morning to our incredible team. Um, and thank you to all of our uh media partners for joining us. We are here today. It's going to be, I think, uh, pretty short and sweet, just to share some exciting news that the city has received and then of course to take any questions that you all have. Um, so
today I am very pleased to share that we just received news that the city of Boston has earned a AAA bond rating from both Moody's and S&P global bond rating agencies. And this is the 12th year in a row that we have been uh designated as
such. This is the highest possible rating a city can earn and a sign and affirmation that our economic fundamentals are strong, that our local economy is resilient, vibrant, and growing with more employers choosing
Boston to be their home every day. It's a sign also that our city budget is strong, our reserves are healthy, and our tax base is stable. This rating also means that we are able to get the best possible rates when we make critical
investments in our city's infrastructure from our schools and our fire stations to our seaw walls and streets. These lower rates translate to millions of dollars of savings for Boston's taxpayers. And most of all, this rating is an indication that our
leadership is working. Our approach to fiscal discipline and rigorous financial management is doing exactly what it should and we are delivering results for our residents using every bit of value from those taxpayer dollars and the needs that we see out in
community. This is a contrast to what we're seeing at the federal level as the current federal administration sews economic chaos and targets the very industries that Boston relies on. healthcare, life sciences, higher education, climate technology. Boston remains determined to
fight back against illegal attempts to undermine our economy and our communities. Last week, we joined cities and counties across the country in a lawsuit challenging the White House's decision to try to cancel more than $3.5 billion in funding for housing from the
Department of Housing and Urban Development's continuum of care program, $48 million for the city of Boston in particular. That has resulted in a uh temporary pause, a temporary restraining order as the legal process proceeds.
And earlier this year, I joined more than 40 other mayors across the country in leading the filing of a friend of the court brief, an emicus brief, challenging the Trump administration's move to cut funding for life-saving research centered here. And that is not only about delivering the innovations
that generations of patients and families rely on, but also the jobs and um critical connections for our residents who are employees of this important industry. Our AAA bond rating today is proof that
despite this federal administration's best attempts to tear down the pillars of our economy, Boston is well positioned to weather the storm. I want to thank Chief Ashley Roenberger and our entire finance and budget team for their support and their diligence and hard
work in stewarding our city through this historic period of economic uncertainty and transition. Our rating this year and over the last decade is the direct result of their work of the city's deliberate family focused approach we
take to crafting each individual line item in our budget. Fiscal responsibility doesn't mean not spending money. It means investing where we know it will have the biggest impact and generate the biggest returns for our residents, our families, and our businesses.
over the last four years. That's what we've done in our administration and that's what we will continue to do in partnership with our communities. So, I want to thank again the incredible team that puts in so much work every single day for every neighborhood and every resident of the city of Boston. And now I get to pass it over to the leader of
that team, Chief Financial Officer Ashley Graphenburgger. Uh good morning everyone. I'm Ashley Graphenberger, Chief Financial Officer. Um the rating is kind of like finance Super Bowl for us. So just really um excited to be here and thrilled uh with this announcement.
So uh we were in this room just over a month ago rolling out the fiscal 26 budget and um in the last month we've seen significant market volatility, tariffs that have been turned on and off um updated economic data showing a slowdown in the US economy. And all of
that demonstrates the need for strong fiscal leadership in this time. Despite all the uncertainty, I'm pleased to report that the city of Boston has received a AAA rating with a stable outlook from both Moody's and S&Ps, the highest possible rating for the 12th consecutive year. I'd like to thank our
analysts at Moody's and S&P for their thoughtful analysis and deep understanding of the city and its finances. In both credit opinions, Boston is highlighted as being the economic leader of the region, having proactive and strong fiscal management, healthy reserves, and stable revenue to
support its operations. These are traits that we know to be true about Boston, and we appreciate the continued acknowledgement from our external rating agency partners. This rating action comes in advance of our planned $500 million general obligation bond issuance next week,
which will provide funding for nearly 200 capital projects in the city, including new and renovated schools, major park and playground renovations, new libraries, community centers and pools, energy improvement projects, and other state of good repair and
infrastructure projects. What does it mean to have a AAA rating? Aside from being the highest level you can achieve financially for us, it provides the city with the ability to finance critical infrastructure projects throughout the city. It provides investors with confidence that the
city's um able to repay their bonds. The AAA ratings have the highest creditworthiness and over the life of the bonds will produce real savings for the city and its taxpayers. By maintaining this AAA bond rating, the city is able to achieve the most favorable financing terms in the bond
market, which in today's market equates to savings of approximately $225 to $250,000 a year, um or about $500 million over the life of the bonds. Basically, this means we can spend more of our taxpayer dollars on the critical
services and priorities um that residents expect instead of the costs associated with financing. It should also give residents the confidence that city leadership is acting in a strong uh responsible way with their resources. To be clear, today's announcement isn't
just about the budget. This is about the guts of our financial management, the long-standing policies, practices, and statutes that govern what we do and are often hidden from view or are misunderstood. I want to particularly thank our our treasurer, Jerica Bradley, and the staff of the Treasury
Department, our law department, our financial adviserss, our bond council, and the entire finance cabinet for the months of tireless work that goes into preparing for this rating and this bond issuance. We do not take this rating for granted, nor do we believe that it is guaranteed. Maintaining this rating
requires intentional leadership and difficult choices. And I especially want to thank and acknowledge Mayor Woo for her leadership that she demonstrates each and every day to solidify Boston's strong financial position. Thank you. What questions do you all have?
