186 years ago, before the invention of the Morse Code in 1838, the sewing machine in 1845 and the safety pin in 1849, Massachusetts passed a law that gave nonprofits an exemption from having to pay property taxes.
That might have made some sense then before we had 250,000 college students in Boston using our police, fire, parks department and snow removal service. But now, well, we have a few other things going on:
The city raises two-thirds of its revenue from property taxes, yet 50% of city’s land is tax-exempt. As the amount of assessed value of our city’s land is essentially fixed by law, except when new construction is built, our city’s ability to raise revenue is hamstrung. Along come voluntary payments.
As the city’s capacity to raise more, much-needed revenue has been restricted, city government has been quite shy in asking for relief. After all, who wants to buck Harvard, Northeastern and BU? But over the years, one task force after another has been created to look at the issue of tax-exempt properties and how to get the large nonprofits to pay something, let alone their fair share of taxes to keep the city running. The Payment In Lieu Of Taxes (PILOT) movement was created, and task forces has been convened. The end result: some institutions pay something, some pay nothing. Yes, nothing.
All nonprofits have been given a target amount that they “should” pay, which is 25% of what they’d pay if they were not a nonprofit. Then they are allowed to offset the amount by 5-0% by providing goods and services to the city: green space, tutoring, advice, used football equipment (as Northeastern does) and so on. Then the nonprofits are asked to pay this amount, or anything else they care to donate. So how are we doing? The Globe had a report yesterday.
“…Fifteen of the 19 colleges, including the city’s wealthiest universities, did not pay amounts requested by the city during fiscal 2014, which concluded at the end of June, according to city data. Northeastern University, which was asked for $2.5 million this past fiscal year, gave nothing, even though it paid $886,000 in each of the previous two years and $30,000 in fiscal 2011…”
Continue reading the Globe report.The BTU has written on this issue many times in the past, hoping for change. See the City of Boston’s information on the PILOT Program. For those who want to delve a bit deeper, see here.