Boo Wu – Boston Sitting on a Billion Dollar Commercial Real Estate Tax Bomb

Blue cities sure love their taxes, and they collect them like Daffy Duck clambering up the side of the pile of gold in Aladdin’s Cave, screaming ‘MINE, MINE, MINE!‘ 

What’s yours is theirs, theirs, theirs. 

And they tax it all – everything they can – even if you’re only there for an outing. God forbid you actually own property or live in a city like, say, Michelle Wu’s Boston.

You are being punished for taking a room that was intended for illegals

— Vin Kelly (@VinTrueCrime) April 7, 2025

The comment on the Xweet would be funny if Wu even knew what she spent on housing for the Sanctuary City’s illegal population, but, as with most Democrats, money management isn’t her forté. She’s just suing the federal government for more.

…At one point during the March 5 hearing, Congressman Byron Donalds, a Florida Republican, asked Wu how much the city spends on services for illegal immigrants.

“We don’t ask about immigration status,” Wu replied during the hearing.

“You don’t ask about how much money the City of Boston has spent on illegal immigration? Are you out of your mind? Do you manage your budget or not, Mayor Wu?” Donalds asked.

“I manage my budget. I have a AAA bond rating,” Wu said during the hearing.

Yeah. And about that bond rating – granted, Boston is nowhere near the Pit of Despair that Chicago is, but the folks that lease commercial buildings in the city have been leaving and not coming back for a while, and it’s starting to have a deleterious effect.

In the first quarter of 2025, there was a bit of an uptick in rentals in the languishing commercial real estate market – the vacancy rate dropped to 22.5%.

YOICKS

As the commercial real estate sector continues to adjust to post-pandemic realities, the latest insights from JLL’s Office Outlook for Greater Boston show both positive momentum and ongoing challenges in the city’s office market. Despite some promising signs, the road to full recovery remains long.

According to JLL, Boston’s office market has shown improvement in the first quarter of 2025, marking the third consecutive quarter of declining vacancy rates. The region’s total office vacancy rate dropped to 22.5%, with Class A office space in the city seeing an even sharper decrease, down to 19.8%. Leasing activity also saw a strong uptick, with a 39.8% increase in leasing velocity compared to the same period last year, indicating sustained demand for office space.

The problem with empty buildings is that the tax base begins to erode as the occupancy rates dwindle, and rents drop in an attempt to suck someone, anyone, in to keep some cash flowing.

That’s what’s happened in the Boston metro area.

The values for their commercial real estate have come down so far that there’s now a looming $1B shortfall in projected tax receipts that’s going to have to be made up somewhere.

Looking at you, Mr. and Mrs. Homeowner.

Boston’s office-building values have taken a big hit. That is causing homeowners like Paulette Durrett to dig deeper into their wallets.

When the value of the city’s commercial buildings falls, that places a higher tax burden on Boston residential owners. Since it can take years for tax assessments to change, tax bills earlier this year were the first since the outbreak of Covid-19 that boosted residential tax rates because of a major decline in commercial values. 

While homeowners in other cities are starting to feel this tax burden, it is particularly extreme in Boston. 

Durrett, 76 years old, said her annual bill will more than double to close to $1,600 from about $720. That is going to force the retiree to shelve plans for home repairs, replacing her 15-year-old car and buying new clothes this spring. 

“I’m going to have to tighten my belt,” she said. 

Durett is one of tens of thousands of Boston homeowners who received a bigger-than-expected tax bill, in large part because Boston office buildings have tumbled in value by more than 50% in some cases since 2019.

Insult to injury, as businesses flee the city – and the state in many instances – driving down the value of the buildings built to house them, Boston homeowners have conversely seen their property values rise. So homeowners are going to see the proverbial double whammy – paying more taxes because of the increased value of their humble Boston abode, as well as picking up the tab for the miserable business climate driving companies away.

…Continued downward pressure on commercial values would shift more than $1 billion of Boston’s tax burden to homeowners over the next five years, according to a report from the nonprofit Boston Policy Institute. Those increases would be on top of additional tax hikes many owners face because their homes have risen in value. 

