Wu's Commercial Property Tax Hike Delayed Again As Business Groups Change Stance

The monthslong debate on Mayor Michelle Wu's proposal to raise commercial property taxes came to a head Thursday as a state senator blocked her plan from passing for the second time this week. 

State Sen. Nick Collins, who represents South Boston, said his concerns around the bill were exacerbated by new property tax data from the Massachusetts Department of Revenue that showed a less severe outlook for residential property owners than the city had projected.

That data also led a coalition of business groups that had negotiated the tax agreement with Wu to change their stance and call for pausing the bill. 

"The new property valuations certified by the Department of Revenue last night materially differ from the data provided by the City in discussions in October," the coalition, which includes the Greater Boston Chamber of Commerce and commercial real estate group NAIOP, said in a joint statement. 

"Based on these revised figures, we support pausing consideration of Boston’s home rule petition that would shift property taxes onto commercial property owners to allow time to analyze the impact of the new information."

The coalition also includes the Boston Municipal Research Bureau and the Massachusetts Taxpayers Foundation. And the Boston Policy Institute issued a separate statement saying the city had provided "extremely inaccurate data" during its hearings on Wu's tax shift proposal. 

The Department of Revenue certified numbers that showed residential homeowners' tax bills would rise 25% less than what the Wu administration released in October and 36% less than what was released in June, the BPI stated.

Residential property owners could now see a 21% tax increase, much lower than the 28% increase estimated in October. Wu and city officials updated numbers in October to show the projected residential tax increase was 27.8% compared to 33%.

Wu said in a statement Thursday evening that it is common for property values to change due to revisions or error checking and the final numbers were "within the original estimated range."

“I’m in disbelief that some may be looking to renegotiate or walk away from a deal that was settled a month and a half ago, then codified in good faith through a second set of vetting and approvals by the City Council and the House of Representatives," Wu said. "We all sat around the table in September, discussed preliminary numbers that were subject to a range of margin of error as the valuation process continued, and agreed on a compromise to protect against the worst case scenarios over the next few years of uncertainty."

But senators said they want more time to study the property tax data before approving the change to commercial tax rates.  

"We believe that it is fair and prudent to allow the time to digest that data and speak to our constituents, stakeholders and colleagues to determine if this home rule is necessary," Collins said at the Senate hearing Thursday morning. 

State Sen. Peter Durant, who oversees Worcester and Hampshire counties, also said it is "prudent" to delay the bill due to the new data. 

"Rushing forward without this due diligence could certainly undermine public trust and have a long-term consequence," he said. 

Wu proposed legislation in March to hike commercial property taxes to protect residential property owners from a massive increase.

A third of the city's revenue is reliant on commercial property taxes, and with values declining in the office market, the city was estimated to see a budgeting shortfall between $1.2B and $1.5B from 2025 to 2029.

The mayor's plan passed the city council and the state House of Representatives but then failed to pass the Senate before the end of the summer legislative session. 

In October, Wu reached a compromise agreement with the coalition of business groups to lower the commercial property tax hike from her initial proposal. 

Commercial property owners currently pay 175% of the rate that residential owners pay. Her initial proposal had called for increasing that to 200%, but the agreement brought it down to 181.5%. 

After amending the bill, Wu secured approval from the city council in October and the House of Representatives just before Thanksgiving.

However, approval has remained hard to secure from the Senate.

On Monday, Collins asked for the vote to be tabled until the Senate's next meeting on Thursday.

Reports emerged Wednesday from WBUR and the Boston Globe that Collins received $17,200 of campaign donations from prominent commercial real estate and hospitality industry leaders in the weeks leading up to the scheduled vote. 

"A majority of contributions to my campaign come from Boston residents including organized labor and almost all are Boston taxpayers," Collins said in a statement to WBUR. "As Senator, I will always prioritize protecting Boston's taxpayers and the economic stability of the City and our region."

Collins' call to further delay the plan on Thursday was bolstered by backing from the coalition of business groups, and the Greater Boston Real Estate Board also supported delaying the proposal. 

“It appears that the tax implications for Boston homeowners are not as dire as Boston officials had originally predicted based on the new information just released," Greater Boston Real Estate Board CEO Greg Vasil said in a statement. "Providing any additional tax relief to commercial owners who bear so much of the burden of Boston's operating budget is key."

UPDATE, DEC. 6, 9:50 P.M. ET: This story has been updated with a statement from Mayor Michelle Wu.