04.28.2025

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Office market meltdown: Boston must bolster its financial defenses as city faces the potential loss of hundreds of millions in tax revenue, top expert warns

Don’t look now, but a financial tsunami is headed straight towards Boston’s gleaming skyline.

Boston developers, their soaring office high-rises emptied by the shift to remote work, are pushing for property tax abatements right and left, with more than $1 billion in tax revenue at stake in the coming years, the Boston Policy Institute has reported.

And when that storm finally washes ashore in the form of adverse court rulings ordering the city to pay up, Boston may need to borrow heavily to deal with the fallout.

Such is the dire message that Henry Kara, a top Boston tax appeal attorney, recently delivered to Boston Mayor Michelle Wu, Contrarian Boston has learned.

Kara has urged the mayor to seek permission from the state Legislature to float bonds that could be used to pay for a flood of multimillion-dollar court judgments in favor of property tax appeals by various tower owners.

One Lincoln has become a symbol of the meltdown of Boston’s office market

The idea would be to take a page from what Boston did decades ago, when, in the wake of the 1979 Tregor decision, it issued bonds backed by a series of new taxes and fees on everything from hotels to jet fuel used at Logan.

A state court ruled that Mayor Kevin White’s administration had systematically overtaxed owners of struggling office buildings, putting the city on the hook for $100 million in payments, or the equivalent of more than $400 million today.

While Boston is a much wealthier city today, the potential fallout is still likely to come with a steep price tag.