Boston PILOTs Program Showing Mixed Results

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January 21, 2012; Source: Boston Herald | The best known example of an aggressive system of municipal collection of property taxes from nonprofits is Boston’s, which we have covered in the NPQ Newswire several times (such as here). Mayor Thomas Menino convened a task force to come up with a formula for calculating the “voluntary” payments in lieu of taxes (PILOTs) that tax-exempt property owners should be expected to pay (which are planned to reach 25 percent of what fully taxable property owners would have paid). 

Have they paid up? What has been the result of the Menino program? The Boston Globe highlights the success of the program in generating new revenues: “Boston nonprofits have boosted their voluntary contributions to city government over the past six months by 24 percent.” But the Boston Herald focuses on a different picture, noting that “more than a dozen colleges and other major tax-exempt institutions…[are] refusing to shell out even a single dime in voluntary payments requested by the Hub to pay for their fair share of city services.”

The Herald identifies the Museum of Science, the New England Aquarium and Suffolk University as some of the non-payers who owe, according to the Menino formula, some $2 million in PILOTs. The Museum of Science said it wouldn’t pay because it provides $319,000 in free services to Bostonians.

Meanwhile, the Globe highlighted the increase in the pace of nonprofit payments. For example, Northeastern University paid $443,000 in the first half of the fiscal year, which is $30,000 more than it paid in all of last year. Hospitals, the Globe suggested, look like they will increase their payments by one-third in comparison to last year.

Both stories are correct. There is more nonprofit money flowing into city coffers, but there are some institutions that don’t buy into the Menino plan. The long-term implications are unclear. Will the Boston model become the national municipal template for tax-exempt property owners’ PILOTs? –Rick Cohen