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Harvard’s contribution to the City of Boston in 2018 fell short of the amount of money the city requested from the University as part of a program in which some schools make contributions to the city instead of paying taxes.
Under Boston’s Payment in Lieu of Taxes program, city officials recommend that nonprofit institutions, including universities and hospitals, voluntarily pay the city 25 percent of the property tax the groups would have paid if they had been subject to taxation. The program applies to “educational, medical, and cultural” institutions that own property valued at more than $15 million, according to the City of Boston’s website. Boston City Councillor Lydia Edwards said the program uses property values from 2011.
2018 marked the seventh year in a row that Harvard’s contribution to Boston has dipped below the amount requested by the city. The last time Boston University paid the full amount requested was fiscal year 2014, and Boston College has not paid the full amount for seven years in a row.
“Something like half of the real estate in Boston is in the hands of either a governmental entity which is tax exempt, or a nonprofit entity which is tax exempt, and it does really impact the ability of the city to pay for the services that the nonprofits and everyone else depend on,” Northeastern Law Professor Peter D. Enrich said.
Nonprofits including universities can contribute half of their payment in the form of “community benefits” rather than cash. Schools can define what constitutes a “community benefit” under the PILOT program; the benefits Harvard listed in a 2018 report to the city included programming for public school students and summer jobs for teenagers.
Harvard contributed $9.8 million to Boston in 2018 — 79 percent of the nearly $12.5 million requested by Boston. That figure includes the University’s nearly $3.6 million cash contribution, as well as the $6.2 million in credit that Harvard received for “community benefits.”
Some politicians and experts, however, argue that the PILOT system is a flawed way of requesting and assessing contributions from Boston non-profits.
“This is based off of 2011 numbers, which is really the crying shame of it all,” said Boston City Councillor Lydia Edwards. “I’d love to be paying 2011 tax rates, but I’m not.”
Enrich said even the 2011 assessments that form the basis for PILOT might only be approximate.
“The assessments for the nonprofit buildings are incredibly badly done,” he said. “Part of it is it’s hard to do an assessment for a hospital or a university library. It’s not like those things get bought and sold, and no one knows what their fair market value is.”
Even after property assessments and requests from the city, some non-profits can choose not to pay the full amount Boston asks for since PILOT contributions are not mandatory, according to Enrich.
“As a matter of law, this is entirely voluntary,” he said. “There is no obligation on any of the nonprofit entities to pay any tax at all.”
Enid Eckstein, a coordinator for the PILOT Action Group, which aims to ensure that the city receives the contributions it requests under PILOT, said she feels nonprofits have a “moral obligation to the city” even in a voluntary program.
“There’s no requirement that they do it,” she said. “But when the mayor negotiated this program, the idea was that the universities were entering into a social contract.”
Edwards argued that the city of Boston, not non-profit institutions, should decide what constitutes “community benefits.”
“As long as Harvard and other universities are able to define not only what the community benefits are but what they’re worth, that’s the city’s problem,” Edwards said. “That’s the city’s dereliction of duty.”
The Boston Mayor’s office declined to comment on the record to a request for comment.
Harvard spokesperson Brigid O’Rourke wrote in an emailed statement that “the University seeks to strike a thoughtful balance between taxes, PILOT, and mission driven community programs both in Allston-Brighton and the City of Boston.”
—Staff writer Oliver L. Riskin-Kutz can be reached at firstname.lastname@example.org. Follow him on Twitter at @OLRiskinKutz.
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