For anyone unfamiliar with PILOT funds (payments en lieu of taxes), they’re the chump change cities sometimes ask wealthy “nonprofit” organizations like the city of Boston’s colleges and hospitals to pay up in return for city services, like having paved roads, a sewer system and first responders.
Approximately 50% of all the land in Boston is owned by non profit organizations, land which would be worth nearly $250 million a year in annual revenue if it was taxed.
This means residents have an unfair tax burden while rich universities which charge students tens of thousands a year more than state school — and have hundreds of millions or billions in the bank — pay little or nothing for most of their property.
Boston’s colleges have a horrible track record on fulfilling their PILOT obligations. Of those, Northeastern’s rank greed is by far the most embarrassing — and after they’ve completely stiffed the city this year, dining on its services and ditching when the city asked it to at least go dutch on the tip, it is time to cry foul.
If Northeastern and the litany of colleges and other wealthy nonprofit institutions in the city can’t pay a measly 12.5% of what their tax bill would be in PILOT funds, it is time to tax them in full.
Read here for the Globe’s story on this. There are many more bad actors.
If not it seems the city can and should enforce them like it would taxes. I do like the idea of non-profit status, but maybe there should be some rate, albeit lower than for-profit businesses for institutions with assets over a certain amount.
PILOT payments are 100% voluntary. The City’s only “enforcement” power is public shaming. That’s what’s going on here.
The city can also do other things, such as put the delinquent institutions at the top of the list for code, traffic and parking enforcement. They can also put the institutions at the bottom of the list for constituent services and make it extra difficult for them to get approval for new construction projects.
Taking these actions would pretty clearly violate the 14th Amendment, which protects against targeted enforcement of laws without a rational basis and a compelling state interest. Neither of those conditions exist here.
Making it “extra difficult” to get approval for particular new construction projects would be a clear violation of the proponent’s procedural due process rights.
Finally, I’m not sure what exactly you have in mind around putting them at the “bottom of the list” for constituent services. First, there’s almost certainly no such list (for what kind of services do you have in mind?). Second, I also have a hard time imaging a “less city services” scenario that would both survive Constitutional scrutiny and would also be an effective incentive for the institutions.
I think we’re back to shaming (or repealing their non-profit status or changing the laws around whether non-profits are legally obligated to pay taxes).
It’s not unconstitutional to give out a summons to a violator just because other violators haven’t been issued a summons.
Lots of tickets on Huntington Avenue? Huntington Avenue’s a major artery with trolley tracks. It’s dangerous to have it clogged. Northeastern happens to be there? Wow, that’s interesting.
Violating the building code? We don’t have the budget to check every building in the city but we got a call about this one. Oh well.
Yes, it is. If you have a system established that is targeting particular violators with increased enforcement.
Overall, that’s one great idea you’ve got there, fenway! The City should simply ignore the Constitutional limits on its powers, acting instead to punish particular persons/institutions who they’ve been unable to fully shame in to voluntarily giving it money. After all, its only we the taxpayers that will have to pay the City’s attorneys to defend these indefensible actions and pay the inevitable civil court judgment.
I see no system. Prove there’s a system. Civil court judgment my ass. I’ve never heard of a constitutional claim of that sort in my life.
Seriously, if you think this kind of thing doesn’t go on all the time, you need to get out more.
I think you’ve tied yourself in a bit of a rhetorical knot here. Sure, there’s no constitutional provision, and sure, it has happened in the past, but I don’t think you actually want the city targeting certain institutions with traffic tickets.
From there it’s a short ride to “Time for some traffic problems on Huntington Avenue.”
I don’t want “more of” institutions that leave 22-year olds with $50K in debt in exchange for a piece of paper that might get them hired at Starbucks. Screw ’em. But, like I said, it happens. I don’t get anywhere near as annoyed about targeting institutions sitting on billions but paying nothing, or next to nothing, as I do about 40,000 people delayed at the GWB for a couple of hours.
