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The Boston City Council held a hearing to review its payment in lieu of taxes program Friday, hearing testimony from residents and advocates on drawbacks and potential updates to the program that Boston has run since 2011.
The PILOT program requests for large, property tax-exempt nonprofits like universities and hospitals to voluntarily pay 25 percent of the property taxes they would have paid without the exemption.
Up to half of this payment may come in the form of non-cash “community benefits” like scholarships reserved for local students, job training programs, and educational services targeted to residents.
These nonprofits are requested to make the payment because roughly a quarter of the city’s budget is spent on city services like police, fire, and snow removal that benefit these institutions.
For 11 consecutive years, Harvard has paid less under the PILOT program than city officials requested for its land holdings in Allston and Longwood, valued at more than $1.5 billion.
In 2022, Boston requested $13.7 million, but Harvard contributed roughly $10.8 million. In each of the past five years, Harvard has contributed roughly 79 percent of the City’s requests.
Harvard spokesperson Amy Kamosa did not comment on why Harvard has consistently failed to meet the requested amount or how the University decides how much it will pay.
“As a nonprofit educational institution, Harvard engages with the City of Boston in a variety of important ways, including consistent participation in the City’s voluntary PILOT program and delivering community programs to Boston residents, paying municipal taxes on the University’s non-exempt property, as well as leading meaningful initiatives and outreach across every neighborhood in Boston,” she wrote in an emailed statement.
Harvard’s community contributions include the Arnold Arboretum, a public-private green space; fellowships for students to work on city projects at Boston City Hall, and Harvard Law School’s clinics and Pro Bono programs.
Adherence to the requests varies widely across private institutions: Boston Children’s Hospital, for example, paid its full requested PILOT contribution in 2022, while the New England Aquarium paid just half, all in community benefits.
Councilor Julia Mejia said residents should have more of a voice in determining what constitutes a community benefit under PILOT, instead of being told what benefits them by nonprofit institutions.
“How can we have a process that is being led by people who are dictating for us what it is that we need, and then bringing it to the community for a reaction?” she asked. “That’s just not how we should be doing business.”
“You can’t have a community benefit without community involvement,” said B. Chris Sumner, a community representative at the hearing.
Robert J. McCarron, CEO of the Association of Independent Colleges and Universities in Massachusetts, defended the benefits universities provide to Boston against criticism from councilors and advocates.
“Boston’s colleges and universities are integral contributors to the City and have been since their inception,” he said. “Today they continue to be vital in keeping neighborhoods alive and attracting visitors to the city.”
Another complaint about PILOT is around the program’s continued use of property valuations — which inform how much the city will request from an institution for its contributions — from 2009.
Commissioner of Assessing Nicholas Ariniello commented on the challenge of updating the property valuations during the hearing.
“It can be very hard to generate increased fundraising returns just by asking for more,” he said, pointing to what some see as a reason that Boston has not updated their valuations and increased payment requests.
Massachusetts has previously explored mandating PILOT payments from large nonprofits like Harvard, though a 2021 bill aimed at making such payments required did not make it to a vote before the state legislature.
Councilor Liz A. Breadon, whose district comprises Allston and Brighton, said that as universities buy more property for student housing in the city, the city loses more in tax revenue because the properties become tax-exempt under state law.
“The other issue that comes up is when a nonprofit institution such as a university, acquires a piece of commercial property like a former hotel or a former apartment block, and the community at large think, ‘Oh, there goes another piece of valuable property that’s going to go off the tax rolls that we’re going to have to subsidize,’” she said.
City Councilor-At-Large Ruthzee Louijeune, a graduate of the Law School and Kennedy School, said she believes “times have changed” on how the city is “trying to hold nonprofit institutions accountable.”
Enid Eckstein — a co-chair of the PILOT Action Group, an organization that advocates for PILOT compliance — said during the hearing that the program should consider what Harvard owes to the city of Boston.
“What is the social and moral obligation of a world-class institution to the community that it has displaced?” Eckstein asked.
—Staff writer Samuel P. Goldston can be reached at email@example.com.
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