Will PILOTs Take Off in Boston?

January 3, 2011; Source: Boston Globe | The issue of nonprofits making payments in lieu of taxes (PILOTs) has been a Boston cause célèbre because of the city's generous supply of well endowed universities and hospitals such as Mass General, Boston University, Beth Israel Deaconess Medical Center, Boston College, and Brigham and Women's Hospital. A city task force examining the city's PILOTs suggested that these nonprofits were stingy and should be paying at least 25 percent of what they would have had to pay if their properties were fully taxable.

The Boston Globe editorialists (linked to above) helpfully point out that these institutions would have paid $345 million in taxes in 2009 had their properties been taxable, but they paid only $14.5 million in voluntary contributions. The Globe thinks that these institutions should be paying for the police, fire, snow removal, street repairs, and other safety and livability functions that their students and staff consume – roughly 25 percent of a property tax payer's tax payment. The Globe glosses over the fact that these institutions are tax exempt, that as 501(c) organizations, they provide services and functions that justify their tax exemptions.

According to the Globe, the task force's recommendations for nonprofit property owners were "generous to a fault, which is a lot more than can be said for some of the city's nonprofit institutions." Wait until the Boston Globe goes under as a for-profit entity and reemerges, as one of its suitors wanted last year, as a nonprofit journalistic enterprise. The beneficial effect of reducing the paper's property tax bill had to have been one of the factors in the potential sale and conversion to nonprofit status. Will it take the same position when the city eyes its then tax exempt property for a "voluntary" contribution?—Rick Cohen