Non-Profits Have Had a Free Lunch Since 1830

In December 2010, a city task force released a report that called on certain non-profits to pay their fair share of property taxers. As many know, non-profits are exempted from the obligation to pay property taxes under a law that was passed in 1830. (That’s not a typo!) Well, since 1830 a few task forces have been convened on this issue, as you would surmise, and the latest city report called for certain non-profits to gradually increase their payments over a five year period, after allowing for a ‘community benefits reduction’ and a few other offsets.Trabnslated that means that the large non-profits can subtract whatever community benefits they provide (tutoring, providing rent-free meeting space, serving as community partners) before paying their voluntary payment.

Northeastern University Pays Less in Property Taxes Than 7 Typical Boston Homeowners

Northeastern University, for example, in FY09 ‘voluntarily’ paid $30,571 in property taxes. If taxed at a full commercial rate, NU would owe roughly $36 million. Under the task force recommendation, the voluntary payment would be $3.6 million after five years of incremental payments. So that’s an additional $700,000 per year (p.123).  No word yet on how successful the city has been in getting even this voluntary payment.

But we did read something interesting the other day at how the Museum of Fine Arts is balking at paying its fair share:

Museum of Fine Arts Balks at Increased Voluntary Payments

According to an article in the Art Newspaper:

“The Museum of Fine Arts was dismayed to learn that the city of Boston is requesting a payment of $250,000 this year under new rules for the amount that not-for-profit organizations have to pay in lieu of taxes. The city plans to quadruple the bill to more than $1m by 2016.
“The steep rise in contributions is a result of the Mayor of Boston Thomas Menino’s revised Pay­ment in Lieu of Taxes scheme, known as Pilot. The art museums, and the city’s other not-for-profit organizations owning property that is worth more than $15m, face paying a fee that is based on 25% of what they would have to pay if they were charged the city’s commercial tax…”

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