Taurus Investments, a local real estate investment firm, claims in a lawsuit that city officials have over-levied taxes on its 148 State St. building in Boston, as part of an “unconstitutional and unlawful” practice that its lawyers claim extends to dozens of buildings. Photo courtesy of Colliers International

Boston Mayor Michelle Wu won reelection by a massive 50-point margin.

And whether you love or hate her brand of progressive politics and policies, Wu is clearly a rising star in the national political firmament, with maybe even a run for U.S. Senate in her future.

She has a chance to look magnanimous in an increasingly heated tax dispute between City Hall and the real estate investors who control the city’s battered office market, mired in a historic slump thanks to the durable popularity of remote work.

So far, though, Wu has chosen to dig in and not give an inch as allegations mount that City Hall retaliated against officer tower and building owners who made a stink about their tax bills.

Lawsuit Could Cover 60 Properties

Last week, a prominent real estate investor filed a lawsuit arguing that it faced retaliation by the Wu administration after appealing its tax bill on a downtown Boston building it owns.

Over the course of two years, Taurus Investments contends it was forced to shell out tens of thousands of dollars in additional taxes on 148 State St. after it filed an appeal with the state’s Appellate Tax Board.

In response, city officials hiked the assessed value on its 11-story office building and, by extension, the amount of taxes owed, the lawsuit contends.

“The City annually determines the fair market value of nearly 180,000 parcels and just one in every 200 end up in dispute. There is a well established and clear legal process for any property owner to appeal who believes their valuation is too high, including this plaintiff,” a city spokesperson told Banker & Tradesman last week after the lawsuit was announced.

And when similar allegations were floated over the summer, Wu flatly denied them.

Taurus has teamed up on the lawsuit with the conservative Pioneer New England Legal Foundation, which has been raising concerns about this controversial city assessment practice for months now.

The Boston-based real estate investment firm is seeking class-action status to represent other building owners hit with higher taxes as a result of what the lawsuit calls an “unconstitutional and unlawful over-assessment scheme.”

At a meeting with reporters Wednesday, Frank Bailey, a retired federal judge and president of the Pioneer New England Legal Foundation, claimed he has identified more than 60 other Boston office buildings hit with the same charge after appealing their tax bills.

And that number may go as high as 200 buildings, all at a time when the office market has collapsed, and towers are foreclosed on and sold at auction as tenants dump now-unneeded office space.

That means allegedly retaliatory tax increases levied by City Hall could easily run into the tens of millions of dollars, if all the buildings that were hit by the alleged scheme are taken into account.

“This case is about the rule of law,” Bailey said. “Taxpayers should never have been punished for exercising their rights.” “It is a question of basic fairness,” he added.

Allegedly Retaliation Against Tax Appeals

Per the Pioneer Foundation’s Bailey, the retaliatory hikes worked like this. City officials would initially lower a building’s assessment by a certain amount, and when the owner appealed, saying it wasn’t enough, city officials would raise the value right back to where it was before.

However, it’s not just the additional taxes that real estate firms and developers have been hit with that are raising eyebrows. Rather, it’s also the way city officials have gone about it.

City Hall never directly notified the building owners about the increases. In fact, there is no record of them either in the city’s online assessing database, with the changes noted only on the paper property record cards at City Hall.

In fact, the practice was only uncovered when a local tax lawyer was going through the property card records on behalf of his clients. The lawyer spotted an unusual pattern where the assessed values – and ultimately taxes – were raised on buildings on cards that carried the notation “ATB dispute,” short for “Appellate Tax Board.”

That’s the state body property owners can call up when they want to dispute a municipal property tax matter.

To date, Wu and her administration have done everything but address the allegations directly, honestly, and transparently.

Bailey said he tried for months, to no avail, to sit down with the city’s assessing department to get an explanation for the tax hikes on buildings whose owners had filed appeals.

Wu released hundreds of property records to the City Council in an attempt to muddy the waters, claiming just 13 property cards had the words “ATB dispute” written on them, indicating their assessments – and bills – had been raised after the appeals.

But here’s a more likely explanation: When office building owners raised a ruckus at City Hall over the tax increases, city assessors simply stopped using the telltale ATB dispute notation.

Bailey said dozens of buildings without the notation have been hit with tax increases.

Wu Squandering Opportunity

Let’s put aside the question of the motivations behind the tax increases, including the possibility that it was simply a bureaucratic error.

Forcing office building owners who filed appeals to pay more in taxes while they await a decision from a state tax board seems inherently wrong, if not illegal, and certainly hard to defend.

As the dispute escalates, Wu is squandering a golden opportunity to look like the bigger person.

Scott Van Voorhis

In fact, all the mayor has to do is make a simple pronouncement that she has heard the complaints and will be looking into them.

Maybe bring an outside law firm – or better yet, a firm with deep experience in real estate assessments – to review the situation.

Instead, Wu has chosen to defend a practice that looks like a pure money grab by a City Hall faced with the loss of potentially billions in revenue from crumbling office tower values.

It also invites unflattering comparisons to mayors past, like Kevin White.

With the city struggling amid suburban flight and crime during the 1970s, White kept assessments and taxes high on Boston office buildings. The city eventually lost in court and nearly went bankrupt after it was forced to pay out hundreds of millions in the equivalent of today’s dollars.

Does Wu really want to look like just another petty pol sticking it to the industry she has clashed with now for years?

Is this really the hill Wu wants to defend to the last?

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.