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Officials Defend Harvard's Payments to Local Governments

UPDATED: October 30, 2014, at 1:20 a.m.

University officials defended Harvard’s decision to pay only slightly more than 50 percent of the $4.3 million the city of Boston requested to offset the cost of municipal services in fiscal year 2014, citing its long history of “consistent” and “reliable” monetary contributions, in addition to direct programming, that benefit its Cambridge and Boston communities.

The request came from Boston’s “payment in lieu of taxes” program, which calls for voluntary payments from nonprofits that have at least $15 million worth of property. While the program was created in its current form three years ago, Harvard officials pointed out that the University has made PILOT agreements with the cities of Boston and Cambridge dating back to 1928. In the past 10 years, Harvard has made over $45 million in PILOT payments, $20 million of which went to Boston and $25 million to Cambridge.

Local government officials criticized the University for failing to fulfill the whole request, referring to what they said can feel like a “one-sided” sense of appreciation.

“Clearly Cambridge benefits from having Harvard, MIT, and Lesley in our city. But those universities also benefit from being here,” said Mark McGovern, a Cambridge city councilor. “The frustration is that you’re talking about a university—this isn’t John Smith vocational school. Harvard has more money than many third-world countries. They are going to be expected to do more.”

Cambridge City Hall
Cambridge City Hall.

Leland Cheung, a Cambridge city councillor, also noted that the property Harvard has acquired over the last decade in Allston represents funds removed from the city’s tax roll.

“This is a constant tension of whether or not our nonprofit universities are carrying their weight in utilization of city services,” Cheung said.

While each institution is asked to pay 25 percent of the taxes it would have paid if it were not tax-exempt under the PILOT program, the nonprofit can then reduce that amount by up to 50 percent as part of a “community benefits credit” by providing other services to the community.

Harvard officials argued that the amount the University pays under Boston’s PILOT program is not indicative of all that Harvard gives back to the community, citing examples like the Arnold Arboretum and financial aid scholarships for students from the city.

“One size doesn’t fit all and just to give an across-the-board 50 percent credit for programming does not even begin to capture the volume of programming that Harvard and other institutions provide,” said Harvard Vice President for Public Affairs and Communications Kevin Casey. “It undervalues what institutions are doing and undervalues what the city of Boston is capturing from institutions doing great things and sometimes in partnership with the city.”

Richard Doherty, president of the Association of Independent Colleges and Universities in Massachusetts, echoed that the 50 percent credit did not adequately address the diversity of higher education institutions in Boston and their consequent variation in community involvement.

“You can’t come up with a single formula that will fairly be applied to that much diversity. We did not like the formula, but we were OK with [it] as long as there was a recognition that the payments were going to be voluntary,” Doherty said. “There’s no inconsistency in our position and there’s no inconsistency with a school paying exactly what the formula suggests they pay, pay less than it, or decide not to pay at all.”

Casey also pointed out that although Harvard is tax-exempt due to its non-profit status, the University still pays taxes on property that is not used for educational or research purposes. Over the past 10 years, Harvard has paid nearly $60 million in taxes to Boston and over $50 million to Cambridge in addition to the documented PILOT payments.

"We think there needs to be an appropriate balance. We believe in PILOT payments,” Casey said. “We believe it is in our interest for the city to be very strong and vibrant and helps us attract students, but yet we need the flexibility to do other things.”

According to city data, higher education institutions widely varied in committing to the voluntary payments—while Boston University paid $6 million out of a requested $6.5 million, Northeastern University paid none of a requested $2.5 million.

—Staff writer Christine Y. Cahill can be reached at christine.cahill@thecrimson.com. Follow her on Twitter @cycahill16.

—Staff writer Amna H. Hashmi can be reached at amnahashmi@college.harvard.edu. Follow her on Twitter @amna_hashmi.

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