Catherine, mayor, Chief, we've seen several large office towers sell at well below their assessed value. uh one Lincoln selling at $400 million for pleasure auction 99 high selling well below its previous sale. How concerned
are you about the ongoing devaluation or ongoing loss of of office value and what that means for the city's long-term fiscal health? Yeah. Um well there there was a a a bit of a touch on this in the
um in the uh opinions of the ratings agencies as well that I I'll I'll let um our chief talk about and if our assessor wants to add anything um the expert is in the room. I I want to just cite a couple of statistics. Um I may or may not have anticipated that you would be
here and ask this very question. So just a note obviously um we are very concerned and monitoring the ongoing transition uh that cities across the country and downtowns in particular across the country are experiencing with
macroeconomic trends that are um really reshaping the purpose of commercial office buildings and and the occupancy of them. And we know that Boston uh is is fortunate and we are um working hard
every day to ensure that our multiple downtowns are all thriving each in their own way. And so in many cities there's one downtown area and when it's struggling it's struggling. Um, in Boston when we say downtown, we really
mean some combination of or or one of the other of the financial district, Backbay, Seapport, um, maybe even into the south end to sort of a a much larger geographic area that has a lot of different unique characteristics and uses. And when you start to separate out
those different subdowns, if you will, they are going through very different experiences, right? We know that the Seapport, for example, is is thriving. Um, okay. Let me back up and say overall, welcome, Madam President. Um, come on up. We're just in the Q&A part
portion, but, um, I'll turn it over to you in a second to, um, say a few words after we finish answering this question. So, overall, our, um, class A office vacancies at 5%. Um, this is among the the lowest um, nationally. Class A.
No, overall class A um overall across everything across every class of commercial it is 14.5% uh which is less than DC, LA, New York, Minneapolis, Chicago, Seattle, San
Francisco, and you know, I could go on all of all of our peer cities. We have the lowest retail vacancy rates at 2.2% out of our peer cities. Um and we have seen the uh you know every effort that we're trying to make in reducing vacancy
by recruiting new companies and helping with conversions that is all moving forward each in its own way. Um major businesses as you've covered and as you know Lego Janentech etc. um Roach coming to Boston, building out their innovation centers here, relocating headquarters
here. That is a huge deal and it is a sign of confidence also in the direction of Boston's um business community, but also our commercial spaces in in particular. Um in Backbay and the Seapport, we have seen very strong lease
renewals. And so between Bane um Capital or um Price Waterhouse Coopers, major employers are choosing to stay and even expand the square footage that they're leasing up. And so that has been a very positive sign as well in again trying to drive down that vacancy rate. Um
traditional construction has been strong as well. So over the last 12 months, there have been 2.2 million square feet delivered. um in traditional office construction in Boston that's 1.7 million square feet in the seapport 370,000 square feet in Alustin Brighton
and 190,000 square ft in Charles Town in East Boston um and anyway so overall when you think about the different areas Seapport backbay there are strong signs of recovery andor even just you know growth leading what we're seeing in
commercial areas nationally the financial district is where we have our older buildings, older commercial buildings where we have more of the class B, class C uh commercial as well. And that is where we see the values um and the the sort of vacancy rates really
as the the the premier challenge. We've been working to convert um as you know, we're up to nearly 700 units of housing in the pipeline for those conversions. recently expanded the um type of floor plate that will will be possible and and
likely for conversions and opening it up to dorm or um workforce housing conversions as well. So, we're doing everything possible to recruit more businesses, fill up that space where it is clear that it may not be the best use of space or that's just um you know
where a jump to adding more residential is possible. We're doing everything to make that happen as well. Um, but overall our budget fundamentals are strong and we're going to continue to monitor it. The, as you know, um, and as
