July 21, 2015; Boston Globe
Under Boston’s late mayor, Thomas Menino, a model policy was developed to encourage more consistent and fair payments in lieu of taxes from the city’s many very large nonprofits. The health organizations largely comply, but not so the colleges and universities. So the next time someone calls for taxing nonprofit property instead of depending upon PILOTs, remember this story.
As NPQ has mentioned before, cities where large, well-endowed nonprofits make up a significant portion of the property tax base are in a tough position when it comes to a fair approach to covering city services. Nonprofits should be concerned that resentment will emerge among the other residents who do not have a choice about whether to pay in. In fiscal 2012, the city of Boston stopped negotiating individually with its big nonprofit property owners for payments in lieu of taxes (PILOTs) and begin to bill them on a more systematic basis, incrementally increasing the amounts each institution was asked to pay. By fiscal 2016, the goal was to have each nonprofit contribute 25 percent of the property tax bill they would owe if not exempt. (There are some breaks provided by the city to groups that demonstrate they provide other modes of community benefit, but that can equal only half of the city’s requested amount.) The only problem is that many of the city’s educational institutions are simply refusing to pitch in.
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The new system’s rules, which apply to organizations with more than $15 million in annual revenues, were drafted by a task force that included representatives from some of the city’s larger nonprofits, including Boston University president Robert A. Brown and Wentworth president Zorica Pantic. Pantic says the program is still voluntary. “We all understand the city needs some funding and we want to help,” but “some schools feel they are doing more than the guidelines say they can apply to their community benefits.” Naturally, those schools paying at or near what was requested say the city’s expectations are within reasonable bounds.
Tufts University, MCPHS, and Showa Boston Institute for Language and Culture all paid their full share as requested. Among the larger schools, Northeastern University and Emmanuel College paid 13 percent of what the city requested, Emerson College paid 19 percent, and Boston College 23 percent. Harvard only paid 44 percent—because, after all, it is just scraping by. Wentworth Institute of Technology paid half, and Suffolk University. just over half. Boston University paid 86 percent of what was requested.
Among the smaller colleges, neither Wheelock nor Fisher College paid anything. The New England Conservatory anted up 11 percent. Simmons College paid 28 percent, and the Berklee College of Music paid around half of what was requested.
Meanwhile, of the 16 medical institutions, 11 paid their requested amounts.
“The City of Boston appreciates all of the contributions to the PILOT program, in particular the nonprofit hospitals that continue their high level of support,” said Bonnie McGilpin, a spokeswoman for Mayor Martin J. Walsh, in a statement, leaving us all to speculate what she might have been thinking about the schools.—Ruth McCambridge