Accounting
Boston mulls commercial tax hike to counter office market slump
Boston Mayor Michelle Wu is
Wu has submitted a petition for a temporary increase of the city’s tax-rate ceiling for commercial properties relative to residential levies. The proposal aims to redistribute the tax burden while continuing to fully fund all city services, according to Ashley Groffenberger, Boston’s chief financial officer. The tax adjustment won’t raise additional revenue for the city.
“The proposal we put forward is really focused on creating stability and not having an outsize impact on residents,” Groffenberger said in an interview.
Adam Glanzman/Photographer: Adam Glanzman/Bloo
The move would favor homeowners while potentially deepening the pain for commercial real estate amid a nationwide slump in office demand spurred by the rise of remote work. Boston’s fiscal health is particularly vulnerable to the decline, with more than a third of its tax revenue
Currently, commercial properties in Boston are taxed at a rate of about 2.5%, compared with around 1.1% for residences, according to an analysis by Tufts University’s Center for State Policy Analysis and the nonprofit Boston Policy Institute.
Boston is facing a record vacancy rate, with almost a quarter of its 69 million square feet of Class A and Class B office spaces unoccupied, according to Jeff Myers, head of research at Colliers’ Boston office, citing data going back to the 1980s.
It’s against this backdrop that a plunge in the assessed value of Boston’s office buildings could necessitate a rebalancing of commercial and residential property taxes, said Groffenberger. She likened Massachusetts’ property taxation to a pie that remains constant in size, regardless of real estate value fluctuations. If commercial property values plummet without a corresponding tax adjustment, residential rates would have to rise.
Evan Horowitz, executive director of Tufts’ Center for State Policy Analysis, said that while Boston’s tax structure has been effective for decades, “it doesn’t work now because it will give you rates that would cause a political firestorm.”
Any attempt to raise taxes for homeowners would be highly unpopular, particularly in a city that’s already struggling with housing affordability, he said. On the other hand, increasing commercial property taxes could exacerbate the distress in the office market.
If the status quo persists and property rates stay at their current levels, Boston faces a more than $1 billion cumulative shortfall in tax revenue over five years, according to the Tufts and Boston Policy Institute report.
Wu’s plan is modeled after a
“The fact that it’s rooted in precedent is helpful to understand that this is a powerful tool, but also a tool that will not cause the sky to fall,” Groffenberger said.
One important difference between 2004 and 2024 is the prevalence of remote work, which may permanently curb the amount of office space that companies need.
“This is really the most challenged office market on record for the city of Boston,” Myers said. “The pain is here, it’s going to get worse in the near term, and it’s going to put more pressure on those owners to find ways to save costs.”
Mitchell Moss, an urban policy and planning professor at New York University, warned that Boston’s unique geographical context heightens the risk of driving businesses and property owners to alternative locations for office space, such as nearby Cambridge, Massachusetts — a separate but very close-by municipality with
GE Vernova Inc., the energy business
“You don’t raise taxes on an industry which is suffering because you’re going to make it less competitive,” Moss said.
The mayor’s proposal allows for a three-year window to implement the changes to commercial and residential property rates, giving the city the opportunity to respond to the actual financial impact once building valuations have been calculated for tax purposes.
“The core of this is ensuring residential affordability,” Groffenberger said. “What’s good for residents is good for the whole city.”
DSB Rock Island merges with fellow Minnesota firm Meuwissen, Flygare, Kadrlik and Associates; Smith + Howard adds Richmond-based consultancy Fahrenheit Advisors; Reynolds, Bone & Griesbeck adds fellow Memphis firm Scott and Pohlman; and GBQ expands its credit union practice with Lillie & Co.
AI-specialized accounting platform company
“We’re putting every dollar back into the platform and team – to invest in ML research, to continue to bring the most cutting-edge AI to accounting firms, and to open additional slots for firms,” said Matt Harpe, Basis co-founder, in an email.
Basis, which emerged from stealth
“This technology is a new paradigm for accounting. Learning to work with your computer, not just on it, might be an even bigger shift than going from paper to digital. Over the last year, as accountants have experienced what’s possible with the most cutting-edge AI, we’ve seen more and more firms decide that AI must become the top strategic priority. We’re excited to continue to equip firms with AI that actually works,” said Mitch Troyanovsky, Basis co-founder in an email.
Basis sells exclusively to accountants versus selling directly to businesses or building ‘new’ accounting firms, and is tailored specifically for use by expert accountants. Basis focuses on building agents that understand, and can operate on, accounting broadly instead of isolating only a specific task. This allows Basis to work across clients and workflows without losing context, and to quickly take on new workflows, said Basis. Accountants onboard Basis to engagements and assign it core workflows for one-time or ongoing execution
“Accounting is a massive industry, and Basis is clearly leading on the AI side. This is one of the few AI agents that’s already deployed and working. Matt and Mitch have put together the best NYC team in the applied AI space,” said Vinod Khosla, founder of Khosla Ventures, who also co-founded Sun Microsystems.
Platform Accounting Group has added two more accounting firms, based in Indiana and Illinois, bringing the total firms that have joined the Utah-based company this year to 12.
Platform Accounting Group, founded in 2015, invests in and acquires small accounting firms, and announced it
Midwest Advisors, formerly known as Philip+Rae & Associates, is headquartered in Naperville, Illinois, and has provided fractional CFO roles, controllership and back-office accounting operations for more than 30 years. Additionally, the firm offers tax preparation, accounting and auditing, financial planning, estate planning, payroll services, small business consulting, bookkeeping, back-office accounting, small business consulting and more.
In operation for 30 years, Indianapolis-based Crossroads Advisors, formerly Peachin Schwartz + Weingardt, serves high-net-worth individuals, closely-held businesses and not-for-profit organizations. The firm supports clients throughout their life cycle, from the startup phase to mature businesses seeking an exit or succession strategy.
“Because of my experience and time there, I deeply value the tight-knit community and small-town feel of the Midwest,” said Reyes Florez, CEO of Platform Accounting Group, in a statement. “We are thrilled these firms, who like us, prioritize relationships and roots, are joining our group and will be able to invest even further in their clients and communities.”
Platform Accounting Group has nearly 1,000 employees across 12 states and expects to add a few more accounting firms in January, the company said.
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