Boston’s universities, hospitals, and other tax-exempt organizations paid $34 million into the city’s coffers during the past fiscal year. Sounds like a lot. But is it enough?
It depends on who you ask. The latest report on the payments that nonprofits voluntarily make in lieu of property taxes just became public, inevitably reviving the annual debate about how much money the “eds and meds” should contribute to city revenues. Their collective contributions, known as PILOT payments, rose nearly 2 percent from the previous year, to $34.2 million. (The total also includes nearly a half-million from museums and other cultural institutions.)
Nonprofits say they already do more than their fair share, and provide multiple services that aren’t reflected in the numbers. But critics point out that many wealthy universities and teaching hospitals still do not pay the full amount that the city requests of them each year.
The PILOT Action Group, a coalition of activist organizations, just crunched the numbers: The percent of PILOT-eligible institutions that pay the full amount requested by Boston dropped to 23 percent in 2019, down from 26 percent in the previous year and a peak of 48 percent in 2012.
One institution that left the 100 Percent Club: Tufts University. The school’s main campus straddles the Medford/Somerville line, but its medical school is in Chinatown. Tufts’ cash pilot contribution to Boston fell to $450,000 in 2019, from $584,000 the previous year, when the school paid the full request from Boston. Tufts had been under community pressure to contribute more to its two home cities. So it did exactly that, agreeing to pay $450,000 apiece to Medford and Somerville, up from $275,000. Now, all three cities get the same amount, an attempt at parity. (A Tufts spokesman notes that in Boston, Tufts still pays 88 percent of its requested payment, the highest rate of any major university.)
Boston College remains the smallest contributor of the majors: $358,000, or enough to in essence cover the cost of city fire services, but no more than that. (Percentage of the city’s request? 10.) Spokesman Jack Dunn says the Catholic university chooses not to participate in the PILOT program so as not to jeopardize its tax-exempt status. Instead, university officials say the best way they can help the city is through community benefits that are worth millions.
While most of the city’s big institutions don’t reach the 100 percent threshold, many do come close. Massachusetts General Hospital, for example, met 96 percent of the city’s request, in part by paying $6.9 million last year in cash, the most of any hospital. Boston University contributed the most of any school, $6.3 million, helping it meet 86 percent of what city officials asked.
The current system dates back about eight years, to the Menino administration. Here’s how it works: City officials request the larger nonprofits to contribute 25 percent of what they would be paying if their properties were on the tax rolls; half can come in the form of community benefits credits, with the remaining in cash.
Most max out the community benefits portion, but Jim Klocke, chief executive of the Massachusetts Nonprofit Network, says the value of these donated services often far exceeds the formula amount.
Officials in the Walsh administration say things are moving in a positive direction, with total PILOT payments increasing on a year-over-year basis, although they concede they would like to see more institutions make their full cash contributions.
They cite the wide range of community benefits these nonprofits provide — scholarships, park maintenance, workforce training, donated event space.
To advocates in the PILOT Action Group and their allies on the City Council, these institutions still need to do more. City Councilor Lydia Edwards says she won’t be satisfied until all the bigger nonprofits pay Boston in full. She says city officials should weigh enforcement actions, such as possibly holding up expansion plans, until the requests are met. She wants more transparency around the community benefits portion, and would like the administration to update its property valuations for nonprofits to better reflect the building boom of the past decade.
The natural next question: How does Boston stack up, next to its peers? Boston still leads the way in total PILOT payments, by far, based on research from the Lincoln Institute of Land Policy. The next highest amount gets collected in New Haven, says Daphne Kenyon, a tax policy fellow at Lincoln. Yale’s hometown gets about $8 million. Providence and Cambridge are close behind, also in the $8 million range. Princeton, N.J., is the only community outside of New England to make the institute’s top five.
Kenyon says Boston deserves kudos: Not only do city officials collect a big chunk of change, they do it in a generally amicable way.
That may be true. But expectations are high here, and the city’s prominent hospitals and universities will still court controversy as long as they choose not to pay the full amount expected of them.