And I’m not so much on the goo-goo train as some folks. I operate on the assumption that the city, or state, or any other city or state, will target some institutions at times and turn a blind eye to other institutions.
This is too often used for nefarious means – anything from political retribution to driving while black. Policies and laws do need to be revisited, but I also think the value of higher ed needs to be acknowledged, and yes, favored at least somewhat over businesses.
…no matter how you rationalize it.
but only people of color are pulled over. It may be a court case, but it’s a loser for law enforcement.
To be clear, you don’t mean legal obligations. After all, non-profits are exempt from property tax by state law in most (all?) states including Massachusetts. One exception would be if a non-profit made a legally binding commitment to pay PILOTs. Has Northeastern made such a commitment?
Not legal obligations, but definitely moral obligations as members of our community.
I don’t see why that is controversial. They aren’t going to up and leave and go somewhere else, and they are the largest land owner and real estate developer in the region. Biotech also serves a noble end and is a big engine in our local economy-and it pays property taxes just fine.
Property taxes in Chicago are the single highest tax burden on working people, and plenty of big corporations pay nothing on their downtown headquarters, supposedly so Daley ‘saved us from becoming Detroit’ but it sounds like a way to rob from the middle class and working poor to pay for the rich. I think it works the exact same way in the Boston area when it comes to the colleges, especially in my hometown of Cambridge, a community I love that has become even more unaffordable since I left for Chicago ten years ago. Maybe those taxes can pay for more affordable housing, more safety net services, and more equitable elementary schools. Harvard has been in the same spot since 1630-it ain’t going anywhere. It’s unconscionable that it pays nothing.
a little over $2 million. Less than the city wanted, but better than nothing.
On assets of…? How much did Boston want? The PILOT program is a good deal for everyone as long as the colleges actually participate at a fair level. I would hope that Northeastern will just pay up. It seems that this issue pops up every couple of years when someone in City government complains.
And Marie Antoinette let them eat cake, still doesn’t change the fact that they have a social responsibility to do so much more.
it should be noted that MIT is a good faith actor on PILOTs. Harvard, less so, but Harvard is considerably better than Northeastern.
What educational benefit does the sprawling Hotel at MIT complex (including the grocery store and street front retail) bring to the table? It should be taxed, along with the property they hold. MIT is good with PILOT, and both schools actually did far more with the Cambridge schools than my alma mater did in Chicago. But PILOTS aren’t enough, in my view. I think the status quo is an unreasonable give away to massively profitable corporations, even if they serve a non-profit purpose. I agree that they are a catalyst for a lot of great things. Proponents of fair taxation aren’t anti-university, we simply want them to be their fair share.
I can even concede taxing them as a business, with a corporate tax and other fees, would be unacceptable. But taxing their property-which is basic tax that pays for the municipal services they enjoy-is entirely reasonable and fair. And should have happened years ago, and happens in other places with good leadership.
They say they do.
Does MIT pay property taxes?
MIT pays taxes on its commercial property and in doing so is the single largest taxpayer in Cambridge, representing over 12% of the City’s revenue stream. Also, since 1928 MIT has provided an annual voluntary payment in lieu of taxes (PILOT) on its academic property that is legally tax-exempt. Details of the Institute’s tax payments and PILOT contributions can be found in its annual Town Gown Report.
My understanding is that Boston University is the Town of Brooklne’s single largest taxpayer as well. BU owns homes that deans (etc.) live in. They pay full freight on those. BU owns commercial real estate on the Brookline side of Comm Ave. They pay full freight for that too.
Dorms, classrooms, labs, even the President’s home (site of many University events)? Tax exempt. Commercial property or non-student residential property? Generally, that’s taxable (and taxed).
MIT is a reasonable corporate citizen-it was also founded as a public/private institution, gets a ton of government funding, and is not nearly as expansionist in its property goals. In other words-I’d be pretty pissed off if they weren’t.
