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Wu to seek permission to temporarily raise tax rates on office buildings should assessments show big decline in their values; says move would protect residents from potentially large tax increases

Mayor Wu said today she will seek state legislation that would let the city tax owners of commercial and industrial property at a higher rate for four years, should official assessments being conducted this year show a precipitous drop in the assessed value of downtown office space in particular due to work shifts caused by the pandemic.

Wu, who said the city is already seeing some decline in commercial building values downtown, said that should the current re-assessment cycle, to be finished within nine months, show a particularly steep decline, without a change in its taxation structure, the city would be forced to charge residential property owners potentially "significant increases" to make up the difference, an increase nobody wants in a city that already has some of the highest housing prices in the country.

Wu's proposal, if approved by the City Council, the State Legislature and the governor, would likely still mean property-tax increases for owners of residential property, but at far lower amounts than otherwise Wu and her advisors said at a morning press conference. Owners of commercial and industrial buildings with lowered assessments would still see decreases in their quarterly tax bills, but not as great as they would otherwise, they said.

At issue is the way Proposition 2 1/2 works. The measure limits only increases in the total amount of money a city or town can bring in through property taxes each year, not the increases for an individual property's taxes, so short of large cuts to city services, the city would have no choice but to raise residential rates should income from commercial properties decline significantly due to reduced assessments, she said.

At the same time, the law limits the maximum amount of tax revenue that can come from a particular type of property. Wu's proposed measure would let the city temporarily change the percentage of the overall property-tax levy that comes from commercial/industrial properties from the current maximum of 175% of what it would be if the city didn't have two tax rates - one for residential, one for commercial/industrial property - to 200%.

She said it's too early to say whether the measure would be needed, because that will depend on the current reassessment effort by city assessors, but she that it's better to have authorization to make the tax changes now should reassessment show a dramatic decrease in commercial property value, then wait until right before the city might have to set new tax rates and send out bills.

If the city gets authorization and does enact the new plan, it would run for four years, with the maximum amount of taxes from commercial and industrial properties decreasing each years.

She noted that Boston has done this sort of temporary commercial increase before, in 2003, under Tom Menino.

Among the supporters of the proposal: Tom O'Brien, CEO of HYM Investment Group, which is constructing the commercial and residential Bulfinch Crossing complex downtown and working to build out the giant Suffolk Downs project on the East Boston/Revere line.

O'Brien called the proposal "a really important tool" that would mean "a lesser burden on residents" in Boston. However, he also called for work on "potential new growth and new projects." Over the past 20 years, massive new development in Boston has helped keep municipal services afloat, since the value of each new building, and its resulting property-tax income, is added to the city's overall assessment and yearly income.

Adam Chapdelaine, of the Massachusetts Municipal Association, which represents the state's 351 cities and towns, praised the proposal as a way to give Boston a way to handle property taxes in way that minimizes the impact on its residents.

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Comments

mass RTO mandates is 3, 2…

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But yeah, it sounds like my corporate overlords aren't the only people who want to force us to prop up useless skyscrapers and overpriced real estate.

I like cities. I like all the hustle and bustle, but... it's over. Skyscrapers are for paper pushing. They appeared in the early 20th century and they became largely obsolete before the 21st century began.

The financial execs have been lying about it for decades because they like offices fifty floors above all of us. The insane expense of building, maintaining, and staffing these giant buildings all concentrated together is no longer justified, and any attempt to fight against that - especially by punishing little people - is only going to make it worse.

We need to admit the truth now and start pivoting to make cities whatever it is they can be, find whatever uses we can find for the skyscrapers we have, and move forward. But I don't expect the rich to lead the way on any of that.

Sorry Mayor Wu, but Boston needed all that tax money to prop up all the activity that was created by all the people who HAD to go there to work. There are going to be a lot of pains for the city as it admits the true value of its buildings. Bite the bullet and face the truth.

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Remote work was a temporary thing.

The future is hybrid. This is to be expected from potential employees unless there is some actual reason for being at work, like a surgeon.

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I have seen zero businesses who want RTO make any moves to consolidate their office space or turn to shared office space with other businesses, and there is no way to justify the costs of renting an office that's going to be used 20% of the time (especially if it's a Boston skyscraper).

The need for remote work may have been a temporary thing, but my team now consists of many people who are remote because they are geographically remote - my spending time, money and pollution to go to an office doesn't help me collaborate with them at all, and my home office tools are vastly superior.

My company is currently slowing down its hiring by posting open jobs as hybrid, meaning that we're looking at local talent instead of national talent. Embracing remote means casting a wider net, which we do after wasting time on unsuitable applicants who actually want to commute.

Why do you think the future is hybrid for jobs that can be done remotely? I don't see how the costs possibly justify the benefits in the world I already live in.

None - absolutely none - of the RTO plans I have seen (several of which have been floated by my company, and have failed) appear to be based on an actual belief in the power of in-office work as a productivity measure, nor are they based on sound accounting of the costs. I think any boss who tells you the future is hybrid is lying, and they want it to be a stepping stone to full office work. They are trying to hold on to the old ways because it's all they know how to do, and because they don't feel like big bosses if they can't see you at your desk.

I have also seen zero effort on anyone's part to plan for the next pandemic. Everyone is behaving as if there's never going to be a need to work remotely again, but there's no rational reason to believe that. RTO businesses are rushing to make all the costly investments in offices that made the last lockdown so expensive for them. This is not sound business policy, but I haven't met a C-level executive who actually cared about the long term health of their company in a very long time.