The report that broke the bad news was released last year and pretty much buried by the Wu administration until the Wall Street Journal dug it up and into it. The numbers are just gross, and it’s all on snooty Miss ‘I Manage My Budget‘ Wu, who is still trying to seek even more of the tax burden onto businesses.

…[Boston Policy Institute] BPI’s report led to a prolonged spat between the watchdog and City Hall, which downplayed its findings, and continued to do so after Mayor Michelle Wu cited declining commercial values as the reason she was seeking Beacon Hill’s approval shift more of the tax burden onto businesses and by extension, hopefully lower residential tax bills.

Wu said that temporarily changing the city’s tax structure would stabilize the budget in a way that would soften the rate for Boston homeowners. The city derives roughly three-quarters of its revenue from property taxes.

…For the relatively new fiscal watchdog, which made its first big splash with its empty office buildings report last year, the Wall Street Journal’s attention to its findings served as validation after the prolonged blowback it has received from City Hall.

“The article highlighted that the total assessed value of Boston’s commercial property fell from FY24 to FY25, going from $63 billion to $61.2 billion, a decline which the report’s author, Evan Horowitz of Tufts University’s Center for State Policy Analysis, told the WSJ: ‘is basically unprecedented, outside of recessions,” BPI said in a Monday statement.

“This article is also more evidence that it was Mayor Wu – not BPI — who was peddling ‘false information’ about the state of the City’s budget.

In her FY25 budget speech on April 10, 2024 Mayor Wu attacked BPI’s report, saying: “To point to some false information that the city might be experiencing a billion-dollar shortfall — that is just simply not true.’

In an interesting codicil, Boston has a program known as Payment in Lieu of Taxes or PILOT, where they use a formula for the vast number of wealthy non-profits – colleges, universities, hospitals, etc – in the city who own immense tracts of incredibly valuable property that they don’t pay taxes on. The formula spits out a figure that’s a scant fraction of what the non-profit would pay in taxes, and attempts to shame the organizations into paying the figure voluntarily. It’s meant as a contribution of sorts to the collective good for city services, etc. 

This year’s list came out, and some non-profits were good neighbors, paying their share.

But some were very naughty.

Such a great post. These “nonprofits”, some that are quite large, pay their people like regular corporations, have plenty of profits, & contribute little to nothing to the state. Add this to colleges and religious institutions and there’s your fix for the MBTA, roads, healthcare.

— Stan (@StanMtnBike) April 25, 2025

Some who have more money than God have one more reason to hang their snotty, elite heads in shame, if they knew what shame was.

Harvard failed to fully make its requested Payment in Lieu of Taxes payment for the 13th year in a row last year, according to City of Boston data released last week.

The new data – released six months after its usual release in early fall — comes as the Boston PILOT program is mired in uncertainties. A yearlong renegotiation of its payment formula has shown few signs of progress, while the Trump administration has threatened serious funding cuts against several of its participants, including Harvard and Massachusetts General Hospital.

Harvard is also facing the potential revocation of its tax-exempt status by the Internal Revenue Service, in response to its defiance of a slew of demands from the Trump administration. In such an event PILOT would no longer apply to Harvard, although the revocation of nonprofit status would almost certainly face legal challenges.

Such uncertainties are a challenge for both Boston and Cambridge PILOT programs that hope to see Harvard pay more in new commitments.

I guess the excuse this year is, ‘THE BAD ORANGE MAN TOOK AWAY OUR ALLOWANCE!‘

Tightwads at Harvard have been pulling this BS for thirteen years and lecturing the rest of the world on how to live when other, less privileged schools just cut the damn check.

Pathetic snivelers.

Ah, well. Blue cities. 

More taxes might be coming to Boston

Councilor Sharon Durkan is proposing a fee on food delivery to address scooter traffic but it’s unclear how this will fix it since the scooters will remain

What is clear:
Consumer taxes will increase as prices cool under President Trump pic.twitter.com/kK02jNToyL

— Bostonians Against Mayor Wu (@AntiWuCoalition) March 23, 2025

You can hear the meter running.

It drowns out the sounds of the receding footsteps of the folks leaving for good.