What about Harvard? Does their measly 2 million cut it? I don’t think so-especially if MIT is pulling it’s weight. Also I would argue all their property should be taxed, no exceptions. Dorms use municipal water after all. But I would agree no corporate tax. That to me is a sensible middle ground.
that the $2 million for Harvard from the Globe story refers only to Boston. I don’t know how much they pay to Cambridge.
Smells almost as bad as the Chicago parking meters.
From a 2006 Crimson article http://www.thecrimson.com/article/2005/2/2/harvard-reaches-pilot-deal-with-city/ (linking wasn’t working for me on mobile)
That doesn’t sound like a partner to me, funny how Healey and Fowler Finn back when we had a CRLS graduation on the yard (which we gave them in the 1630s) are always so deferential. It ain’t Walgreens-Harvard won’t leave Cambridge or incorporate in Ireland anytime soon. I can’t think of another tax payer that gets to negotiate their on rates and get praised for whatever they pay. If it’s immoral for Walgreens and GM, it’s immoral for Harvard. Native daughter Liz Warren would surely agree.
This website discusses Cambridge property taxes in some detail. It includes a table of the city’s top ten taxpayers, and yes, MIT is #1. Harvard University is . . . not on the list, although the “President and fellows of Harvard College.” are at #9.
It appears that Harvard is effectively taking a sort of libertarian FYIGM attitude toward the cities of Cambridge and Boston, and some way should be found to pry some of their enormous endowment* loose to help the cities out.
*The endowment is $36.4 Billion, highest of any university in the known universe, and far more than second-place Yale. Also more than the economies of half the world’s nations.
Do you have any evidence that Harvard doesn’t pay full retail price for their water, both from the Cambridge Water Department and through the City of Boston (via MWRA)? Communities vary in treatment, but at least some communities isolate their water departments to be enterprise funds, which allows them to act like silos, collecting 100% of their needed capital and operational revenue through ratepayers.
And our former city manager, a Medford resident, thought that was a good deal (why did we pay him 780k/yr again?!).
It’ll eventually go up to $10 million, which is around what Harvard pays for 20 law professors.
I have a strong suspicion that, in addition to any PILOTs, Harvard pays the City of Cambridge and/or the City of Boston for:
* construction permits
* police officer details
* water and sewer
To be sure, those are fees not taxes, but nevertheless, you’ve now twice implied in posts that Harvard gets free water and sewer. Do you know that? Did you mean to imply that?
Apart from a list of the top ten users of Cambridge muni water (Harvard U. and Harvard properties are both on it), I could not find whether or how much Harvard pays for water. I too would be surprised if it was free.
That is really quite surprising.
For 2011:
Total Payments: $15,987,554
Real Estate Taxes Paid: $5,165,704
Payment in Lieu of Taxes (PILOT): $2,709,788
Water & Sewer Fees Paid: $5,564,756
Other Fees & Permits Paid: $2,547,306
So it looks like they pay some ancillary fees to the city, water and sewer fees, real estate taxes, and that pittance of a PILOT. Again, the school is worth over $36 billion, and it didn’t build itself-the people of Cambridge helped build it and sustain it-through almost four centuries. How these fees are calculated is less clear, the average rate for water usage is $3.5 per 100 cubic feet, so I am unsure if that is an at market rate for all of Harvard’s property or if they are only paying for non educational uses. The same is true for the permits and the real estate taxes. Again-I never argued Harvard paid nothing-simply that it is paying disproportionately less than it ought to. Especially when the middle class and working families are getting priced out of Cambridge, its ridiculous to keep offering them these freebies and incentives. Unlike Boeing in downtown Chicago, where is Harvard going to relocate? Unlike Burger King, what other country could it incorporate in?
They are run like a for profit corporation, with generous CEO compensation, issues with unions and had to be dragged kicking and screaming into paying living wages to its service employees. All means all and it’s high time they pay their fair share.
All they pay is six times more than all they pay.