we've talked about a lot, um, the rigidity of state tax law means that whenever there is a drop in commercial values and residential holds strong or or is increasing, it is an automatic shift of the overall tax burden,
relative tax burden onto residential. And so that is what we have been watching very carefully. That is what we tried to file legislation for, got close um and have refiled legislation for because we should not have to have our residents bear the burden of larger
economic transitions through the quirks of state tax law when there are mechanisms to soften that and to help with the transition. Um so we're going to keep that up and the ratings agencies in many ways affirmed not only our um strength and foundation but also our approach in trying to protect and shield
residents in this way as well. Yeah. Well, Ashley, did you want to add anything on this particular point or add? Really? I mean, I think the mayor touched on the main points, which and I think is great to see in the credit opinions about the stability of our property tax revenue as being a credit
positive and that the changes in commercial values are not such that we're going to experience a major revenue disruption, but that it's that shift of the burden from one um sector to the other. And exactly as the mayor was saying, the reason why we we fought so hard and are continuing to push for
the um tax legislation. Nick, did you want to add anything on this on just the sales or I think my my followup was actually for commissioner just in terms of I I hear you on the on a lot of the older office
stock being in the financial district and maybe downtown. But when we look at things like one Lincoln where it was refinanced for $1.1 billion in 2022 and then just sold at foreclosure auction for $400 million. I know that that's a one-off example, but we see a lot more
of those examples coming on as we've seen a beta shift. So, I'm curious how the assessing department is taking those comps into consideration when you were looking at assessing the overall value of Boston's downtown and then how that again factors into the ongoing fiscal
stability of the city. So, I will just I will preface and then Nick can add more detail. I think it's exactly right. The the sales you mentioned are one-off anecdotes, right? And it's a matter of whether or not that anecdote is a trend or if you So that is
the process that the assessing department goes through every year. Um so we're still very early on in our data collection process for setting values for this fiscal year. Um, and so I don't, you know, we will, we will see what the data bears out as we collect it, but, um, you know, these are sort of
one-off examples that we pay attention to, but whether or not it's indicative of a of a larger trend, um, remains to be seen. Anything to add? Hey everybody, Nick Garnell, Commissioner of Assessing. Um, it's a it's a great question. I really
appreciate it. it very much kind of starts to get into the weeds about how the assessing process works. Um, which gets a little bit into how state law works and a little bit into timelines and those are all actually elements that lead a lot into the stability that led
to our bond rating. Um, so the transactions that you're talking about, for example, they're things that occurred after January 1st. Um, and January 1st of 2025 is actually the valuation date for fiscal year 2027. The reason that I bring that up is that the
system is designed to actually give my department, my team the time that we need to fully gather all of the data and figure out what's going on with the market after the transactions occur so that we're not put in a place where we're constantly adapting to individual
sales. And so right now, um, as Ashley mentioned, we're very early in that process of figuring out values for next year for fiscal year 26. uh we just send out a bunch of information requests. We're going to get a bunch of data back from owners. It's going to give us more detail about vacancy, asking rents, new
transactions that are happening in the market. And then once we have that information, we can start to develop models. Um and as you mentioned, individual data points kind of help key us in on areas that we maybe want to ask more about, but they don't
define the market for us, right? Um, and I think that an important thing to remember in context with our bond reading is that bonds are long-term investments, right? The rating agencies, what they're doing is they're helping people understand the risk of that investment. And so what they're saying
is based on the city's management and our financial structure, the policies that we have in budgeting, the way that our revenue structure works, that we are very secure and we're a good investment for people. Uh, so we're really proud of that.
