Harvard and the City Strike an Historic Tax Pact

For a while it looked like Harvard and Cambridge were headed for the worst town-gown clash in decades.

By October, dozens of city residents were filing into Cambridge Rindge and Latin School to hear city officials and community activists discuss Harvard's steady expansion into the city. Cambridge was in the throes of a regional recession, and many feared that the large tax-exempt University could devastate the city's coffers by removing newly acquired commercial properties from the tax rolls.

But the clash never happened. Before the pressures of recession or community agitation could grow too great, Harvard and the city announced a landmark agreement that dramatically increased the money the University would give to the city each year in voluntary contributions.

The in-lieu-of-tax agreement, signed by President Derek C. Bok and City Manager Robert W. Healy on November 26, ended more than two years of exhaustive debate on what properties Harvard would contribute monies for and how much it would give.

At the heart of the agreement was a clause committing Harvard to provide the city with in-lieu-of-tax payments for the next 10 years on buildings it takes off the tax rolls in 1991--in amounts equal to the taxes Cambridge would receive if the properties were still taxable.

The pact will bring the city more than $11 million over the 10-year period from Harvard as compensation for the University's vast tax-exempt landholdings, which amount to almost 5 percent of the city's potential taxable property. Harvard's annual voluntary contribution rose by $100,000, while compensation for tax-exempt affiliated housing property rose by nearly the same amount.

Soon after the pact's approval, John Shattuck, Harvard's vice president for government, community and public affairs said the new agreement was better than any other university-city pact in the nation. And it is that sort of praise that Shattuck has continued to give throughout the year.

Shattuck says that all parties involved are pleased with the outcome of November's signing, which also included the formation of two committees to improve town-gown relations in the city--an administrative working group and a city-sponsored task force.

Shattuck says that Harvard's promise to provide the city with payments for commercial properties removed from the tax roles will be the most significant part of the new agreement.

"It's working very well from both Harvard's and the city's points of view," he says. "The removal of the Quality Motor Inn from the tax roll [in May] set a good example of how the system will work, as it will continue to be taxed for the next 10 years.

Shattuck says the deal does not bind Harvard to make similar payments on properties taken off the tax rolls after 1991. But based on the decisions made this year, the University will consider signing similar deals on commercial property converted to academic use in the future.

Cambridge Vice Mayor Kenneth E. Reeves '72 also says he is highly supportive of the new system.

"When you understand the tax-free nature of a university, the existing agreement is definitely an improvement, principally because Harvard will pay tax on newly acquired property," Reeves says.

But while some councillors, like Reeves, find it hard to criticize Harvard because of its most recent concessions, others still feel that the University must do more to help the city stay on its feet.

"There is still a substantial amount of land with limited payment, while the cost of school books, blood for hospitals and other expenses continue to go up for the city," says City Councillor Francis H. Duehay '55, nothing that city governments across the country are looking to universities to pick up the slack resulting from the recession.

"These demands are real and they have to be paid for," he says. "You can't pay this year's bill with last year's taxes, so non-profit institutions must be confronted. Otherwise, the university students and faculty will feel it as much as everyone else."

John R. Pitkin, a Cambridge resident who co-chairs the Joint Committee for Neighborhood-Harvard Consultation and sits on the mayor's task force, says he hopes the committees that resulted from the agreement will help address the issues not dealt with in the November negotiations.

"It was a very positive step," he says. "The city now has some insurance that property won't be converted to tax-exempt property, but other fiscal issues weren't addressed in the agreement. Hopefully the framework which was set up can deal with the other problems."

A Model For Others?

Cambridge is not the only city that has been agitating for money. From Newton, Mass. to New Haven, Conn. to Evanston, Ill., cities have gone looking to universities within their borders to provide much-needed funds in the wake of the recession.

But few, if any, of these towns have persuaded their universities to pound out tax agreements as substantial as Harvard's. Newton Mayor Theodore Mann, for instance, says he is looking for more generous reciprocation from his city's five colleges, the largest of which is Boston College.

Yet while city officials from other regions may have their sights set on agreements similar to the Harvard-Cambridge deal, representatives from area universities, including B.C., say their institutions aren't capable of forking out voluntary funding on the scale that Harvard has set.

Harvard officials say they sympathize with the positions of other schools and add that their agreement probably cannot be considered a model for other town-gown deals.

"The universities and cities or towns are all different in the ways they function," says Marilyn Lyng O'Connell, Harvard's director of community relations and a member of the new town-gown task force. "It's like comparing apples and oranges."