Nonprofit Newswire | Colleges and City Finding Common Ground on PILOTs

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September 21, 2010; Source: Telegram & Gazette | How is the City of Worcester, Mass., doing in its attempt to get local nonprofit colleges and universities to make “voluntary” tax payments—Payments in Lieu of Taxes (PILOTs)—to the municipal government? Acccording to the Telemgram & Gazette, a lot better than in the early 1990’s when the then president of Assumption College said the city council was “using the colleges and other nonprofits as political punching bags in their search for new revenues.”

The scorched earth relationship between the colleges and the city has eased to the point that the city has now struck three PILOT agreements with colleges, the most recent a deal with Clark University which will pay in $6.7 million over 20 years. To city officials, this is evidence that the colleges are volunteering to help the city out and recognize their obligations, despite their status as tax exempt entities.

The Clark deal, however, shows quid pro quo as well – city approvals for a pedestrian plaza on campus in exchange for Clark help with upgrading a neighborhood park. The universities aren’t quoted in the article, so how much of this they feel is truly voluntary, or as we used to say in New Jersey municipal government, “mandatory voluntary,” is not clear. However, Worcester is doing well on the amounts it is getting from local colleges.

In Boston, if you don’t count the $4.9 million PILOT from Boston University and the $1.99 million from Harvard, the 14 other colleges with city PILOTs paid an annual average of $106,544. In Worcester, the average PILOT was $270,000. The lack of uniformity and fairness from municipality to municipality, the somewhat less than voluntary character of the voluntary PILOTs, and the frequent subtext of development agreements makes the municipal exaction of tax payments from tax exempt institutions confusing and disconcerting.—Rick Cohen