Madam President, would you say a few words? Good morning everyone. Um, thank you, Madame Mayor. Thank you, uh, Chief Offenberger, Commissioner Arnelloo for all the work that you do. It is an exciting day for us to reaffirm again um, Boston's smart uh, uh, fiscal
management and that's a credit to the team, that's a credit to Jim and his team um, making sure that our budget is fiscally sound. It is not the first or second or third time. And so it is a credit to us standing on business here in the city of Boston and making sure
that we are uh doing work to advance the needs of every resident of every neighborhood and at the same time managing the city in a smart way. One of the questions that I always ask in any budget hearing and we are in the middle of budget here on the city council is what are other cities doing? And we stand um far off far better off than a
lot of other cities when it comes to our bond rating. A lot of other cities that don't have such a high reliance on property taxes also don't have a AAA bond rating. And so there are, you know, we have challenges just like any other major city, but the ship is being uh the
ship is being what's the word is being uh is is being stewarded uh properly. And I want to thank uh the team for for doing that. Uh, I know that there are a lot of questions about downtown which the mayor answered which with the chief answered and I also just want to give a credit to the downtown Boston Alliance and Michael Nichols and all the work
they're doing to help to activate uh downtown Boston. We know that we want to do everything we can to bring activity to bring people uh to the downtown neighborhood so that we can make sure that there's um action happenings that it remains uh a destination where people want to go. The city of Boston and
Massachusetts remain a place that people want to come right this place where people want to come for school. Uh we we are in a housing crisis in part because we are such a desirable city and we're a desirable city because of how we show up for our residents, because of how we manage our budget and how we try to do the work of sharing our prosperity. We ask on the city council all the time,
what more can we be doing? What more can we be doing um with how with our standing, with how strong we are as a city to make sure that we're caring for all of our residents. Um I think we we we stood out among many major cities in terms of the investments that we made mayor uh in housing to try to make sure that this desirable city that a lot of
people want to come to that people also have a place to live. And so I want to thank the team for all the work that you do to make sure that we are steering this ship. That's what I was looking for. That we are steering this ship properly. Um and know that on the Boston City Council, these are questions that we ask all the time. Um and we continue to make sure that we are working together to build a prosperous,
resilient Boston that everyone all deserves and that we can all share in that prosperity. Thank you. Um and I'll just add just one more thought on the the conversation around downtowns and businesses and and commercial spaces. So, um, prior to this, I just came from West Roberry
where I was with the West Roxberry Business and Professional Association. They're, uh, basically the neighborhood level almost chamber of commerce, um, of small businesses there. And it's it's so important and so um, impactful that Boston has many neighborhood downtowns,
too. And so the work that we're doing around zoning, the work that we're doing around small business supports and the focus on main streets and and getting connected to each one of the neighborhood commercial corridors also just in every way helps to not only diversify our economy, but ensure that
the benefits of a thriving economy, jobs, and vibrancy are really felt in each one of our neighborhoods and in all the residential areas of Boston, too. What else? I have another one.
Go for it. Yeah. regarding the uh increased burden on residential homeowners versus commercial property owners. Uh can you talk us through maybe where you stand now in terms of re uh reintroducing a home a
home petition or or um to put um at this point continue the three-year deal that was struck through a compromise with the business community and the Senate. um that eventually was was not um moved forward and it's still
important because it's as we've been saying this whole time it was to allow the city to have the tools to respond to uncertainty. Uh we won't know until the end of the calendar year calendar year again where valuations stand because that is always a cycle. It is a timeline
established by state law and um having the flexibility to be able to be proactive and have the tools over a multi-year period was always part of the the goal. Um I think we have seen the situation play out exactly as the city
had um warned and were concerned about before. every neighborhood you go to. Um it's very clear that housing costs are an incredible burden and property taxes are a a significant part of that. So we
need residential tax relief for our residents. We have refiled that with additional provisions that account for some of the feedback that was suggested throughout last year's process. The city council, thank you, Madam President, um passed that very swiftly and it has been refiled up at the state house by
Representative Rob Consalvo. Thank you all for coming. Great. Thank you. Oh, yeah. Sure. Um Okay. Uh I'm trying to Okay. Bond bond rating. One sec. Why don't I do it off
the side? I'm going to make sure I have the the right technical vocabulary for this. Um and and we'll I'll do that. Thank you for coming.