My first source, Harvard students I might add, got it’s facts wrong. You asked a question and I answered it wit better questions. Wow it went from laying .000072% of it’s endowment to .00043%! What a model corporate citizen. The American corporate tax rate is currently 30%. If we leave the nation out of it, we still have the MA corporate excise tax on property and net worth which would at least be .0026% (or 2.6 tax on every 1k earned) which would be 94,000,000 from Harvard every year. So they are getting at least a $40,000,000 tax break that would be desperately needed in our chronically underfunded state and would not even constitute the cream off the top of the milk bottle that is Harvard’s endowment. Cross apply that to every college and we are talking about billions the state-so economically desperate for jobs and revenue it’s inviting culture casinos in-and we are talking about billions. As Sen. Dirksen once said “a million here becomes a million there and pretty soon you got a billion-now you’re talking real money”.
Did you go to Harvard? Your strike me as a usually sensible person-why are you so obstinate on this question? Are you saying Harvard built that? Or do they owe the community something more than the symbolic gestures they give?
Don’t go all ad-hom on stomv and start putting words in his mouth besides.
His comment was just pointing out that your first “that’s all they pay” statement, written with certainty, was completely wrong, as your later comment documents. There’s a lesson in this — if you’re not an expert on the subject, check your information before you make statements with such certainty. If your Harvard-students source was the Crimson article you linked to, it did not mention water and sewer at all. It did, however, mention the $4.5 mil that Harvard paid that year in property taxes. That also contradicts your “all they pay is 2.6 million.”
MY point is that it’s a good idea to check to see if you’re really saying what you think you are, and if it is really true. If you miss on either of those, and somebody points it out, it’s not personal, unless it is. In this case, it wasn’t.
He just dismissed all my other points by harping on one error. He asked me a question , I answered it, and then he played gotcha since that answer contradicted my previous statement. If I really didn’t care to do my homework I wouldn’t have bothered replying in good faith in the first place. And he dismissed the other arguments in the second post, or the arguments I made in my reply. So again, that’s “all they pay” is still considerably less than what they ought to pay. The onus of proof rests on him to articulate why that’s fair.
I don’t like the sloganeering aspect of asking whether Harvard “built that,” but I do think that our schools, and maybe Harvard in particular, have as good a claim as anyone to say they “built that.” (Really, using the phrase is like dragging fingernails on a chalkboard to my ear!)
I say this with lots of love for our neighbors throughout New England, but when I think about what makes Boston Boston, and not Worcester or Hartford or Springfield or New Bedford or Providence, I think of our schools. To be clear, I don’t think this justifies the current property tax law. I just don’t think it’s particularly sensible to figure out the right answer here by asking if non-profits “built that.”
Unless he has since retired, Mike Dukakis is a professor at Northeastern.
I wonder what Professor Dukakis has to say about this matter.
was still teaching there.
nobody asked the Duke. And, I am also pretty sure that nobody at Northeastern cares what the Duke thinks about this issue.
Ultimately, this is a voluntary payment.
Mount Holyoke has done PILOTs before, but in Fire District 2 of South Hadley, they are by far the largest entity with the largest number of people, and I’ve been told they don’t pay regularly or proportionally.
Amherst has THREE colleges, including UMASS, which causes huge spikes in law enforcement costs once or twice a year.
I don’t see this issue going anywhere, however.
Surely our major educational, medical, religious, and cultural institutions are net pluses, not net minuses, for the city and commonwealth even if they make no PILOT payments. The law exempting them from property tax is meant as a public subsidy, and the subsidy works to provide us with more education, science, religion, and culture than we would have otherwise. So there’s a case to be made on the other side, too.
If the “net plus” argument is allowed, then all kinds of property would be removed from tax rolls. I would argue that a private employer who provides hundreds or thousands of high-paying professional jobs is a distinct “net plus” for the city — arguably more so than Northeastern.
I certainly hope there’s a better argument than this for exempting Northeastern from its moral obligations as a citizen of Boston. I don’t doubt that our colleges have gamed the laws to protect themselves. That gaming does not justify this behavior.
Northeastern, like Boston’s other colleges and universities, should pay its fair share.
