While most university property in Cambridge is tax-exempt, both Harvard and MIT make a payment in lieu of taxes (PILOT) to the city each year. But with the universities combining to account for 10 percent of the city’s real estate, residents and politicians frequently call for the schools to contribute more.
In a 40-year deal signed December 3, MIT pledged to limit the conversion of its commercial property to tax-exempt use, a move that city leaders praised for easing concerns that Cambridge would lose millions in revenue if more university land were taken off the tax rolls.
In addition, MIT raised its PILOT to $1.5 million this year—a 20 percent increase—and agreed to adjust its payments by 2.5 percent annually.
Under a 1990 agreement with the city, Harvard contributes about $1.7 million each year in lieu of taxes, in addition to $4.5 million in property taxes on its non tax-exempt land. While the agreement is set to expire in 2010, Harvard officials and city leaders have been in talks for over a year to negotiate a new deal.
Mayor Michael A. Sullivan said yesterday he was told by the City Manager’s office—which has unilateral power to negotiate PILOT arrangements—that a new deal could be reached with Harvard by the end of the fiscal year on June 30.
Councillor Anthony D. Galluccio, co-chair of the council’s University Relations Committee, said this week he considered the annual PILOT increase worked out with MIT to be insufficient.
In a letter to City Manager Robert W. Healy dated Dec. 13, Galluccio wrote that when dealing with Harvard, the city could get a fairer outcome—and more money—if PILOT increases were tied directly to the costs of city services provided to the University. The city budget tends to increase by about 5 percent annually, Galluccio wrote.
“The city is responsible for providing fire protection to those residents and to that land. We make sure that the streets are clean. We make sure that the traffic flows smoothly,” Galluccio said in an interview yesterday. “Those services cost money.”
John R. Moot, president of the Association of Cambridge Neighborhoods, suggested in an interview that the Harvard PILOT agreement should have annual increases tied to inflation.
While declining to comment on the specifics of the negotiations, Harvard’s Senior Director of Community Relations Mary H. Power said that the University recognizes the city’s desire to raise the annual payment.
“We have been talking to the city manager and look forward to renewing our PILOT agreement,” she said.
Galluccio said Harvard could earn the goodwill of Cambridge residents by agreeing to a generous payment, since MIT’s agreement was focused on preventing property from being taken off the tax rolls, rather than establishing a high annual sum paid to the city.
“My hope is that Harvard would take advantage of the chance to look extremely respectful to the city,” Galluccio said.
The MIT deal represents its first written PILOT agreement with Boston after operating under an informal arrangement for decades.
The agreement states that only 2.5 percent of MIT’s property can be converted to tax-exempt use over the next four decades. It also stipulates that any land that is converted will lose its tax-exempt status incrementally over four years, rather than being removed from the tax rolls immediately, according to MIT Office of Government and Community Relations Co-Director Sarah Gallop.
If MIT converts more than 2.5 percent of its land to tax-exempt status—the likelihood of which Gallop said is impossible to predict—MIT will pay the city as if the additional land were still fully taxed.
“We understand the impact that a place like MIT can have on a city’s health,” Gallop said. “We’re still addressing the concern the city has that we could take a huge chunk off the city’s tax rolls. But we are volunteering not to do that.”
—Staff writer Alan J. Tabak can be reached at firstname.lastname@example.org.