You know how Harvard is so difficult to get into and so expensive to attend, yet everyone wants to go there? The same with Boston. The more expensive we make it and the harder it is to visit, the more people will want to be here!
I’m trying to explain to a friend Boston’s newest scheme to save itself.
“Businesses no longer want to be in Boston,” I say. “So what Mayor Michelle Wu plans to do is make it more expensive to be in Boston, and they’ll come flocking back.”
“Are you kidding me?” says my friend. “That’s like a restaurant with no customers raising its prices and thinking it’ll suddenly be full.”
My friend is kind of dimwitted so I have to take things slowly.
“Ever since the pandemic,” I explain, “Employees no longer want to come into the office. They’d rather stay out in the suburbs, working in their pajamas and slippers, maybe wearing a dress shirt for Zoom calls, but otherwise just comfortably sitting in front of their computers. You do get that, right?”
“Sure.”
“So that means office buildings are no longer full and businesses that had leases are no longer renewing their leases, which means that the values of those office buildings are now dropping like a rock. And if their values drop, so do the property taxes they pay and suddenly Boston is finding itself collecting hundreds of millions less in taxes than before.”
“Understood.”
“So the solution is to increase property taxes on those buildings beyond the state limit. And that’s what Mayor Wu wants to do.”
“But if you increase property taxes, won’t those extra costs just make it even less economically feasible to own an office building in the city?”
“The mayor has that figured out as well. Yes, she’ll raise taxes. But since the building is now worth so much less, the owner will actually be paying less in taxes than they would have been paying if the building’s value hadn’t gone down.”
“But the point is the building’s value has gone down. And the owners would still be paying a much higher tax rate, right?”
I sigh. My friend is such a dunderhead.
“And further,” my friend continues, like a dog that’s finally caught that car it’s been chasing and won’t let go, “office buildings in the suburbs have lower tax rates and, if this goes through, the comparison between the city and the suburbs will be even worse for Boston. If you make it even more expensive to be in Boston, then why would anyone bother to develop any more in the city when it’s cheaper outside of it?”
“That’s because Boston is such an attractive place to be,” I say.
“I thought you just told me no one is coming into the city!”
“No need to raise your voice,” I say. “Look at all of the new bike lanes. And we’ve finally started to attack this ‘car-first’ culture. Car lanes are down to one, meter parking in some parts of the city is at $3.75 an hour, and, even better, the city is now insisting that there be fewer parking spaces available whenever people do build housing.”
“But hardly anyone is in the bike lanes. And if you make it harder and more expensive to drive and park in the city, won’t that just put off people further?”
“No, to the contrary. You know how Harvard is so difficult to get into and so expensive to attend, yet everyone wants to go there? The same with Boston. The more expensive we make it and the harder it is to visit, the more people will want to be here!”
“I’m not sure that’s an apt comparison …”
“Well then, we’re sure lucky you’re not mayor.”
This column appeared in The Boston Globe on April 1, 2024 at https://www.bostonglobe.com/2024/04/01/opinion/downton-boston-office-vacancies-taxes/.