Boston City Hall at night in 2023. A legal advocacy group suing Boston says the city’s tax officials saddled commercial property owners with $19 million more taxes when they sought to lower their tax burdens in the face of rising office vacancy rates. Photo by James Sanna | Banker & Tradesman Staff / File
Forget about no taxation without representation.
As the nation passes its 250th year, a growing scandal at Boston City Hall over – what else? – taxes threatens to cast a harsh light on the city where it all began.
City Hall’s secretive and allegedly retaliatory assessment hikes on commercial properties have amounted to taxation without even any notification for the owners of hundreds of Boston office and commercial buildings, many struggling after some tenants shifted to remote work.
Over the past two years, city officials, after initially agreeing to lower tax assessments on more than 150 struggling office and commercial buildings, jacked them back up to their previous levels in retaliation against owners who filed for abatements, the Pioneer New England Legal Foundation announced last week.
The Pioneer Institute think tank’s legal advocacy arm, which filed a lawsuit last year challenging the controversial city assessing practice, said the Wu administration had turned over the information about the buildings as part of the discovery process in the run-up to a potential trial.
City Never Flagged Higher Bills
Pioneer had previously identified a few dozen buildings affected by the city’s alleged scheme, so the disclosure indicates the practice may have been more widespread than previously thought.
However, here’s something that is equally if not even more shocking: The owners only found out about the changes when their tax bills arrived, and they saw the assessment – and the amount owed – had gone back up after being initially lowered by the city’s Assessment Department, according to Pioneer’s lawyers and others who have researched the issue.
It required further sleuthing at City Hall – including requesting copies of the paper property assessment cards on file – for the owners to discover that the city officials had raised the assessed value of their buildings back to the previous year’s levels, per Pioneer.
Even then, the information was minimal: City officials left a simple, cryptic notation on property cards, “ATB dispute,” referencing a building owner’s appeal to the state’s Appellate Tax Board challenging the city’s assessment of their property as too high.
It gets worse. Last year, city officials stopped even noting the ATB dispute on property cards as Pioneer began an investigation of what Frank J. Bailey, a retired U.S. Bankruptcy Court judge and the Pioneer New England Legal Foundation’s chief, contends is a retaliatory assessment practice.
The Wu administration appears to have stopped the process since then, and has denied all wrongdoing in the affair.
The owners of 148 State St. were the initial plaintiffs in the lawsuit. Photo courtesy of Colliers International / File
Will State Keep Snubbing Property Owners?
Meanwhile, the foundation has hand-delivered a letter to state Commissioner of Revenue Geoffrey Snyder calling for an investigation into the controversial Boston assessing practice.
It marks the fourth attempt by the legal foundation to convince the seemingly recalcitrant state revenue commissioner to open a probe of the alleged retaliatory assessment scheme.
Rather puzzlingly, Snyder, the state’s top tax man and clearly quite the sleuth, had previously stated that his Department of Revenue could not confirm the allegations, despite being provided with the information the Pioneer New England Legal Foundation had collected in its own review.
However, now that Boston officials themselves appear to have confirmed the basic facts – with a list of the buildings whose assessed values increased after the owners filed appeals – it will be interesting to see what Snyder does next.
“The Department of Revenue previously said it could not substantiate our findings,” Bailey said in a statement. “But the city of Boston itself has now identified substantially more properties than we had uncovered.”
Scott Van Voorhis
$19M in Additional Taxes
Let’s recap: In each of these cases, owners of office and other commercial buildings, their market values ravaged by rising vacancy rates and other issues, filed for tax abatements, only to see the city respond by raising – not lowering – the assessed values of their properties.
As a result of the assessment increases, building owners have been forced to pay a total of more than $19 million in additional taxes – taxes they arguably don’t owe – as their cases slowly make their way through the state tax appeals process.
The city’s hardball, and arguably unconstitutional, attempts to squeeze more money out of commercial property owners come as Boston Mayor Michelle Wu and her administration grapple with steadily mounting financial pressures.
Boston faces a revenue shortfall that could reach $2 billion over the coming years, with the collapse in office occupancy having tanked the value of the city’s office towers and buildings, long a cash cow for the city, according to the Boston Policy Institute.
The Pioneer New England Legal Foundation filed its lawsuit last December, and both sides are now in the discovery phase, in the run-up to a trial, should a settlement prove elusive.
In May, Nicholas Ariniello, Boston’s commissioner of assessing who oversaw the alleged retaliatory assessment, suddenly resigned after seven years as the city’s taxman.
People familiar with Ariniello’s cautious style have raised doubts to me about whether the now-former assessing commissioner would have independently cooked up such a brazen scheme without encouragement or orders from higher-ups, although the Wu administration, as I said, has denied all wrongdoing.
After all, it’s one thing to jack up the assessment on an office building and force them to continue paying higher taxes during what could be a years-long appeal before the state tax board.
However, it’s quite another to hike someone’s tax bill and not bother even telling them about it.
Scott Van Voorhis is Banker & Tradesman’s columnist and publisher of the Contrarian Boston newsletter; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
