A watchdog group and law firm have filed a class-action lawsuit against the City of Boston on behalf of a commercial property owner who alleges that the city unlawfully inflated its assessed value, and taxes, in retaliation for filing an appeal.

Pioneer New England Legal Foundation, which has been sounding the alarm on the city’s alleged over-assessment scheme for commercial properties for months, and Sullivan & Worcester LLP filed suit against the city in Suffolk Superior Court Wednesday on behalf of their client, 148 State St., a Seaport office building.

While the lawsuit was filed by just one commercial property owner, it’s meant to address the city’s alleged unlawful assessment practices that have impacted at least 61 commercial property owners identified by Pioneer since it began investigating the matter last summer, according to Frank Bailey, Pioneer president and retired judge of the U.S. Bankruptcy Court in Massachusetts.

“This step was taken only after very serious consideration and after literally months of efforts to engage the city and the Department of Revenue to ensure basic questions about the transparency and fairness of the Boston commercial real estate tax system is operating in compliance with the law,” Bailey said at a press conference.

“In short, what has happened is that the city assessor’s office has engaged in a retaliatory property tax scheme against commercial property owners merely for exercising their legal rights to appeal their assessments to the Appellate Tax Board. This practice has been going on for two years, 2024 and 2025,” he added.

The lawsuit contends that the city has been retaliating against commercial property owners who appeal city assessments that they contend have resulted in valuations that are beyond the fair market value, in an effort to decrease their values and thereby lower their property taxes.

Rather than tax property owners with pending appeals by the values reflected in the city assessments, the lawsuit contends that the city has been “artificially inflating the value” of those properties “solely because these property owners have exercised their statutory right to seek a tax abatement before the Appellate Tax Board.”

“As a result of this unconstitutional and unlawful over-assessment scheme, the plaintiff, and the putative class that it represents, have paid millions of dollars of excess real estate taxes, to the city’s unjust enrichment,” the lawsuit states.

The lawsuit states that while city assessments have reflected decreased values for the commercial properties tied to the post-pandemic market, “the city has not recognized sufficiently the actual loss in these properties’ fair market value.”

In fiscal year 2024, the city is alleged to have inflated the final assessed value of commercial properties with open ATB appeals from FY23, to match the properties’ higher assessed value from FY23, rather than the FY24 decreased assessed value, the lawsuit states.

The city is alleged in FY25 to have “added back to its assessment of the properties’ fair cash value approximately half the entire amount by which the city estimated that the properties had decreased in value since FY24 for property owners that had filed appeals in FY23 or FY24,” per the lawsuit.

In the day’s press briefing, Bailey said Pioneer has identified 61 commercial properties that have been impacted by the city’s alleged over-assessment scheme, but couldn’t provide specifics on how much the city could be on the hook for, in terms of the lawsuit seeking to recoup overtaxation through refunds.

In June, around the time Bailey said Pioneer had identified 39 impacted commercial properties, a local tax expert, Daniel Swift, a principal at the global tax consulting firm, estimated that applying his calculated over-assessment average across the entire office property class suggests an overtaxation of $200 million.

Gregory Maynard, executive director of Boston Policy Institute, a local think tank that has projected falling office values could lead to a $1-2 billion city budget shortfall within five years, said in a statement, “The lawsuit filed today has major implications for Boston’s budget and residential tax bills.”

“According to Mayor Michelle Wu, the average single family homeowner in Boston faced a 10.5% increase last year in FY25, after commercial values fell $1.85 billion, and a 13% increase this year in FY26, after commercial values fell an additional $2.38 billion,” Maynard said in a statement.

“If the allegations in this lawsuit are true, then commercial values have dropped even more than those state-certified numbers. That means different revenue numbers for the budgets in affected years and higher tax bills for residential property owners,” he added.

A spokesperson for Wu’s office issued a statement in response to the lawsuit that states, “The city annually determines the fair market value of nearly 180,000 parcels and just one in every 200 end up in dispute.

“There is a well established and clear legal process for any property owner to appeal who believes their valuation is too high, including this plaintiff,” the city spokesperson said.

Wu has proposed legislation that would allow the city to hike commercial tax rates, and Bailey said the alleged retaliatory over-assessment could be seen as a back-door way for the city to achieve the same outcome as the bill that has stalled on Beacon Hill, and was killed by the Senate last year.

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A city spokesperson had previously dismissed Pioneer’s allegations leading up to the lawsuit’s filing as “baseless and full of misinformation.”

The state Department of Revenue said in July that upon a review, it was “unable to substantiate” Pioneer’s claims.

Bailey said Pioneer is not deterred by the DOR’s finding, nor does it think it will have a significant impact on the outcome of the lawsuit.

“Rather than meet with us and see what we had, we were basically told that they weren’t going to be pursuing it any further,” Bailey said, “and something about that it wasn’t his statutory duty, which we think is really just fallacious.”