New report shows high-profile universities avoid paying their share under city's Payment-in-Lieu-of-Taxes program
Wealthy Boston nonprofits are paying less that their fair share of Payments-in-Lieu-of-Taxes to the city of Boston. The voluntary program asks large nonprofits that rely on essential city services to pay 25 percent of "would be if taxable" property taxes. Even with the lowered rate, these welathy institutions are not fulfilling their obligation to Boston. The result is that critical city services and programs, such as education and housing, go lacking for needed revenue.
These are some of the findings of a comprehensive new report entitled Boston’s Payment in Lieu of Taxes (PILOT) Program: A Fair Deal for Boston Residents?, prepared by the PILOT Action Group (PAG), a coalition of labor, faith, student, healthcare and housing advocates. The report details how these nonprofit organizations, whose assessed property values exceed $15 million, are underpaying promised payments to the city. The report also seeks to jumpstart a conversation on the role Boston’s wealthiest organizations play in the growing inequality crisis in underserved Boston communities.
“Last month, the Massachusetts Affordable Housing Alliance (MAHA) launched an Expand the Pie campaign to increase funds to build more homes Boston residents can afford,” said Symone Crawford, Mattapan resident and president of MAHA. “Our universities need to be doing their share to help Boston address our affordability and displacement crisis.”
The program, implemented in 2012, asks the largest 49 nonprofit institutions in the city to voluntarily contribute 25 percent of their if-taxable property tax valuation as their fair share to the city, divided equally into cash and community benefit contributions. The PILOT arrangement--which is voluntary--yields a small fraction of the tax revenue that would be collected under the traditional property tax rates. But the new report finds that even with a 75 percent discount, these institutions have failed to pay over $60 million in pledged payments under the PILOT program. In its latest reporting year, FY17, only 27 percent of institutions kept their promise to provide the full amount of cash and community benefits requested under the arrangement. In FY 2017, the city anticipated some $49.5 million in PILOT payments but only collected $32.4 million. Since the PILOT program’s inception, the institutions were credited with over $230 million in community benefit spending.
At the same time, Boston has become increasingly reliant on property taxes to fund services. In FY 2019, property taxes represent about 70 percent of city revenue, with the cost of providing city services falling mostly on Boston taxpayers.
The report offers pressing recommendations for improving the program, including:
•The creation of a new PILOT oversight commission with representation from community members to ensure services these organizations offer benefit the residents of the city and meet a clearly defined need mutually determined by the city.
•Holding nonprofit institutions accountable to pay their full contributions, including withholding of expansions and zoning contingent upon their participation.
•The revaluation of property value of PILOT-requested institutions, as prescribed by the city’s own PILOT guidelines.
•Transparency in community benefits reporting, documenting clearly how these organizations are providing needed services to city residents.
•Creating a community engagement process, aligned with social determinants of health and education.
Community leaders expressed their support for the reports’ findings.
"If all hospitals and universities paid their PILOT Funds, it would make a huge impact on our communities continuously left out of the Boston experience of building wealth,” said Rev. Vernard Coulter of the Prophetic Resistance, New Faith Missionary Baptist Church. The money could provide desperately needed funding to Boston Public Schools, recreational centers and youth organizations. Scripture says, ‘to whom much is given, much is required.’”
“As the birthplace of public education, Boston should be a city where all students and families have access to fully funded schools. It should also be a city where quality healthcare is available for all, along with affordable housing. In the face of a significant lack of investment in such priorities at both the federal and state levels of government, we must take action to increase funding for these priorities at the municipal level. We hope our largest and wealthiest institutional neighbors, especially those who don’t pay taxes despite benefiting from millions of dollars in public support and infrastructure, will join us in this conversation and put forth more reasonable investments in our city and our communities through the PILOT program. These institutions must grow with the community, and do so in a manner that is not disproportionately at the communities’ expense.” Jessica Tang, President, Boston Teachers Union
“Almost every day thousands of students and school staff work in buildings that are in desperate need of expensive, extensive repair,” said Massachusetts Coalition for Occupational Safety and Health (MassCOSH) Executive Director Jodi Sugerman-Brozan. “This contributes to unhealthy indoor air quality and other hazards that PILOT funds could be used to mitigate so our world-class educational system does not operate in shamefully derelict buildings.”
Given its unique reliance on property taxes and its inability to raise other funds, Boston needs to evaluate its relationship with its nonprofit institutions and address the shortcomings of the current PILOT program. In a rapidly growing city with expanding economic development and population growth, PAG seeks to work with the City of Boston to fulfill the bold vision of “Imagine Boston 2030”, one that envisions a Boston for all, with equally expanding opportunities for education, housing, healthcare and economic mobility.
About the PILOT Action Group - The PILOT Action Group is a coalition of 21 community, faith, student and labor groups who came together to address concerns around the role of our wealthy nonprofit neighbors in the future of our city.