… it’s perfectly fair to believe that we should not be subsidizing things that we want more of than the market would otherwise provide.
and have hundreds of millions or billions in reserves, I think they can afford to be subsized less.
Lots of people and companies provide net benefits to communities.
They also pay taxes. Maybe high priced colleges should pay less, but they should at least match Boston’s requested PILOT funds, which only amounts to 12.5% of what those institutions would pay were they taxed.
Phillips Academy, by all accounts one of the wealthiest prep schools in the country, pays Andover about $200K. They have removed hundreds of house from the property tax rolls by acquiring them for faculty and staff housing and most of the children of faculty and staff attend Andover public schools.
I totally agree with Senator Warren when she said ‘you didn’t build that’ when it comes to corporations and would apply it to universities and hospitals too. Most of us back progressive taxation, yet when it comes to educational institutions, too many liberals here clam up and ask us to ‘please think of the children’ rather than having the uncomfortable conversation about elitism, wealth concentration, and inequity disguised as meritocracy that are all symptoms of our dysfunctional higher ed system. The ivory tower helps defend and perpetuate a climate of free inquiry and academic understanding, which typically, helps fuel cultural and political liberalism. I get that.
But, why is my idea so radical? I am not even asking them to pay corporate taxes or taxes on their hefty endowments or investments, taxes the rest of us would have to pay and taxes most businesses do. I am simply asking them to pay their fair share of property taxes. These will fund the services that cities currently lose money on providing-schools for the communities they are located in, payments for the utilities, police, and fire protection they enjoy, and it will help differ the cost of the roads which get a real beating during moving season, and make sure they pay their fair share of being part of a true community.
Warren’s whole point was, you didn’t build that-they are certain properties that are part of the commons. Cambridge, when it was the Town of Newtowne deeded common property to Harvard aka municipal property given as a gift, to enable its initial construction to create a college to benefit the public and educate ministers to preach to the faithful colonists and heathen natives. That institution is now worth over $37 billion. Nearly a billion of that is from Cambridge and Boston property alone. And that’s just one of the many institutions we gave this initial gift to.
I get that taxing Harvard was the cause de jure of the Sullivan and Vellucci’s of yesteryear, and they rubbed people here the wrong way. But this is no longer a cultural issue of taxing those ‘good for nothing draft dodgers’ like it was then-its an issue of fairness and what all means all truly means in our commonwealth. The universities would not exist, like most private businesses, without substantial public investment up front. And they outta pay their fair share.
These hospitals and colleges are not really non-profits; that is a sham that’s been enshrined in state and federal law, and nobody among our state & federal politicians has had the guts to lift a finger and challenge this status-quo.
It is more accurate to call these institutions “tax-exempt”, rather than “non-profit”.
In 2013 Northeastern had a surplus (otherwise known as a profit) of $147 million.
Non-profits should be taxed on ancillary properties. Only actual school classrooms, sanctuaries of worship, etc. should be exempt from tax. Investment properties, rental properties owned by the non-profit, etc. should not be tax exempt due to the form of ownership. If a college owns a building which is run as a Dunkin Donuts, it should be taxed on that property. If a non-profit has faculty or employee housing, that should be taxed. Only the portions directly in use or directly related to the mission stated in the articles of organization should be exempt.
I am not at all sure that commercial property on which taxes are paid are included here– those would be tax payments not PILOT payments.
First of all, good catch by you and the Globe. This system needs work.
I note a few 2014 zeroes on the list. I’m going to hazard a guess that they decided to wait and see how the new mayor handles this. They must be rooting for it to be dropped.
And really, I don’t know how one enforces a voluntary tax. It seems like it should be a certain percentage … but then it’s a real tax, I guess.
Enforcement.
Starting conversations about if they should be taxed is another.
Lots of other, more hardball ways, too. Ending favors, tighter enforcement, etc.
Once we start talking about enforcement, we’re no longer calling it voluntary.
Bad actors shouldn’t be appeased. Anything in the tool kit to make them good actors should be pursued.