Harvard Responds to Issue of Unfulfilled PILOT Payments to Boston

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October 30, 2014; Harvard Crimson

Earlier this week, NPQ published a newswire about the fact that while many major nonprofit health institutions have complied with a PILOT agreement made with the city of Boston, most educational institutions, including the mega-rich Harvard, have not. At that time, I wrote, “Harvard University was asked to contribute $4.3 million in 2014—it owns $1.5 billion worth of tax-exempt property in Boston—but paid only $2.2 million. But, then again, the world’s wealthiest university is having a tough time, its endowment only having grown to $36.4 billion.”

Yesterday, the Harvard Crimson covered the school’s response to the criticisms raised by the original Boston Globe article. Harvard officials said that the school had, since 1928, made “consistent” and “reliable” monetary contributions to both the city of Cambridge and to Boston, but it also cited the offsetting value of direct programming which, they say, benefits the local community.

Harvard has made $20 million in PILOT payments to Boston over the past ten years and $25 million to Cambridge. But Mark McGovern, a Cambridge city councilor, believes that the payments and services are inadequate to the amount of property that has been removed from city tax rolls:

“Clearly, Cambridge benefits from having Harvard, MIT, and Lesley in our city. But those universities also benefit from being here…The frustration is that you’re talking about a university—this isn’t John Smith vocational school. Harvard has more money than many third-world countries. They are going to be expected to do more.”

Leland Cheung, a Cambridge city councillor, also noted that the property Harvard has acquired over the last decade in Allston represents funds removed from the city’s tax roll. “This is a constant tension of whether or not our nonprofit universities are carrying their weight in utilization of city services,” Cheung said.

Harvard Vice President for Public Affairs and Communications Kevin Casey counters, saying, “One size doesn’t fit all and just to give an across-the-board 50 percent credit for programming does not even begin to capture the volume of programming that Harvard and other institutions provide…It undervalues what institutions are doing and undervalues what the city of Boston is capturing from institutions doing great things and sometimes in partnership with the city.”

Casey also said that some of Harvard’s property is not used for educational or research purposes and is therefore taxable; in fact, Harvard has paid nearly $60 million in taxes to Boston over the past decade and over $50 million to Cambridge.—Ruth McCambridge