties, especially office, seriously, NAIOP does not believe that now is the time to further punish, and further devalue, the commercial sector.

In addition to impacting existing property owners and tenants, this proposal would impede future commercial development, which the City desperately relies on to exceed the 2.5% annual growth limitation of the property tax levy.

For these reasons, NAIOP respectfully urged the City Council to reject this proposal, and instead focus on strategies that will reinforce fiscal responsibility, such as the creation of a responsible and prudent FY25 budget with spending levels in line with inflation or limited to 3-4% growth, and the exploration of strategies to diversify revenues. NAIOP also understands that that it is critical to protect the City’s residents from increased housing costs in all forms. As such, NAIOP recommended that the Council to pursue an increased residential exemption, which gives tax reductions to owner-occupied residential properties.

The proposal is still pending at City Council. If passed at City Council, the proposal will go to the State Legislature, where it will be filed and receive a hearing. It must then pass the House and the Senate before being sent to the Governor for signature consideration. At this stage, Governor Healey will not comment on whether or not she would enact the proposal. As the end of the formal legislative session on July 31 rapidly approaches, the window for these actions is closing. NAIOP will be weighing in throughout the local and state-level process.

The NAIOP Advocacy Team is working on numerous initiatives at the state and local level. If you have questions regarding these, or other topics, please feel free to reach out to NAIOP’s CEO Tamara Small or NAIOP’s Vice President of Policy and Public Affairs, Anastasia Daou.

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