In a growing controversy over commercial real estate taxation, owners in Boston are alleging that the city is imposing hidden penalties on property taxpayers who pursue appeals with the state’s Appellate Tax Board (ATB).
Despite a failed attempt to secure a tax abatement at the city level, some building owners have taken their grievances to the ATB, resulting in tax adjustments that are leading to increased tax bills.
The 2024 assessment for one prominent property, listed at $928 million, included a $33.5 million ‘adjustment’ marked as an ‘ATB Dispute’—a notation that directly added an estimated $871,000 to its annual tax obligation.
Tax attorney Daniel Swift has highlighted this situation, asserting that such adjustments began appearing in fiscal 2024 and appear to reflect a troubling trend unique to Boston.
Frank Bailey, president of the Pioneer New England Legal Foundation, voiced serious concerns in a letter to state Revenue Commissioner Geoffrey E. Snyder, claiming, ‘The city is secretly penalizing those commercial real estate taxpayers who pursue their right to appeal to the ATB.’
He emphasized that the city’s adjustments occur without any prior notice to taxpayers, effectively raising assessed values during ongoing appeals—an act that, he argues, lacks legal justifications.
Bailey stressed that these adjustments could take years to resolve, during which taxpayers must continue to shoulder these costs.
Compounding the issue, he mentioned that some landlords may pass these increased tax costs onto tenants, affecting everyday businesses like bagel shops and dry cleaners on the ground floors of these properties.
The foundation’s letter has drawn attention but refrains from naming specific clients or cases, although city records indicate other properties, like 155 Seaport Blvd. and One Post Office Square, have been similarly affected after filing ATB appeals.
In response to the allegations, a city spokesperson labeled the claims as ‘baseless and full of misinformation,’ asserting that there are no additional charges associated with appeals at the ATB.
The spokesperson indicated that any suggested correlation between pursuing an appeal and increased assessments was misleading, characterizing Pioneer’s claims as a disservice to Boston’s taxpayers.
The issue may soon require intervention from either state officials or the courts to clarify this matter.
The letter from the Pioneer New England Legal Foundation requests a response from Snyder within 30 days, while Bailey stated that if no action is taken, the group might consider filing a lawsuit.
However, he highlighted a significant concern: potential plaintiffs may be hesitant to step forward due to fears of retribution from the city for exercising their rights.
City Councilor Ed Flynn has become actively engaged, filing a 17F order requesting comprehensive information about the existence of ‘ATB dispute’ notations in property records prior to July 1, 2023, and the total number of records that contain such notations.
Officials concede that while these notations may have been historically present, their frequency appears to have increased in the most recent year.
Currently, there are approximately 418 properties under appeal for fiscal 2024, with around 25% classified as commercial or commercial condo properties.
This entire ordeal unfolds amid Mayor Michelle Wu’s efforts to adjust the city’s overall tax burden, whether through legislation aimed at easing tax rates for residential property owners while shifting more responsibility onto commercial sectors.
While Wu was unsuccessful in her previous attempt last year, she has reintroduced the bill for ongoing discussions.
Nevertheless, action from the state legislature appears stagnant, leaving commercial property owners in a precarious situation as appeals continue.
As these appeals linger, the potential ramifications for the city’s tax revenues become increasingly concerning, with the possibility that the city may owe significant refunds to property owners whose appeals succeed.
For example, if the appeal tied to the property at 125 High St. succeeds, reducing the property’s value by just 10%, the city might find itself liable for a refund of approximately $2.2 million for the year 2022 alone.
The cumulative financial implications of multiple successful appeals on various downtown office buildings are daunting as well, potentially exceeding millions in refunded taxes.
Flynn’s reference to the Supreme Judicial Court’s Tregor ruling from 1979 stands out, reminding observers of past situations where Boston had to reckon with overassessed properties, leading to a substantial financial burden.
Officials maintain their state-mandated reserves were structured to mitigate similar future crises.
Historically, Boston’s commercial properties have represented a robust revenue stream for public programs, but post-COVID realities have drastically altered this landscape, forcing reassessments of property values downward.
Ignoring these changing dynamics would not only negatively affect those in the commercial sector but also diminishes Boston’s overall economic competitiveness, especially when those exercising their rights to contest valuations are penalized instead.
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