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They moved my office and didn’t renew the lease in the old building. In the new office people are rarely there and have cubicles instead of offices .

My leadership NEVER makes comments about WFH. Like if a meeting is proposed it can be I person or Teams based on peoples availability.

Fidelity has fully embraced the hybrid model as well. They require half time in the office.

When I see job postings in my field, which is a high demand one, hybrid work is often mentioned.

What field are you in? I’m in te hard sciences.

I think the idea behind hybrid is more about saving commuting costs and office space leases. Again, in my work I’m seeing hybrid get more and more solidified. It’s a balance between face time and commute.

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I think the idea behind hybrid is more about saving commuting costs and office space leases.

I think the idea behind hybrid is neither of these things. It doesn't save you a cent on an office space lease, and corporations dgaf about "saving commuting costs" which are 100% borne by their employees. Hybrid is a strategy to retain employees.

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I fully understand anyone with a job that actually involves hands-on stuff needing to go to the office, of course - and hard sciences might include that. I'm in software engineering, so 100% of the work can be done remotely (and given my post-pandemic team of national and international engineers, it has to be done remotely).

I would agree with you if I saw more companies actually pocketing savings by downsizing, but I'm not seeing that. And unfortunately Wu's response doesn't seem geared toward that at all - she only wants to perpetuate businesses renting Boston real estate, and also perpetuate people living in the city to be close to those businesses. The property values for both should plummet, the active city population should plummet, the tax base should plummet. I'm not saying that's going to be awesome - just that given the market forces, it's unsustainable. The skyscrapers just aren't worth what they were worth in 1980, because for finance and many types of knowledge work, there's no need for it. The game has changed.

I hope that Fidelity pays a high price for their heavy-handedness. A friend of mine in a similar financial company went looking for a new remote job as soon as their employer started turning the screws, and when they quit, they will not be shy about telling them that it's all because of RTO. Last time I talked to them they were in final talks with a distant employer that seems glad to hire them remotely.

As I mentioned, all my company's job postings are currently listed as hybrid - but after we fail to find a suitable candidate nearby, we cave in and look for someone remote. So I bet a lot of job postings that say "hybrid" are being wishful rather than strict (and wasting time and money in the process).

My leadership also never talks about WFH vs RTO, but they whispered to my manager to whisper to us that we all had to start coming in two days a week. Then my manager whispered one day a week. I did it once, took some video of the nearly empty office where everyone was wearing headphones so they could call into their meetings, and never went back. Since there is no actual RTO policy, there are no consequences, and leadership doesn't want to admit that penalizing or firing the employees who want to work from home isn't an option because they couldn't replace us (especially with local people who are willing to commute).

If your leadership seems to be more rational than mine, I am envious! But from where I sit, corporate stewardship is a nightmare wasteland full of insecure charlatans. When the pandemic first hit, my in-office team was close knit and we had all kinds of fun together. I understand how good an office environment can be, and I miss some aspects of it. But once the lockdown started, I was sure that my company would shut down the office for good and go full remote to save on rent. Nothing that they have done since has matched up with any rational strategy. The office is deserted but still rented, there's been no thought to all the essential people we hired remotely during the pandemic, etc. The only thing that matches with reality, as I understand it, is that corporate leaders are generally stupid, insecure, selfish, and bad at business fundamentals. When I lost the last drop of respect that I had for them and assumed the worst, their behavior becomes explainable, and predictable.

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corporate stewardship is a nightmare wasteland full of insecure charlatans

I'm stealing this.

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could the CoB exercise some candor and disclose, at least in aggregate by class, what current assessments are coming in at, and the number and amounts of commercial real estate abatements, compared to prior years.

Given the numbers being reported in the media, we cannot be getting a complete financial picture. This is cutting deep.

Unfortunately many CRE transactions are not at arms length (Faneuil Hall MarketPlace, Arch Street) so getting an accurate picture is difficult at best.

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Again.

Apparently Boston's fiscal problems are less important than Milton's choo-choo.

Or this could be still under Politburo review.

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44

Buahahaha!

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37

So they still plan a burden on the residents?

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Today's commercial real estate sale: 101 Arch Street.

Sold 03/28/2024: $78,000,000
Bought 11/22/2005: $121,700,000

Today's seller: Clarion Partners
Today's buyer: Synergy Partners

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I hope Chacarero survives.

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And in person work at offices isn't dead. Until you can eavesdrop on other employees at your company to learn how other employees talk to when they are on the phone with clients and learn info. From being in the same room and chance encounters and cross department communication in a kitchen for example.

Also fields like architecture loose some creativity and mentoring of junior staff during remote work.

Construction and teaching kids also requires in person work.

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As long as we are winning the war against the North End.

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We can consider restraining the skyrocketing growth in the city budget a bit? Oops, Wu and the Progressive class just don't do that. Spending is their raison d'etre.
I guess the rest of us Boston residential homeowners will have to tighten our belts so the JP Progressives can spend out money better than we could. At least Swirls won't have to pay like all the other suburban freeloading users of our resources. Too bad for us Adam.

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Yes, Wu is a liberal. We can agree on that. If the bottom drops out of the commercial real estate market, the city has a big problem. We're talking big time cuts, not "Oh Mayor Wu can't have all the goodies she wants." Finding a way to maintain something close to the status quo, without dramatic increases in residential taxes, is a sensible path.

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It sounds like you're unhappy with the idea of shifting some tax burden from people onto corporations.

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.

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At least someone gets my point. This plan won't really keep down residential taxes. It will only increase commercial taxes. Progressives don't leave one penny unspent.

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