A report from the Boston Policy Institute warning of a looming billion-dollar property tax deficit generated alarming headlines that Mayor Michelle Wu said were based on "false information." Image courtesy of CommonWealth Beacon

The headlines carried dire alarms about the post-pandemic rise of remote work and its effect on office towers. “Boston Faces $1 Billion Tax Deficit From Faltering Office Market,” Bloomberg blared. “As office real estate slumps, Boston budget could take a hit,” the Boston Globe warned.

The jarring news, which has been met with strong pushback from Mayor Michelle Wu and city budget officials, was based on a report from a new public policy think tank that is suddenly driving the conversation about what could end up being the biggest budget predicament facing City Hall in years.

The Boston Policy Institute, launched in December by two 37-year-old Democratic insiders, says its goal is to shine a light on the city budgeting process, development policy, and other top issues. But the organization’s refusal to make public its sources of funding – coupled with the not altogether happy history one of its founders shares with Wu – has prompted whispers of grudge-settling and rumors of who could be behind an effort to bring fresh scrutiny of City Hall as Wu readies for a 2025 reelection campaign.

At the center of what has become a high-profile dust-up is the group’s effort to gauge the impact high office vacancy rates could have on city finances. Boston is unusually reliant on commercial property taxes – they account for nearly 60 percent of all city property tax revenue. The Boston Policy Institute report estimated that long-term vacancy rates from new hybrid work patterns will mean a 20 to 30 percent decline in office building values, a fiscal shock that the report said would translate to a “cumulative revenue shortfall of more than $1 billion in the next five years.”

City officials have strongly disputed any talk of a revenue shortfall or budget hole. They say any decrease in revenue from commercial property would be made up for through higher tax collections from residential assessments.

In recent days, Wu has ramped up criticism of the report, telling city councilors at an April 10  budget briefing that it contains “false information.” While acknowledging uncertainty about shifting work patterns is a potential threat to the economy, she declared in a separate speech to business leaders, “the city is not facing a billion dollar shortfall.”

With her remarks, WBZ political analyst Jon Keller said last week, Wu took a “simmering dispute” over the report and “threw gas on it.”

The new city-focused think tank arrived on the scene during a period of uncertainty surrounding the city’s established government watchdog group. The Boston Municipal Research Bureau is searching for a new leader after its previous president quietly departed last fall with no public explanation or announcement.

The business-funded research bureau, a staid fixture in the city’s firmament for more than 90 years, has generated detailed reports on City Hall for decades. Its funders are clear and the organization’s board of directors is a lengthy list of movers and shakers from some of Boston’s best-known companies and educational institutions, like Fidelity and Boston University.

In contrast, the months-old BPI is organized as a nonprofit under an IRS designation that lets them shield donors from public filings. Greg Maynard, the center’s co-founder and executive director, defended the arrangement, saying it allows the organization to raise money from those who support its mission but may be concerned about alienating City Hall under Boston’s strong-mayor governing structure.

“I think the response we’ve seen, especially in the last week, is exactly why a report like the one I put out is hard to put out,” and why donors would prefer to stay unknown, Maynard said of the criticism from Wu and city officials.

The secrecy around donors was a selling point when he originally sought funders. Maynard teamed up with fellow political consultant Joe Caiazzo a few years ago to pitch potential supporters on a differently named organization with the same goals. The pitch, according to materials obtained by CommonWealth Beacon, came with a $300,000 budget, setting aside money for consultants and research.

Maynard, who has worked on mayoral campaigns in Revere and Somerville, among other local races, joined with Caiazzo, who worked as a senior aide on Vermont Sen. Bernie Sanders’s presidential campaigns, to formally launch the Boston Policy Institute in December. Maynard’s Brockton apartment serves as its headquarters.

Along with its focus on the city budget and schools, the organization is keeping a close watch on Wu’s ongoing overhaul of the Boston Planning & Development Agency.

Maynard has more than a passing familiarity with Wu – and her proposal to transform the redevelopment agency. They met during Elizabeth Warren’s 2012 Senate campaign, where Maynard was among the first field staffers hired to help the Harvard professor beat Republican incumbent Scott Brown. Caiazzo also worked on that campaign.

What’s more, Maynard’s future wife, Kerry Richards, interned for Wu in 2015 when she was on the City Council and was later hired as her policy director, helping write Wu’s 2019 paper laying out the case for abolishing the BPDA as a quasi-public authority.

Richards was there just over a year before leaving to take a job with the mayor of Brockton as his chief of staff. It’s widely understood inside and outside City Hall that her departure from Wu’s council office came after a less than amicable split.

Maynard insists the increasingly bitter back-and-forth over tax policy and the city budget isn’t personal, and says the goal of the new Boston Policy Institute is solely to spark open dialogue that he feels has been lacking in Boston and beyond. “There’s no question the public conversation in Massachusetts has become less robust over the last several decades in terms of focus on policy,” he said. “This is a way to improve that conversation.”

A Wu administration spokesman declined to comment for this story.

Those involved with the new organization and Wu share a background in liberal-leaning Democratic Party politics, but there are clear fissures.

Just after it launched, the think tank tapped Nick Clemons, a Democratic operative who, like Caiazzo, worked for former Rep. Joe Kennedy III, to pen an analysis of public polling of Boston mayoral elections from 2013 to 2021. While Wu swept into office on promises of “bold change,” Clemons wrote that one of his takeaways was “Boston is a city open to change, but not radical change that alters the landscape overnight.”

The institute also engaged an education analyst who has worked for Boston and Brookline’s school systems to write reports on the Boston Public Schools. The analyst currently works for Democrats for Education Reform, an organization that supports charter schools and has battled with the Boston Teachers Union, which is allied with Wu and backed her candidates for City Council last year.

But it’s the group’s report on the pandemic’s potential effect on Boston’s budget that has created a stir. Maynard hired Evan Horowitz, a respected policy and budgeting expert who runs a Tufts University research center, to carry out the analysis.

The Wu administration, which did not see the report ahead of time, sounded skeptical notes at the time of its February release, saying through the tax assessing commissioner that they “don’t feel that the current real estate environment is going to lead to budgetary concerns.” The statement added it’s “something that we are keeping a close eye on,” a reference to how even before the report’s release, city officials had been meeting to discuss how to deal with a potential drop in commercial real estate values.

In March, it became clear how seriously the Wu administration is taking the threat of decreased commercial real estate values. The mayor announced that she was filing a home rule petition that would temporarily hike commercial property tax rates beyond the ceiling permitted under state law, to prevent a spike in residential taxes. The petition, which needs approval from the Legislature, is currently sitting in a City Council committee.

In many ways, the dispute over the report on office vacancies and taxes seems more about semantics than substance. While City Hall may take issue with the report’s framing of the situation as a budget shortfall, Horowitz said that doesn’t change the fact that Boston will need to take action to deal with the new realities brought by the pandemic. “Pretending that this isn’t a problem is not one of the options,” he told the Globe.

Marty Walz, a former Beacon Hill lawmaker who is serving as the interim head of the Boston Municipal Research Bureau, echoed that view and said at the research bureau’s annual meeting earlier this month that the group would be issuing its own report on commercial property values.

Expressing surprise at the strong blowback from the administration, Maynard called his group’s report “anodyne” and pointed out that the Wu administration has yet to issue any projections of its own on the tax assessment question.

“We’re not advocating for policy, we’re trying to improve the conversation,” he said.

This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license.