Assessing the Doom Loop

The slow return of office workers to downtowns in the United States and Canada has raised fears of a fiscal doom loop. Several factors, including the lack of fine-grained data, have hindered accurate predictions of downtown contributions to revenue loss. This study first examines the relationship between building occupancy by industry, cell phone activity, and vacancy rates for a set of downtowns, and then focuses on four: New York, San Francisco, Toronto, and Vancouver. A random forest regression model predicts assessed values, and five scenarios—baseline, remote, modest remote, recovery, and modest recovery—explore the potential impact on property tax revenue and city budgets. The four cities vary in the extent to which they can rely on downtowns as a stable revenue source. However, even under a worst-case scenario, the impact of decreased downtown commercial property tax revenues on city coffers will be minor, and highly unlikely to trigger a doom loop.